Problems of Consumers in buying a flat in Mangalore.


Mangalore was a quiet city, with plenty of vacant land, and most of the houses were tiled, old fashioned. In the 'nineties, the building boom started. Soon, a number of builders surfaced, and many buildings were seen all over the place. As time passed, the Builders wanted to build more and more and get more and more profit. This led to all sorts of developments. But in view of the Gulf boom, and the steep rise in the rate for the buildings, the consumers hardly questioned the Builders on any matter. Their main aim was "investment" which grows fast. This encouraged the Builders further, to be more adventurous. They learnt ways and means to flout all governmental norms, and deliver the buildings without completing their responsibilities, and to use many methods to cut construction costs, but give a good outside look at the same time. Therefore, in the present situation, if any one buys a flat from a major Builder, the Buyer will not get more than 40% of what he paid, as the actual direct cost. The rest are all the profits of different subcontractors. In addition, when one buys a flat from a major builder who does the job by subcontracting, the Buyer is forced to pay Service tax and VAT, which do not come into play if he builds the flat or a bungalow himself! Ultimately, it is a win- win situation for the Builders and lose- lose for the Consumers, but it appears that hardly anyone is aware of this, and of the remedies, especially in Mangalore.

Now let us see what happens when some one goes to a Builder to buy a flat.

The Marketing girls talk convincingly and show a brochure, giving some major specifications and floor plans. The Builder indicates certain sq.ft, which has to be accepted on its face value... The cost per sq.ft is negotiated, and the "Black and White" ratio decided. The building looks beautiful in the Brochure, and the Buyer decides on a flat.

The advance to the tune of 10-12% is taken immediately, without any terms and condition being signed.. The building construction might not have even started at this stage.

After some time, an agreement is signed between the Builder and the Buyer. This is a document with one-sided terms, all favoring the Builder. In this document, the Builder introduces all sorts of clauses. As per the rules he is SUPPOSED to give a copy of the Corporation- approved plan to the Buyer at this stage. He is also expected to display a copy of the drawing at the work spot. But he does neither of these things. He makes his own drawings, in variance to the approved plans and tries to bind the Buyer. He makes changes so that he gets more money, by flouting the rules. The Consumer's rights are not protected in these documents. But, if a Buyer asks /questions any clause, he is bluntly told that it is the Standard Document and nothing can be changed. If he decides to withdraw, he will forfeit the advance!! The document does not give any detailed specifications. At the same time, it indicates certain payment terms, which are against any International law. The Builder takes most of the money upfront, leaving very little for the finishing works. The progressive payments are also front- loaded and have to be paid as and when demanded, otherwise, the Builder can levy interest, or even cancel the agreement unilaterally. No doubt, this document will not stand in a court of law, but who has the patience to go to court, where justice is delivered after years and years!

At this stage, the official registration takes place. The value shown is the value of the proportionate land and some progress!! This method is adopted only in Mangalore, and it is not known if this is legally acceptable in other places.

Even before all the facilities are completed, the Builder collects all the money, and declares the flats ready for occupation, and sends his subcontractors to another project.

Before handing over the keys, he takes a declaration that the flats are as per the requirements and no claims will be raised on him. (This is atrocious, as the defects can be found only when one lives in the flat for sometime).

The Builder does not get the electrical meter changed to the Buyers name; he does not get the Khatha changed, but collects hefty "Service charges" even for the basic Corporation activities like getting the water connections etc. He collects huge additional amount as "Service" charges, indicating thereby, that for every activity, bribes have to be paid in the Govt department. This expense, he passes on to the Buyer, keeping his own shares!! Thus in addition to the sq.ft rates, he collects at least 10-15% more one way or the other, without giving the proper receipts!!

Very few actually occupy the flats. Many live in the Gulf or USA. Hence most of the Buyers do not ask any questions. They also do not find any defects, as they do not live in the houses. Even at this time, the Buyers do not know the variations in the building plan with respect to the original approved plan. The Builder may be "kind enough" to rectify some minor defects, but avoids many. If someone persists and writes letters, the Builder dispatches his Goondas to threaten. He even goes to the extent of declaring that the defects would be attended to, only after the buyer sells the flats and a new owner comes.

