• Stuck in Subvention Scheme

I have invested in a reputed Project via Subvention in May 2019. On contract builder mentioned that they will pay interest to Bank until June 2020, while signing contract I did ask Builder what if I don’t get my flat by June 20, on that Builder verbally said that they will extend interest in that case. The contract does mention that possession will be offered in Oct 2022. Now my EMI’s are starting on 1st July, Builder is asking that I can go for RBI Moratorium until Aug 20 (but it will keep increasing my interest component) thus I don’t prefer that.

Do I have any option left to force builder to keep paying my interest component, otherwise what is the use of Subvention plan? Not to mention that Government has already stopped Subvention plans.
Asked 11 days ago in Property Law
Religion: Hindu

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19 Answers

You don’t have any written commitment from builder that they will pay interest to bank beyond June 2020 

 

2) you cannot force builder to continue to pay interest after June 2020

Ajay Sethi
Advocate, Mumbai
75799 Answers
4532 Consultations

5.0 on 5.0

Hi, as per RERA provisions the builder has to abide by the conditions of the agreement..It is advisable to file a complaint under section 11 of RERA for seeking PRE-EMI till offer of possession..I have other cases with Supertech where complaint has been filed regarding delayed possession as well as pre-EMI ..

Hemant Chaudhary
Advocate, Gurgaon
4553 Answers
37 Consultations

4.9 on 5.0

Hi 

In your case the builder has misled you by offering subvention till June 2020 whereas in the contract, he has offered to grant possession in October 2022. 

You may escalate this matter to RERA on the following grounds:

1) Subvention scheme is applicable till possession date and as such the builder is liable to bear the costs of interest till possession. 

2) With reference to your liability to your bank, you are liable to pay EMI regardless of whether builder has granted you possession or not.

3) Given that  the present moratorium offered from March 23 to August 30, comes with an added interest cost of 9% per annum (if you have availed loan from a nationalised bank), you are right in not accepting the moratorium 

4) Please issue notice to your builder asking him to pay interest component under subvention scheme till Possession and also escalate the matter to RERA. 

5) In law, though the contract mentions 2 different dates (i.e june 2020 and october 2022), builder is liable to pay interest till possession.

Hope this information is useful. 

Rajgopalan Sripathi
Advocate, Hyderabad
1890 Answers
345 Consultations

5.0 on 5.0

You can try serving him with a legal notice for paying the interest further.

Chances are that they will refuse.

Than you can make a representation to the registrar cooperative Societies office. 

Rahul Jatain
Advocate, Rohtak
3287 Answers
4 Consultations

4.9 on 5.0

Since agreement specifically mentions that builder will pay interest till June 2020 only and not till date of delivery of possession you would  not be able to recover further interest from builder 

Ajay Sethi
Advocate, Mumbai
75799 Answers
4532 Consultations

5.0 on 5.0

Hello,

First, please tell that Builder is registered under RERA Act?

If he is registered under RERA Act, you can file a complaint before the authority under RERA Act for compensation, harassment, interest for the delay period and others.

Second, if builder is not registered under RERA Act, you can file complaint before Consumer forum (District, State or National Consumer forum as per pecuniary Jurisdiction) for deficiency in service and claim interest for delay period, or refund the amount which you have been paid to the builder.

 

Ashish Pandey
Advocate, New Delhi
14 Answers

Not rated

Hi,generally it is mentioned till ( date ) or offer of possession..It is advisable to share the agreement for better understanding and guidance 

Hemant Chaudhary
Advocate, Gurgaon
4553 Answers
37 Consultations

4.9 on 5.0

You need to recover the same through filing suit if tte builder is not acting as per the assurance

Prashant Nayak
Advocate, Mumbai
19636 Answers
35 Consultations

4.4 on 5.0

1. Both of you are to be strictly guided by the stipulation made between you and the builder. 

2. In the wake of Covid- 19 any relaxation or modification of such terms should be made consequent to writing a supplementary agreement. 

3. So the terms which are found to be suitable to you but in breach of present agreement must be done in consonance with both of you as stated above. 

Decide accordingly. 

Devajyoti Barman
Advocate, Kolkata
20197 Answers
286 Consultations

5.0 on 5.0

1. The builder shall lay as per the agreement as the possession date is clearly mentioned in agreement.

2. During singing of the agreement you have clearly agreed to the terms of the agreement.

Shubham Jhajharia
Advocate, Ahmedabad
24894 Answers
98 Consultations

5.0 on 5.0

The subvention scheme is just an illusion, in fact the builder collects the amount he spends on the customer through this scheme from the customers indirectly.

