Are you ready to invest in the growing real estate market in India but worried about the frauds and scams associated with it? No matter how much the real estate market in India grows, so will the scams linked with it will grow. Whether you are refinancing the mortgage, buying, or selling, the first thing you want to worry about is getting scammed. Unluckily, criminals are now getting more creative in how they fool customers.
We at Clicbrics believe that homeowners or real estate investors these days are more informed but, ironically, are still susceptible to property-related scams. From fly-by-night operators and legal frauds to untenable buy-one-get-something-free offers and false promises, real estate scams and frauds runs the overall gamut.
Here, we have listed below the 6 biggest property scams in 2022 to keep on your radar. Also, we will involve some workable Clic tips to help you prevent becoming the next victim of a real estate scammer!
Most Shocking 6 Property Scams in 2022 That You Need to Be Aware Of
With millions of people investing in real estate projects in India, real estate frauds and scams are becoming common occurrences. So, here we have got you covered with a listicle of the top 6 property scams in 2022 that every real estate investor must avoid.
1. Title Scams
The foremost and the most prevalent property scam in 2022 is Title Fraud. Title fraud generally happens with both developers and individual sellers. There have been many cases where scammers have duplicated title deeds of disputed or vacant real estate projects and sold them to innocent homebuyers.
And, you will be surprised to know that by the time the fraud is detected, the scammers are far out of sight, counting the money they have made out of fraud. A relatable genre of real estate scam is where homebuyers buy the property of their dream and later know that the project doesn't involve that part of the land the builder had specified as theirs when they booked it.
2. Fake or False Promises
With increasing cut-throat competition in the real estate sector, property builders are continuously trying to lure as many homebuyers in the initial stage of a project to fulfill their funding requirements. Advertisements with fake promises are a major part of it.
As per research, a Gurugram-based real estate developer was accused by more than 700 investors of embezzling more than Rs. 1000 crore in a real estate project. The real estate developer has assured 12% returns to the investors on invested money until possession. But unfortunately, the cheques given by the company bounced. Not only this, but the investors faced inordinate project delays, turning their property investment dreams into dust.
To ensure that you are not fooled, be informed about your rights and duties. Read more here: Rights and Duties of Homebuyers under RERA
3. Delayed Approvals
Another rising property scam in 2022 is delayed approval. There are plenty of cases reported when home buyers or real estate investors are left with nothing in their hands even after possession since multiple sanctions for utilities like water connection, electricity connection, etc. remain pending.
Problems like building with land-use violations, plots in unauthorised layout, floor area violations, etc. detected after agreement formalities and construction have started could surely lead to delays in title registration and other downstream approvals.
4. Deliberate Delays
Disappearing builders and project delays are other common occurrences in real estate scams in 2022. One of the top strategies unethical real estate builders resort to is to deliberately delay project completion until they get many real estate investors or homebuyers.
Apart from this, other scammers divert the money pooled from one real estate project to another, resulting in delays in both projects. Most existing or new builders have left a trail of wide-eyed buyers who've just purchased agreements to show and are kept on wait while they constantly pay huge rentals.
5. Assured Rental Returns
Does your real estate builder or developer assure you of high rental returns? If so, then you must beware of such frauds. Many real estate builders market their projects in India by assuring a fixed rental income from the property. Not only this, but some builders even go beyond limits and publish false rental listings of multiple properties over the internet.
In case the prospective property buyer does not conduct deep research, he/she might actually believe that the real estate, once bought, can easily be rented out for a fixed rental income. But the reality is something different! In reality, rentals are difficult to come by once the purchase is done, ultimately leaving the investors in a bumble.
[Also Read: 10 Hidden Expenses of Home Ownership Every Homebuyer Need to Know]
6. Deviation from the Approved Plan
Deviation from the approved plans or layout is one of the major issues homebuyers face these days. While a little deviation from the approved plan is permissible due to unavoidable architectural or technical difficulties, a homebuyer needs to know that this limit is only up to +5% or -5% of the approved plan. In fact, this is termed unintentional deviation.
However, when the deviation is more than the permissible limits, the real estate project faces challenges obtaining the Completion or Occupancy Certificate. Further, if the deviation is left unapproved by the development authority, the developer is under a constant risk concerning the project's demolition. Therefore, as a home buyer or real estate investor, you raise the alarm in such a situation or even file a complaint against the builder on unfair practices and forgery.
Also, you will be relieved to know that, at present, the property buyers have the right to demand compensation from the developer if the deviation is far more than the prescribed limits. It's important to note that the compensation can even extend to a certain percentage of the entire project cost.
ClicTips to Avoid Property Scams in 2022
"Is my realtor scamming me?" is the first question that pops up in every homebuyer's mind when investing in the real estate market. No amount of caution is too much for property buyers or investors who invest their hard-earned money in any real estate projects.
So, in order to help you, here are workable Clic tips that you must keep in mind when purchasing the property:
Clic Tip 1: Check the Background of the Builder
Clicbricster's understands the value of money you invest in the real estate market. And therefore, we suggest you check the builder's background while investing in a real estate project. Make sure you do a complete background check and research on the builder and its reliability. Use the power of social media and other online platforms to your benefit. Also, dont forget to check the completed project listings and track record and make sure that your real estate builder is a member of popular real estate bodies like CREDAI.
Clic Tip 2: Hire a Legal Advisor
Does the idea of hiring a legal advisor doesn't entice you much just because they charge a fee? They do charge a fee, but the spendings on legal advisors are worth it! It is crucial to hire the services of a renowned legal advisor and discuss all property-related things with him/her before signing the agreement. With the help of the legal advisor, make sure all the government approvals are in place, and if the builder fails to show you the set of approvals or has partial approvals in place, we advise you to think twice before investing in such a real estate project.
Clic Tip 3: Choose RERA Approved Projects
We at Clicbrics highly believe in RERA-approved properties, and therefore we deal in the same. If the project you are considering is RERA approved, the chances of scams and fraud are relatively low since RERA has its own guidelines for the projects to come on board and get RERA approved.
To know more about UP RERA, read a blog on “Detailed Guide to UP-RERA: Features, Documents Required and Charges”
Clic Tip 4: Check the Delay Clause
Last but not least, we recommend you check the delay clause in order to avoid being a part of a real estate scam in 2022. Before signing the sales agreement with the builder, make sure there's a delay clause in the agreement. Besides that, ensure that the construction stages with deadlines are crystal clear, along with a copy of the approved layout or plan. Also, keep a regular eye on the progress of the project you have invested in!
To avoid scams while investing in property in India in 2022, as a home buyer or investor, you are recommended to follow the tips stated above. Also, in current times, many real estate developers have built goodwill from a handful of great projects, in the beginning, only to default on projects introduced later. Thus, a healthy dose of awareness can go a long way in protecting your real estate investment from scams that exist in the real estate market today.