Introduction

A homebuyer spends his entire life savings to purchase his dream house with hope of living a safe, sane and esteemed life ahead, with his family and loved ones. But what if the same dream house becomes the root cause of stress, anxiety and depression among the homebuyers. The first major challenge faced by most homebuyers is that they do not get the timely possession of their property even after making the full payment. Even, if somehow the homebuyers manage to get the possession of their unit, the next challenge that they face is defects in their property.

It is generally seen that many homebuyers face the following challenges due to the structural defects in their properties:

1. Seepage of water in their flats or in the common areas particularly in the basements, especially during the monsoon season.
2. Big cracks or faults in the building.
3. Sometimes a part of the building falls apart from it.

All these defects may lead to loss of life or property of a person. It has also been seen that most of these defects are a direct result of the poor construction quality and laying of weak foundations by the builder. Therefore, it is the builder who is liable for any such defect if it is there in the building. The Real Estate (Regulation and Development) Act, 2016 popularly known as RERA Act, took the same factor into consideration and thus contains provisions containing the liability of a promoter if in case such structural defects arise in a project.

The promoter is also liable to pay the fine which can extend up to 5% of total cost of project if in case the promoter does not comply with the orders passed by adjudicating officer and a separate complaint has to filed before the RERA Authority in such a case.

What is the Defect Liability Period?

RERA Act, 2016 contains provisions in the form of subsection 3 of Section 14 which specifies the liability of a promoter in case any defect arises in the project. According to the provisions mentioned in the act, the promoter is obligated to rectify any defects which are brought to its notice within a period of five years from the date of handing over the possession. This provision makes the promoter liable for any defect in the property arising before 5 years from date of delivery of possession. According to the provisions of the act it is also the sole responsibility of the promoter to rectify such defect within one month of getting informed about such defect and the promoter is prohibited to charge any money from the buyers for rectification of any such defect.

The liability of the promoter arises in the following cases:

1. If there is any structural defect in the project.
2. If there is any other defect in the workmanship or quality or provision of services.
3. If the promoter has not completed any obligation related to the development as is mentioned in the agreement for sale.  

The structural defect has not been mentioned anywhere in the act, but the definition of the same has been mentioned in the rules made by the state under the act. For e.g. structural defect has been defined by Haryana RERA, Tamil Nadu RERA and Telangana RERA.  

The following is the definition of “Structural Defects” as is mentioned in the rules formulated by Haryana Government under RERA Act:

“Structural Defects” means actual physical damage/ defects to the designated load-bearing elements of the building, apartment or unit like faults, breakage or cracks, appearing over time in elements such as load bearing columns, walls, slabs, beams etc. which can affect the strength and stability of the apartment or the building and shall include any of the following, namely:-

• Defects due to design attributes of reinforced cement concrete (RCC) or structural mild steel (MS) elements of an engineered (structurally designed) building structure.
• Defects due to faulty or bad workmanship of RCC or MS work.
• Defects due to materials used in such RCC or MS work.
• Major cracks in masonry work that are induced as result of failures of RCC or MS work.
• Any defect which is established to have occurred on account of negligence, use of inferior materials or non-adherence to the regulatory codes of practice by the promoter.

Though, the structural defect can be appropriately covered by the builders through insurance but the concern for builder is workmanship as it is a very loose term it can cover tiles, paints, wiring or anything else. Though the act has specified a warranty period of 5 years for both structural defect and workmanship, but rules made under the RERA act by various state authorities put different obligations on the promoter, for e.g. In Haryana, in case of structural defects the accountability period is 5 years whereas in case of workmanship the liability of promoter extends to only 1 year from date of possession of the project.

What if Promoter does not take the responsibility in case structural defect arises?

In case the promoter is not willing or does not rectify the defects within a period of one month, the allottees have a right to approach Real estate Regulatory Authority generally known as RERA and ask for compensation from the promoter. The right to decide the compensation is vested in the adjudicating officer which is appointed by RERA in consultation with the government. The buyers need to move an application before the adjudicating officer and the authority cannot decide on the matters of compensation. In Newtech Promoters and Developers Pvt. Ltd. Vs. State of U.P. the Hon’ble Supreme Court noted that when it comes to the question of seeking the relief of adjudging compensation and interest thereon the adjudicating officer exclusively has the power to determine, keeping in view the collective reading of Section 71 read with Section 72 of the Act.

If in case the developer still does not follow the orders passed by adjudicating officer, the compensation to be paid to the allottees by the promoter will be recovered as an arrear of Land Revenue as per Section 40 (1) of the act. In layman terms if in case the promoter does not pay the compensation to the allottees a Recovery Certificate shall be issued against the promoter, which shall be executed by the District Magistrate (DM) having the jurisdiction. The DM will then collect the money from the builder and handover the same to RERA to be given to the complainants. In reference to the same a request for execution of orders has to be filed has to be filed before the adjudicating officer who issued the orders at the first place.

Section 40 (2) also gives powers to the adjudicating officer that orders passed by him can be enforced in a way as is prescribed, for e.g. The Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 provides that orders of the adjudicating officer shall be enforced in the same manner as if it were a decree or order of Civil Court. It means that the Adjudicating officer shall enjoy the same powers as a Civil Court while enforcing the orders passed by it. If in case if the Adjudicating officer is unable to execute the orders the same can be sent to the Civil Court for execution.

The promoter is also liable to pay the fine which can extend up to 5% of total cost of project if in case the promoter does not comply with the orders passed by adjudicating officer and a separate complaint has to filed before the RERA Authority in such a case.

Conclusion:

Real Estate (Regulation and Development) Act, 2016 is welfare legislation and as any other social legislation, its purpose is to protect the economic and social position of individuals in a society and to protect the weaker sections against the atrocities of the powerful. The provisions contained in the act in form of subsection 3 of Section 14 supplements the purpose of the act and provide necessary safeguards to the buyers against the ill practices of builders due to which defect in property arises. The provision is a guarantee clause and obligates promoter to guarantee that he will take responsibility of his construction for 5 years and will rectify defects, if any arises, without charging anything from the allottees. The provision also works as a deterrent to the builder and forces the builder to ensure good construction quality, so to rid himself off from any extra future costs which might arise in future, in case of any defect in the project.