Here are some crucial things to keep in mind while buying your dream house which will help you navigate the treacherous world of real estate
The sheer number and size of advertisements and marketing gimmicks for real estate cannot be ignored. In and around New Delhi, we see them on the front pages of newspapers and magazines, pop-ups and other tricks on internet websites, direct and indirect visuals on television, promotions in movies and hoardings at every conceivable location and so on. It has come to a point where fields and land along the roads leading out of Delhi, in any direction, are now being promoted as the future of urban development, where it will create great wealth and eventual posh destinations.
However, if you are not careful, many of these literal “castles in the air” will likely end up as destinations for your money—at a very rapid rate of depletion.
Here’s a short list of things to keep in mind, if you want to pre-empt and prior to putting your money down. Do this with a cool head and do not fall for hard-sell hustles like “prices are going up” or “last few apartments are left in the project”, and so on. Always be prepared to walk away without feeling remorseful.
1) Do not place any money as booking advance with a broker or intermediary, in cash or cheque, by way of a “credit note” or anything else. A good broker will try to keep his books and liabilities clear by not bringing transit money into his accounts. A crooked broker, on the other hand, will try and entice you to do exactly the opposite. Insist on direct payments to the builder, or the bank if it's a loan.
2) Ask for a copy of the Builder Buyer Agreement (BBA), or the Letter of Allotment, or the Terms & Conditions (or whatever the builder calls it), before you place any advance with a builder or promoter. If you do not get hold of one, for any reason, then walk away. Very often, buyers are stuck with extremely one-sided BBAs, and the threat of forfeiture of advance is real.
3) One clause to look out for in the BBA is the one which permits a builder to increase the chargeable area, arbitrarily, without notifying the buyer. Read this carefully. Also double check on what rate the builder will use for such a clause, if you do agree to it. Paying “market rate” for additional area charged for with the last payment can be an unpleasant surprise.
4) Rates of interest and method of calculating interest on delayed payments needs to be spelt out clearly and accurately. At the same time, a clause covering early or excess payments by the buyer must be part of the BBA, at the same rate of interest. Do not accept overdue interest charged without getting details of how the figure was arrived at.
5) Single or joint ownership is a very personal matter and you need to be clear on this before you sign anything. So please get good advice from your tax and legal consultants prior to documentation. Do not leave this to the last moment when emotions can run high.
6) Construction-linked payments make a lot of sense. Ask for a proper statement of account, within this context, every time the builder raises a demand note. Do double-check with a site visit. If the amounts are similar, which they often will be, make a small surplus payment of a few rupees so that your statement is always in credit and each payment is of a slightly different amount.
7) Get the builder to define well in advance, at the time of paying the booking amount, what ‘possession’ will mean. It should mean when all codal formalities and adherences required for registration are complied with, and when you are ready to occupy a completed project. Do not fall for terms like “temporary possession” for fitments and final interior work.
This is by no way a composite list, but most of these pointers will help you differentiate the good builders from the bad. Of course, nothing like it if a builder is highly transparent—specifics on carpet area for instance.
In the next article, we shall try and list out what you can demand and expect at time of delivery, and how you could go about issues in case of problems.
However, in a sector as unregulated as real estate, the golden rule is caveat emptor or ’let the buyer beware’. This is of paramount importance—look after your own interests before parting with your hard-earned money.
(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love—writing.)
The Ministry said that all private airlines, including foreign airlines, may undertake self handling in respect of 'passenger and baggage handling activities at the airport terminals' and 'traffic service including the passenger check-in', which require passenger interface, at all airports
The companies handling private student loans -- much like those handling mortgages -- sometimes add to the frustration and even the debt load of struggling borrowers
The parallels between the mortgage market and the student loan industry have been frequently noted. Both involve big borrowing and have a history of lax underwriting by lenders. But the two are also strikingly similar in another way: When it comes to both mortgages and student debt, the servicers, or companies that handle loan payments, sometimes add roadblocks and give struggling borrowers the runaround.
Servicers have misapplied payments, given borrowers bad advice, and reported incorrect information to credit bureaus, according to one of the reports. The findings were based on the agency's recent tracking of student loan complaints, focusing on the companies who handle private student loans.
Borrowers facing hardship and looking for flexibility through refinancing or a more manageable repayment plan "struggled to get an answer from their lender or servicer," wrote the agency's Student Loan Ombudsman, Rohit Chopra. When they tried to postpone payments, they were sometimes charged a recurring fee to do so.
And even when servicers encouraged borrowers to make "good faith" partial payments in amounts they could afford, the payments sometimes still resulted in delinquency or default, according to the report.
As we've noted in our reporting, private loans often don't have the same protections as federal loans: Death and disability discharges typically are not guaranteed or are decided on a case-by-case basis.
And when the loans are packaged and sold to investors, it's even harder to know who has the authority to make decisions about repayment options, discharges, or other issues that arise: "Borrowers report that sometimes servicers cannot even answer who owns a loan," noted an agency factsheet. Homeowners have faced similar trouble.
Sometimes, the parallels are exact. By law, members of the military are entitled to special protections, including lower interest rates on both mortgages and student loans. But thousands have been overcharged on their mortgages. And according to the government's second report, service members have also had the same problem with student loans. The report, which focused exclusively on the loan debt of military borrowers, blamed the overcharging on servicing errors and demands for unnecessary documentation.
The report also noted that loan servicers at times "guided" members of the military into putting loans into deferment or forbearance — even though interest accrues during those periods, and there may be better options available.
Of the more than 2,000 consumer complaints received by the CFPB from March and September of this year, the two most complained-about servicers were Sallie Mae, representing 46 percent of complaints, and American Education Services, or PHEAA, with 12 percent.
(The complaints, the report noted, were not "particularly disproportionate" to each companies' servicing volume. Sallie Mae has "modified $1.1 billion in private education loans with interest rate reductions or extended repayment since 2009," said spokeswoman Patricia Christel. A spokesman for American Education Services, Mike Reiber, said the servicer's customer service representatives "work daily with borrowers to explain repayment options and to help them avoid delinquency and default using all available means.")
Though the focus was on the servicing of private student loans, it's worth noting that many of the companies servicing loans in the private market are the same contractors handling federal loans.
Perhaps unsurprisingly, borrowers of federal student loans have also faced some of the same challenges as those with private loans. For instance: Since last fall, the Department of Education has been transferring some borrowers to new servicers it's contracted with to handle federal student loans — often resulting in confusion for borrowers, some of whom have even seen their repayment plans changed.
Currently, the Department has roughly a dozen servicers, with a new company added to the federal loan servicer team every few months. The expanding system of federal loan servicing can be confusing not only for borrowers who've been switched to new companies, but also for colleges who now have to deal with many more companies than they had to in the past.
The CFPB's report recommended that Congress assess whether more could be done to improve the quality of loan servicing and consider ways to encourage loan modifications and refinancing for struggling borrowers. Such efforts have been underway to help struggling homeowners, with mixed results.