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Sep, 2024
10 Types of Property Frauds in West Bengal to Avoid during Flat Purchase
“10 Types of Property Frauds in West Bengal to Avoid during Flat Purchase” is clearly the most asked question for any home buyer in West Bengal.
Table of Contents
Property Frauds in West Bengal
The Indian real estate sector is witnessing exponential growth, with projections indicating a market value expected to reach INR 65,000 crore by 2040. The real estate sector in West Bengal, like many parts of India, is looking extremely promising at this moment. However, amidst this growth, property frauds in West Bengal remains a significant concern. While the boom in real estate sector offers opportunities for investment and homeownership, it also harbours risks of fraud and deception. To navigate the complex landscape of property transactions, it’s crucial to be aware of the various types of property frauds in West Bengal that buyers may encounter. Here are 10 types of property frauds to avoid during flat purchase in West Bengal, along with detailed explanations and precautionary measures:
1. Title Fraud
Title fraud in property transactions poses a grave threat to the legal ownership rights of homeowners and is considered one of the most serious forms of property frauds in West Bengal. Scammers employ various tactics, including forging property title documents, to deceive unsuspecting buyers and exploit vacant or remotely-owned properties. In one scenario, fraudsters fabricate title documents, claiming ownership or power of attorney over the property, and subsequently sell it to innocent buyers. This deceit often targets properties owned by absentee landlords or those left unattended for extended periods. Once the scam is executed, the fraudster absconds, leaving buyers in legal limbo. Similarly, unscrupulous builders perpetrate title fraud by selling projects on land they do not own, promising lucrative returns and enticing investors with freebies. Victims of such scams realize their plight only after investing substantial sums, finding themselves duped by false promises and manipulated title documents. Additionally, the misuse of power of attorney (PoA) further exacerbates title fraud, with fake representatives selling properties on behalf of absent owners, exploiting the inability of sellers to oversee transactions in person. Such fraudulent practices jeopardize the financial security and legal standing of homebuyers, necessitating stringent measures to safeguard against title fraud, including thorough due diligence, verification of property documents, and engaging reputable developers with a proven track record of integrity and transparency.
To fight against such property frauds in West Bengal or to safeguard yourself during buying a property in West Bengal, get extensive legal counselling by an experienced property lawyer in West Bengal.
2. Project Plan Deviations
Navigating the real estate market poses challenges, with deviations from promised project plans emerging as a prominent concern for homebuyers. While minor discrepancies within a limited range are deemed permissible due to architectural or technical constraints, extensive deviations present significant complications. Such projects encounter hurdles in obtaining essential certificates, potentially leading to property demolition if not approved by relevant authorities. Despite regulatory measures like RERA, deviations persist, necessitating heightened vigilance from buyers. Builders often entice buyers with impressive model apartments and promised amenities, only to deliver subpar facilities upon possession. Common areas, parking spaces, and individual unit layouts frequently deviate from initial promises, leaving buyers grappling with unmet expectations and compromised quality. In response, buyers must exercise thorough scrutiny and assertive action against developers engaging in deceptive practices, safeguarding their investments and rights.
To fight against such property frauds in West Bengal or to safeguard yourself during buying a property in West Bengal, get extensive legal counselling by an experienced property lawyer in West Bengal.
3. Guarding Against Encroachment
Encroachment emerges as a significant threat in the real estate landscape, posing grave risks to unsuspecting buyers. Beyond title fraud, encroachment represents a serious form of property malpractice wherein developers illicitly occupy unassigned land for construction purposes. This surreptitious activity often goes undetected, with developers clandestinely continuing projects while keeping buyers uninformed about the encroachment. Consequently, homeowners find themselves unwittingly residing on illegally obtained land, a violation of Indian law. Compounding the issue, since the property is registered in the homeowner’s name, recouping losses from the developer proves challenging. Plotted developments are particularly vulnerable to encroachment schemes, with local land mafias targeting unoccupied or absentee-owned land parcels. Scammers exploit loopholes by taking properties on long-term leases or forging ownership documents, perpetuating the cycle of fraud. To mitigate the risk of encroachment, buyers must diligently verify property boundaries and consult resources like the RERA website and town planning bodies for comprehensive builder information, thus safeguarding their investments and property rights.