You may note that nothing comes t free of cost.

Subvention schemes are offered by the builders to their home buyers, through tie-ups with banks.

The scheme allowed the buyers to book the property by paying 5% to 20% of the amount, upfront.

 Non-payment or late payment of EMI by the builder can spoil your credit score as the loan is in your name. You may also face project delays. On any consumer complaint forum, you can find a large number of people complaining about project delays under such schemes.

 A subvention scheme could be a double-edged sword if you are staying on rent. You may have to bear the burden of both rent and EMI in case the developer fails to deliver the project on time.

You may end up paying much more than the price of the property in case of delay. 

T Kalaiselvan
Advocate, Vellore
65774 Answers
858 Consultations

5.0 on 5.0

Some subvention schemes are for only a fixed period, after which the buyer has to bear the interest cost. "Subvention schemes tempt buyers to buy something they may not otherwise buy. The risk involved is that the buyer is expected to start paying EMIs after the subvention period is over, even if he/she has not yet received the possession of the property. In such a scenario, the customer faces the risk of overpaying or, in some cases, risk pertaining to delivery of the property.

 There are chances that the funds disbursed by the bank are used for financing other projects. "In today's scenario, where over 10 lakh houses are delayed, home loan companies can't work in a traditional manner where they force buyers to pay interest on time on projects which are delayed. As of now home loan companies don't have any responsibility to ensure that the project for which the loan is taken is being built or not.

Therefore in your situation, you cannot demand the builder to pay the interest till handing over possession.

 

if you opt for a builder’s scheme that involves paying 9-20% up front, with the balance being funded by your independent loan at the time of possession, you don’t risk any violation. If a lender is involved at inception, you need to be cautious. “After the NHB ban, some builders are offering to reimburse the interest to the customers instead of the lender.

 

 

T Kalaiselvan
Advocate, Vellore
65774 Answers
858 Consultations

5.0 on 5.0

- As per law, both parties are bound with the clauses of the agreement entered at the time of investment . 

- Actually , a builder used to hide the real rule of sanction of loan from a Bank, as the bank will sanction the amount in the name of the buyer , and not the builder , and generally at the time of construction , bank used to credit the account of builder  with 80% amount of loan.

- Hence, a buyer become liable to pay the emi , if the builder stopped the same as promised at the time of taking amount. 

- Verbal agreement is not valid in the presence of a written agreement , and hence you cannot take legal action against the said builder on the ground of verbal promise to extend interest. 

- Further , Subvention Schemes has been banned by RBI on 3rd September, 2013.

- However, you should issue a legal notice to the builder to pay the interest till possession , and thereby warn that in case of refusal , you will approach the RERA , and Consumer court as well on the ground of deficiency of services. 

Mohammed Shahzad
Advocate, Delhi
3303 Answers
39 Consultations

5.0 on 5.0

Hi,I believe your legal query has been resolved..However we can approach RERA for seeking relief ..Also it is advisable to issue a prior legal notice to the developer to pay the Pre-Emi..

Hemant Chaudhary
Advocate, Gurgaon
4553 Answers
37 Consultations

4.9 on 5.0

No, as per the agreement, builder was liable to pay till June 20, so you have no legal option to force builder to continue pay interest. And anyway, subvention scheme is closed last year by govt.

 

Yogendra Singh Rajawat
Advocate, Jaipur
19328 Answers
25 Consultations

4.5 on 5.0

Why you will pay the interest. Tell builder to pay the EMI till possession is given to you.  That is the subvention scheme. 

Kallol Majumdar
Advocate, Kolkata
2683 Answers
4 Consultations

5.0 on 5.0

No you don't have option to force builder for payment of EMI's as his term for payment comes to an end in June 2020 as per scheme documents.

 

Mohit Kapoor
Advocate, Rohtak
8662 Answers
3 Consultations

5.0 on 5.0

This is a very weird agreement that he made and executed. Possession is in 2022. You should file a complaint against him in the RERA tribunal immediately. This amounts to fraud and criminal breach of trust.

Rahul Mishra
Advocate, Lucknow
8970 Answers
15 Consultations

5.0 on 5.0

Definitely. It should go beyond 2020.

Rahul Mishra
Advocate, Lucknow
8970 Answers
15 Consultations

5.0 on 5.0

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