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Untangle your financial mess

We take you through the problems in seven areas of personal finance and offer solutions. A common thread that runs through these solutions is your need to understand the product.

Rakesh Rai, Narayan Krishnamurthyand Sushmita Choudhary | Print Edition: May 28, 2009

It's becoming common to blame the economy for most things. Delay in a housing project? Blame the slowdown. Credit card fraud? Peg it on the economy. No insurance? Of course, it's the economy. Job loss? The culprit is the slowdown. Can't afford a new computer? It's because of the downturn. Forgot the homework? Recession.

Actually it's more than a joke—the economic slowdown has hit every facet of our lives, including our investments and other financial products. The recent cut in credit limits for credit cardholders is a case in the point. The economy might have necessitated the cut, but it can hardly be blamed for the lack of communication to customers.

There are a number of other problems that seem to have cropped up for no rhyme or reason. Like banks refusing loans after having said yes, or realtors failing to pass on price cuts to earlier buyers. Fortunately, most of the issues that have come up in the past year or so have viable solutions.

We thought the time was right to look at these dilemmas in today's context and give you an idea about the possible ways in which you can resolve them. And because it's important to think long-term, we also consider ways in which you can ensure that such problems do not crop up in the future.

We take you through the problems in seven areas of personal finance and offer solutions. A common thread that runs through these solutions is your need to understand the product. As we have said often enough, an informed investor is an empowered investor.

Delay in delivery of the project | Project modified or shelved midway | Price cuts not passed on to existing buyers | Delay in refunds on cancellation of booking

The Way Out

The good news is that the law is on your side. According to lawyer Mantosh Sarkar, "In case of a delay, the buyer's right has been infringed and he has every right to claim compensation or come out of this agreement irrespective of any adverse clause." If the contract specifies a penalty in case of a delay beyond the stipulated time frame, investors have the option of invoking the signed contracts. The developer has to pay an interest on your deposit as agreed at the time of booking or refund your deposit. So, the first step is to speak to the developer.

If a standard complaint to the developer about a delay or denial of compensation does not work, you can take the matter to court. You can also take builders to court for high-handed and rough behaviour by their employees or for changing the project specifications during construction after taking deposits. "If you have a grievance against a builder, send a notice to him in writing. Do not worry if he refuses to accept your notice. The proof of sending is valid in the consumer court and the notice would be deemed to have been duly served," says Delhi-based consumer lawyer Rahul Bhatia.

You also have the option of approaching a consumer organisation with your problems and it can take up your cause against the builder. "Today, consumers have many avenues to lodge a complaint. We tell them not only where to complain but how to do so as well (what to tell the company or the court). If a consumer is being harassed, we tell him what to tell the person who is harassing him," says Sriram Khanna of Consumer VOICE.

If the problem is common to many buyers, you can use the power of the Internet to lobby for your rights. Even big real-estate developers have been forced to offer discounts and double the penalty offered for delays from Rs 5 to Rs 10 per sq ft because of sustained online campaigns. Approaching the local authorities can sometimes drive a real estate developer to be more proactive.

How To Avoid This In The Future

"While signing the agreement with the builder, ask him to spell out what is included in the force majeure clause, which can result in delays, and also the interest that you get on your deposit for delays," says Bhatia. It is also a good idea to look at the way the cost of property has been broken up because this is likely to have a bearing in case you seek refunds from the developer later; the greater the splits, the longer it will take to compensate.

"An important aspect to keep in mind is that the promise to deliver goods or services should be in writing—it can be a brochure or even a print-out of a Web page from the company's Website. This should be preserved because it will be your only proof to show what the company had promised," says Khanna.

Also, keep track of the progress of the project. "The trick is to be aware and keep visiting the project frequently to check the progress of the construction. If it is behind schedule and you post a comment on the Net, you will have a group by the time the project is officially delayed and this will offer a good bargain opportunity," says a member of an Internet group fighting for its rights against Parsvnath, a prominent developer.

Also, you should check that all the permissions required to start a project have been obtained, and that the developer has adequate finances to complete the project. Till the time a real estate regulator is put in place, buyers will have to rely on informal options like online forums, which are quicker and more viable than approaching a court of law.

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