The real estate market in the country is growing at an unprecedented rate. According to a recent report by IBEF, the real estate market is all set to grow to about USD 1 trillion by the year 2030. The demand for housing in metro cities is booming. With such exponential growth, however, cases of fraud and scams in real estate are also on the rise. While legal safeguards exist to protect the interests of homebuyers, it is important to remain aware of common real estate scams and take protective measures.
Top Real Estate Scams To Avoid
1. Title Fraud - The commonest type of property fraud is title deception or title fraud. The ownership of any property or the land on which a property is built is established by a title deed. This is a legal document establishing the legal right on a property. When a person defrauds the owner of a property by forging the title deed or other legal documents and pretending to be the owner, this is referred to as Title Fraud. In this case, the person who uses these forged documents intends to illegally sell or gain from the property.
2. Rental Returns Fraud - One of the more common frauds that have been reported in recent times is referred to as rental returns fraud. This is when a developer or builder makes false claims to sell an under-development property. The builder advertises that when a homebuyer buys an under-construction property, the builder promises to pay the buyer rent for the construction period. They even give the buyers post-dated cheques to this effect. As expected, these cheques are blocked, or the payment is denied. As a result, the purported "rental income" never reaches the buyers, and the builder never makes good on the promise.
3. Delays and shelved projects – Buying a residential apartment is much more than just an asset acquisition. It is making a major financial decision that will impact your lifestyle. It is also where you want to build a home for your family and loved ones. Intentional delays in delivering the buildings, apartments, and flats as promised can cause a major financial disruption to home buyers. When construction is stalled or delayed, you continue paying rent despite having invested in a property. Your EMI burden at this time is likely adding to the financial duress, and you can also not claim an income tax deduction on the interest paid towards the home loan. In addition, shelved projects are disastrous to the finances of the home buyer. These are sometimes done to extort the homebuyers and get more payment.
4. Authorisation violations – One fraudulent activity that could make a living in your newly bought home difficult is authorisation violations by the builder, developer, or society. Builders need sanctions and permits before embarking on a residential project. Detailed plans are drawn up for this purpose, and these are approved by various authorities such as the municipal corporation, VA office, tehsil office etc. During the construction process, however, if these authorisations are violated, the building becomes illegal, and the state government can take appropriate action including demolition.
5. Middlemen frauds – Frauds perpetrated by middlemen have been a great menace to home buyers. Traditionally, middlemen are paid by the homebuyers to give them information about upcoming projects and by the developers to get the word out. False promises, collusion with unscrupulous developers, and ineffective support from the middlemen can cause financial loss to potential homebuyers. In many cases, middlemen use real estate websites to list properties that may simply not be available or to advertise without the consent of the developer. This can only lead to disappointment and wasted resources.
Real Estate Laws and Legal Recourse
While we agree that the real estate market is booming and the number of scams is on the rise, India is also a country with very strong laws that protect the interests of home buyers. The Real Estate (Regulation and Development) Act of 2016 (RERA) is one such legislation that has made a great deal of difference in assuring homebuyers of the legality of the deals and preventing delays in delivery. The implementation of RERA laws in different states is also a step in the right direction to prevent scams and frauds.
Partnering with Blox
Blox is India's leading consumer-centric online real estate platform. With tech-powered tools, we bring you the best projects in your locality of choice. All the properties listed on the site are RERA-registered and from verified developers with a strong track record of delivering high-quality buildings and housing projects on time to the complete satisfaction of homeowners. Partnering with Blox helps you find trustworthy builders and subsequently, your dream property. The goal is to make your online property-buying experience easy and stress-free.