The Society is supposed to be formed within 3 months, but it is never done before one year. During this period, the Builder utilizes the common areas freely for his purpose, and spends freely from the deposit money kept with him. He keeps for one year and then suddenly hands over the building along with the documents, to a chosen President of the Society, who is generally, the least knowledgeable on the work aspects. He is also not given any time to go through the documents. Only at this time the alert Buyer has a chance to see the variations, but it is too late. For consumer court, the complaints are to be intimated within a year of the readiness of the building!! Moreover there is hardly anyone who goes through the technical documents. The bundle lies somewhere, unseen!!

However, if any courageous Buyer (now Owner) wants a copy of the approved drawing, he has to pay heftily and get a copy from the Corporation. If one goes in for this adventure, and if he happens to be an Engineer, he will realise that all the rules are flouted, and lots of changes made, but not intimated to the Corporation or to the buyer. He finds that the Corporation officials have given the Completion Certificate, without verifying the actual situation at site!! The same applies for Electrical inspector, Environment officer etc. The pamphlet shown in the beginning remains only in the dream and not in reality.

Thus the Builder cheats both the Govt, and the Buyer, and makes lots of money. If someone complains, or dares to go to the consumer court, he threatens them, and even beats them. Of course, the Consumer Court itself takes lot of time to give the verdict, and during this period the builder makes the life of the buyer who complains, miserable.

Thus in the end, the Buyer gets the worst, and someone who takes the initiative to complain, becomes a mental wreck.

Why does this happen?

Mainly because of the Buyers' poor knowledge about the building materials, and the contract terms, and the corruption in the Government departments, especially in the Corporation office. The Karnataka Apartment Ownership ACT 1972 specifies many areas which the Builder is supposed to follow, but none follows.

While giving the approval for the construction, the Corporation also specifies conditions, but the Builder ignores them. The drawing submitted for the approval itself is of sub- standard quality, and many things are not clear in the initial stages itself. It is confusing too.

The Builder changes the layout, but does not intimate to the Corporation, yet gets the Permission to occupy!! The changes affect the facilities of the occupants, curtail their rights, yet the Corporation officials close the eyes.

Even the worst of the offenders are able to get away with minor fines, if caught! The offenders also know that one day, "The Akrama Sakrama" scheme would come and all that they need to do is to shell out a small fine.

With the above situation, there is no wonder that there is a mushroom growth of all kinds of Builders in Mangalore, and the Buyers are cheated.

What can be done?

The Citizens forum can gather public opinion, and insist on certain definite practices as below.

  1. The Government should get a standard agreement document prepared by a private reputed Consulting Company, and make it compulsory to be followed. In this agreement, the clauses favorable to the buyers are also to be included. The payment terms are also to be made buyer- friendly. At least 15% of the money must be paid only when the total building gets ready and handed over to the Society, and 5% only after the warranty period of one year. This agreement should be shown to the buyer before payment of the Advance. The approved plan copy has to be given to the Buyer in the beginning itself, and all the requirements as per the Karnataka Apartment Ownership act are to be made compulsory. The officials must visit the site, meet the Buyers and enquire about this aspect.

  2. Just as Auditing of a Company by independent auditors is mandatory, appointment of a reputed private consulting Engineering Company should also be made compulsory to draft the specifications and the agreement, ensure quality control as per ISO, and certify completion as per the specifications. The Buyer has to be taken around and educated about the specifications and the actual. The special features of the equipments installed (like generators) are also to be explained. All the relevant documents are to be handed over.

  3. The activities of the Consumer Forum are to be given more publicity. The procedures to be made simpler, the judgment given much faster. The Consumer Forum should not include only politicians, but also experienced engineering professionals and legal/commercial experts. Police protection is to be given to those who are threatened by the Builders, and such Builders are to be black-listed straight away.

  4. In the case of complaints on quality and specification violation, a committee of Engineers should make a surprise visit to the spot immediately. The Consumer court should not function like a normal court asking for "Evidence and witnesses", but should base their decisions on the immediate facts. When the crimes of the builder are proven, he should be blacklisted.

  5. The approving authorities are to be made more accountable. They are to be punished immediately if some one shows how they have allowed things to go wrong.

In the present situation, very few will dare to complain, and the purpose of the court is not much served. Therefore, the Lok Ayukta can also make surprise raids on the concerned officials, and break the nexus.

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