The Indian real estate market is currently taking strides in price appreciation and investment potential, attracting several buyers from every corner of the country. However, amidst these surging real estate prices and lucrative deals lies the threat of property scams. Many potential buyers are often duped into making a large investment by dishonest developers and fake listings, only to be let down by fraud in the end.
To draw the attention of customers and investors, these scammers also use a variety of tricks such as guaranteed returns, bait-and-switch, mortgage deals, and more.
In this article, we will delve into some of the common property scams tricking the buyers in the modern times and provide practical solutions to avoid potential pitfalls in the future.
Types Of Property Scams In India
Property scams in India are made to deceive buyers and investors using various methods. Check out some of the common types of property frauds in India.
- Title Fraud
In this scam, the fraudster will forge property documents and represent himself as the property’s owner or power of attorney holder. Typically, a scammer preys on properties that are either abandoned for an extended period of time or whose owners are traveling outside of the state or country.
- Assured Returns
Many developers guarantee 12-15% return on investment annually till the handover of the property. Some, even promise assured returns even after the possession and offer you post-dated cheques. But the real problem arises when any of the cheques bounces.
- Inordinate Delays
This is one of the most common scams happening in under-construction properties. Although, there are situations when delays are justified such as during labor or material scarcity, a natural disaster, sociopolitical unrest and others.
But most of the time, builders provide false excuses because of their greedy intentions. Owing to the lack of regulation, the builder takes money from investors and uses it to purchase more land rather than for construction of the project.
- False Promises
The builder might make you an irresistible offer at the time of sales. What more could a buyer possibly ask for? You may feel that you are 100% protected but hold on and think before you sign the deal. Aren’t these just mere promises? What if he is just using your money to generate higher returns?
- Forced Cancellation
In a rising market, the developer will look for any and all problems with you and your payments. He will not stop trying to find reasons to cancel your booking so that he can later sell that property to someone else at higher prices.
Some developers deliberately delay their projects so that potential buyers panic and cancel their bookings immediately. In such a case, the builder can also impose a cancellation penalty in addition to using the investor’s money without charging interest.
- Pre-Launch Scams
Under a pre-launch scheme, the builder provides a limited number of units at discounted rates while he waits for approval. In an ideal pre-launch project, the builder should have applied for approvals and there should be no reason for that project approval to be rejected. However, some developers use this scheme as bait to grab the attention of buyers. They sell the units without applying for approvals and later use the fund to purchase more land parcels and earn higher returns.
- Deviation from Plans & Specifications
Almost every developer in India showcases stunning model apartments and makes lofty promises about features and amenities when they go up for sale. However, by the time you are offered possession, buyers can notice cost cutting across the complex – in common areas, amenities, parking space etc. Sometimes, builders increase the property’s super area without increasing the real carpet area in an attempt to get more money from investors.
How To Avoid These Common Property Frauds?
A buyer can take several precautions to avoid scams while buying a property in India. Here is a comprehensive list of important steps that will help you in protecting yourself from fraudulent activities.
- Do extensive research: – Conduct a thorough research on current market trends, location of the property and seller’s reputation, Make sure there are no lingering disputes by confirming the property’s ownership and title.
- Visit the property: It is important to physically view the property before committing to anything. Check the neighborhood, facilities, state of the property, and any possible structural damage.
- Verify the property documents: Read all property-related papers thoroughly, such as building blueprints, sale agreements, and title deeds. Seek legal help in order to confirm the legitimacy of these documents.
- Avoid cash transactions: Never transfer big amounts or cash without the necessary paperwork. Keep track of every transaction by keeping receipts and recording every bank transaction.
- Seek legal advice: To evaluate contracts, agreements, and legal papers, speak with an attorney. A legal expert is able to identify potential risks, gaps, or provisions that could cause problems down the road.
- Stay Vigilant: Throughout the real estate transaction, buyers need to be alert. During the process, if you feel pressured by your developer or uneasy at any time, it’s best to take a step back and reassess.
Conclusion
To sum up, there are several different types, methods and forms of property scams in India. Fraudsters lure potential buyers by offering unrealistic price deals to make an advance payment. Therefore, it is important that buyers conduct extensive research, double-check documentation, and consult with an expert in order to prevent property fraud. If you notice anything fishy at any stage of the buying process, you should back off. Overall, the best defense against property frauds is to remain alert and watchful.