Landing in a spot over layouts

While the Madras High Court has granted partial relief to realtors by allowing the resale of unapproved plots, the ban that lasted several months had put lakhs of people involved in the real estate trade to great difficulty.

On many occasions, desperate real estate brokers had even resorted to making murky illegal sales, exploiting unsuspecting buyers. Gullible people were easily persuaded by real estate companies and brokers to buy the illegal plots and layouts, which could not be resold or registered as their property. Even today,legal advisors warn prospective buyers of plots to be careful. 

Sources said there had been instances when a single plot was sold to two individuals. As registration was not possible, documents would be exchanged in return for cash payments. However, the sale was never legalised which led to dubious double sales and left owners hanging. 

Certain owners of the layouts who held a small number of plots target multiple customers. For instance, if a property owner had 20 plots, he would exaggerate his holding to potential customers, claiming ownership of no less that 40 plots. Once 40 buyers agreed to buy and invest a particular amount, the property owner would handover 20 plots to the first 20 buyers, while the remaining 20 buyers were given plots at another spot, which would not be in a good condition. 

Even today, many buyers do not check whether the layouts are approved by Directorate of Town and Country Planning (DTCP) or Chennai Metropolitan Development Authority of India (CMDA). “Some companies register their layouts with DTCP, but they sell the plots at excessive rates, claiming that the plots were approved by CMDA,” said a source.  

However, with respect to the sale of flats and buildings, members from Credai refuted allegations of wrongdoing. S Sridharan, vice-president, Credai, Chennai, said, “There is absolutely no fraud nowadays and Credai’s norms are very stringent. However, buyers should verify details of the flats and buildings, when they want to buy them.”

Likewise, owners of real estate firms denied such allegations, claiming that such incidents have drastically reduced now, as people are more aware of procedures when they purchase plots. VA Abraham, owner of New Emerald Properties, said, “Earlier, there was no internet facility and people lacked awareness. So, instances of  duping were common then. But, the picture is very different now. Buyers check all the details, like number of layouts and registration details from their homes. So, there is no cheating.” 

Experts say one should consult a good lawyer and do background verification of the promoters. Further, customers should be very watchful and look for clues that will expose frauds. Elephant G Rajendran, Advocate, Madras High Court said, “People should first check the layout number and whether it has been registered properly. After all the procedures, the buyers should seek opinion from government lawyers.” He cautioned against rushing to buy layouts. 

There could be various kinds of fraud at different levels during presale and post-sale. Customers could get cheated if they are not aware of the rules of the real estate industry, he warned.

A plot should not encroach a road, street or any other land over which the applicant does not possess ownership right, including waterbodies belonging to government and lands affected by earlier Tamil Nadu Urban Land (Ceiling and Regulation) Act, 1978. If it is not approved by CMDA or DTCP, then it is considered an unapproved plot. The Madras High court had already directed the authorities not to give approval or permission to convert agricultural lands into layouts and prevented registration of the unapproved land and buildings. It may be noted that the Madras High court’s order, which recently relaxed the ban for individual land owners, who have already purchased and registered it, can resell them, was a big relief. However, the Court has not lifted the ban on promoters.