Introduction:
Real Estate disputes are becoming more and more common around the world. From settling mortgages and getting a proper lease to claiming your inheritance in a dead person’s will and paying your rent in a pandemic era, property disputes became more common when affording property became easier with all these low-cost and interest-free loans. Among the common disputes, we can identify some more common than the other, including, but not limited to, delay in possession exceeding the date said, modifying the layout and design of the plot without the owner’s permission, environmental concerns, and fraud on the sellers part.
The most obvious solution to all these problems was the establishment of the Real Estate Regulating Authority (RERA) through the RERA Act in 2016. The RERA became the ruling authority in these property disputes between constructors and customers and were the competent authority to deal with problems.
The establishing of the RERA has gone a long way forward in allowing for faster and more reliable dispute resolution. RERA will be explained in more detailed sections.
RERA and its Functions
The RERA Act was passed by the Indian government in 2016 to bring more transparency and accountability into the real estate and construction sector. Customers can post queries on the status of completion of upcoming projects which they have a stake in and constructors are supposed to be accountable and provide a clean and transparent answer on it. This was done to solve common disputes in this sector and ensure that it doesn’t happen again. RERA also has the authority to adjudicate and hear matters regarding these issues.
RERA has standardized the industry and therefore residential and commercial construction is also now governed under the rules set by the RERA. It seeks to offer benefits to both, the buyers and the developers/realtors. While the buyers benefit from the transparency and accountability that the developers/realtors have to provide under the rules set by the RERA, the developers/realtors benefit from a streamlined grievance redressal mechanism and a single-window period for approval and clearance[1]. Moreover, the developers/realtors and promoters/realtors are graded based on their timely completion of projects and customer satisfaction. Therefore higher the score, more the opportunities.
RERA also has adjudicating authority and can resolve disputes. It appoints adjudicating officers and these officers have the authority to listen to and solve these disputes.
Each state has a RERA body and each of these bodies, in consultation with the state government appoint adjudicating officers who preside over these disputes and have the authority to decide the compensation in case of any mistakes. Adjudicating officers have the power to decide if a case is maintainable or not and dismiss cases as it deems fit. Therefore the first step in filing for compensation in the case of incorrect information given or for delay in possession of the property, maintainability has to be proved first so that the adjudicating officer won’t be able to dismiss the case filed against the developer(s). They also have the authority to decide the amount of compensation that can be awarded to affected parties. Adjudicating officers can also summon people to present evidence and statements in court if they have material that is relevant to the case at hand.
When the adjudicating officer is satisfied that there has been an error from the developer’s side, he/ she will rule that the developer has to pay compensation to the aggrieved buyer. Compensation claims can range from delay in delivery and possession of property or defect in the property or incorrect claims in terms of the property. The adjudicating officer also has the authority to award compensation and interest to the developer(s) due to the conduct of the buyer(s). In case the buyer defaults in his/her payment for the delivered property and if there is an adverse effect due to this act, the adjudicating officer can decide on a compensation claim and if the payment is not made for a long time, he/she can add an interesting claim to this which would make the buyer pay interest on top of the compensation[2].
It is also to be noted that the Adjudicating officers under RERA authority are the apex body when it comes to property disputes that they have authority over. No other courts or other bodies have jurisdiction over those matters that RERA has authority over. Injunctions, compensation, interest claims cannot be given by courts in this matter.
Alternate Modes of Dispute Resolution
One must have in mind that litigation is a strenuous, taxing, and expensive process. Sometimes payment of the fees of the representing lawyer would dwarf the compensation that you’re seeking for. Therefore it may not be the most feasible option for some people. When you have the option of settling amicably and also ensuring that both parties can resolve the dispute adequately, negotiation is a viable concept.
- Negotiation
In Negotiation, two parties sit down and try to settle their differences in an amicable manner. Here the parties put forth their grievances and expect it to get redressed by the other party. To succeed with negotiation, there must be inherent trust between the parties and there must be a willingness to compromise. A rock-hard and arrogant attitude won’t allow for a good round of negotiation. Negotiation can also be preferred when the parties don’t want a third party other than their representatives to know about their affairs.
