Have you ever heard of a home buyer being charged an interest by a developer on a balance amount that the home loan company is not ready to pay due to incomplete work? Here is one such example. According to a complaint file by one such buyer, Mumbai-based developer Lodha Group has been demanding interest on the amount, which is not paid by the home loan company.
This case is related to Lodha’s ‘Aqua’ project near Mumbai that is (still) being advertised in the media. Lodha launched the Aqua project in 2007 and work is still going on. The developer initially had promised possession by June 2009, which subsequently was deferred to September, October, November, December and so on.
The Lodha Group is planning to enter the capital markets. According to a draft prospectus filed by Lodha Developers Ltd with the Securities and Exchange Board of India (SEBI), the Aqua project, being developed by its subsidiary Cowtown Land Development Pvt Ltd, is estimated to be completed by June 2010. This shows the false promises made by the developer to various customers.
According a complaint filed in the public domain by one of the buyers, he bought a flat in Pacific A in 2007. “For the past nine months I am struggling to get the possession. Every time I call them, they promise me a date and then easily postpone it without even informing me,” said the buyer in his comment posted last month.
Usually, for any under-construction residential project, home loan companies pay the loan amount after receiving a demand letter from the developer showing the progress of that particular project. Lodha had sent such demand letters to some home loan companies for its Aqua project. In the past, the officials from home loan companies have refused to disburse the loan amount as per the demand letter from Lodha citing false claims by the developer about the progress of construction.
However, the developer wants the buyer to pay interest at a rate of around 12%-18% on the amount not paid by the home loan company as per its demand. It has already collected the interest charges from some of the buyers. One such buyer was forced to pay an interest of Rs58,000 and after the buyer’s home loan provider refused to disburse the next instalment, the developer is asking for another Rs80,000 as interest on the delayed payment. Executives of Lodha have also refused to accept the next loan instalment from the buyer unless they get the interest.
Not only this, the developer has been charging separate amount for parking space. Another buyer was forced to pay Rs2,70,000 in cash for parking space within a week after booking a residential apartment. In case a customer refuses to pay this amount and wants to cancel his booking, he has no chances of getting a refund on the original booking amount.
According to complaints by customers available in the public domain, it seems that a number of them are facing a similar problem. They are neither getting the possession of their flats, nor are they sure about the natural amenities that they have been promised.
Moneylife sent a detailed questionnaire to Lodha Developers to which they replied that they “take care of their customers” and did not provide answers to our other questions. "We have a strong customer-redressal mechanism which ensures that customer concerns are handled and resolved with empathy. At Lodha we also ensure that all information is made available to customers so as to enable them to make an informed decision," said an email from a company spokesperson.
Earlier also the developer could not give any answers to our specific questions regarding their claims over providing natural amenities for the Aqua project. We have reported the same under the headline “Will there be water in Lodha's 'Aqua' project?” (read more here)
After our earlier reports, market regulator SEBI had also questioned the developer on its claims. According to news reports, Lodha has received the final set of comments from SEBI, and will be updating its draft red herring prospectus accordingly.