In every contract between the buyer and the developer, a clause is inserted that allows for the two parties to negotiate and come to a settlement in case of a dispute. They can also choose to go for mediation or conciliation. Mediation and Conciliation are two types of negotiation where there is a third party present to facilitate the process of negotiation.
In Mediation the third party present to facilitate the process is known as a mediator and he/she offers absolute impartiality and privacy to both the parties. The mediator’s job is to make the parties at ease and allow them to come to their settlement. At no point in time will the mediator be allowed to interfere in the arguments and influence it in any way or offer their own opinions in any way. If the parties cannot agree in the first round, there is always an option for coming back for more rounds of mediation in case they have hope that the dispute can be resolved through more discussion.
In Conciliation the third party is again present to facilitate the process, but here he/she is here to listen to both the parties and offer impartial suggestions which the parties can accept or not. In conciliation, the third party is expected to listen to the arguments and the needs of both parties and come to an impartial solution. The two parties have the discretion of choosing to accept or reject the suggestion put forward by the conciliator. In the case that parties agree to the process of conciliation, a signed settlement agreement between both parties can be drafted which under the Arbitration and Conciliation Act 1996 would be a binding agreement.
Essentially negotiation is just multiple rounds of discussion where both the parties come to an amicable solution, albeit with a bit of compromise from both sides. Without compromise, there can be no solution in negotiation and therefore, it is very much required.
- Arbitration
Arbitration is a cheaper alternative to litigation and is more preferred because of the speedy judgments. While the cheaper cost argument can be debated because most of these arguments are based on “ad valorem” basis[3], the speedy judgments cannot be debated on.
Indian courts have a backlog of over 45 lakh cases and it is a futile exercise in filing a case in courts when there is a problem in the construction industry where time is gold. It is highly illogical to file a case in court and wait for days or weeks for your case about delayed possession to be heard. This matter can be settled in arbitration courts where the process to come to a judgment is easy and less time-consuming. It also offers full confidentiality.
So people who like litigation but hate the time-consuming part can always choose the option of arbitration.
- Expert Determination
In this process of dispute resolution, a technical expert in the construction sector sits down with both parties and offers his/her expert solutions. This process of dispute resolution is usually followed to resolve disputes in the first attempt itself. Parties form agreement which will allow them to challenge the decision of the expert in either arbitration or litigation. However, if both the parties agree to the expert’s decision, his/her decision shall be final and binding in this case and the contract will have to be reworked to accommodate any changes. This process is usually chosen because of expert expertise and to solve without a cash crunch.
Conclusion
The real estate industry is rapid and requires utmost diligence, care, and sincerity to keep it working flawlessly. Margins of error will always be present and therefore dispute resolution is a very important part of this industry and a specific clause is always added in all contracts that allow for alternate modes of dispute resolution. Litigation is a time consuming and an expensive process. All courts are swamped with a deluge of past and present cases and therefore it is illogical to settle property disputes in courts. Therefore there is an ultimate need for efficient and trustworthy alternatives in dispute resolution. This is where the concepts of negotiation, mediation, conciliation, arbitration, dispute board, and expert determination come in.
Each of these resolution methods is proven to be effective and satisfactory and therefore it is important to pay heed to these concepts.
References:
[1] Legistify.com.2020. Functions Of RERA Authority And Adjudicating Officers Under RERA Act | Legistify. [online] Available at: https://www.legistify.com/blogs/view_detail/functions-of-rera-authority-and-adjudicating-officers-under-rera-act/.
[2] Chaurasia, V., 2017. Role Of Adjudicating Officer In Granting Compensation Under RERA. [online] TaxGuru. Available at: https://taxguru.in/corporate-law/role-adjudicating-officer-granting-compensation-rera.html.
[3] Mullick, S., Dalal, N. and Gabriel, Y., 2016. Modes Of Dispute Resolution In The Construction Sector – Real Estate And Construction – India. [online] Mondaq.com. Available at: https://www.mondaq.com/india/construction-planning/504608/modes-of-dispute-resolution-in-the-construction-sector
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