4. Rushed Sales Tactics
Rushed sales tactics are often employed by real estate marketers to create a false sense of urgency, compelling investors to make hasty decisions. These tactics capitalize on the fear of missing out, with claims of limited availability or imminent price increases. By pressuring buyers to act quickly, they obscure vital information and manipulate emotions to drive sales. However, succumbing to such pressure can lead to regrettable decisions and long-term financial repercussions as the buyer don’t get required time for the due diligence. While sellers may have genuine reasons for urgency, buyers must exercise caution and conduct thorough due diligence to avoid falling victim to rushed sales tactics. Taking the time to research and understand the property ensures informed decision-making and guards against potential property frauds in West Bengal.
5. Pre- Launch Fraudulent Scheme
Pre-launch schemes in the real estate sector can often be a breeding ground for fraudulent activities, posing significant risks to unsuspecting investors. These schemes typically involve enticing investors with promises of discounted rates and high returns on investment before the project receives necessary approvals. While legitimate pre-launch offers exist, fraudsters exploit this strategy by selling units in unapproved projects or without any intention of seeking approvals. In such cases, the developer aims to raise funds quickly, often diverting them for other purposes instead of project development. Investors must exercise caution and thoroughly vet pre-launch offers, ensuring that projects are registered under RERA and possess all requisite approvals. Additionally, scepticism towards exaggerated promises of returns can help mitigate the risk of falling prey to pre-launch scams.
6. Deceptive Practice of Bait and Switch
Bait and switch, a cunning tactic employed in real estate sales, involves enticing potential homebuyers with advertisements showcasing affordable properties. However, upon inquiry or engagement, these buyers are steered towards higher-priced alternatives, diverging significantly from the initially advertised options. Complaints regarding this scheme often revolve around properties advertised for sale or rent, only to be discovered as unavailable or off-market upon contacting the agent. Such deceptive listings persist online even after the property’s actual sale, underscoring the need for thorough due diligence when navigating the home-buying process. Vigilance is crucial in scrutinizing questionable listings and conducting comprehensive research on property developers. Assessing the developer’s track record, reputation, and project details can help mitigate the risk of falling victim to bait and switch tactics. Prioritizing clarity and transparency in property transactions is essential to safeguarding one’s investment and avoiding fraudulent practices.
To safeguard yourself against such property frauds in West Bengal during buying a property, get in touch with an experienced property lawyer in West Bengal.
7. Pitfalls of Assured Returns
Assured returns schemes have become increasingly prevalent in the real estate market in West Bengal, with builders enticing investors with promises of steady returns ranging from 12-15% per annum until property handover, and even beyond possession in some cases. These schemes often involve the issuance of post-dated cheques at the time of investment. However, the true challenge arises when these cheques bounce, leaving investors in a precarious financial situation. Developers resort to such tactics to remain competitive in the market, offering attractive deals like assured rental returns on under-construction properties. Despite the allure of these promises, many investors discover post-possession that the actual rental yield falls short of expectations. Builders manipulate rental listings to inflate figures and entice more buyers, leading to disillusionment among investors upon realizing the discrepancy. Moreover, schemes offering assured returns typically come with higher property rates compared to similar options, making it essential for investors to exercise caution. Additionally, the income generated through such schemes is categorized as income from other sources, further complicating financial matters for investors.
As regulatory measures aim to curb such practices, prospective buyers must conduct thorough research and exercise prudence when considering investments tied to assured returns schemes in the real estate market. An experienced property lawyer in West Bengal can help the homebuyers to protect themselves against such property frauds in West Bengal.
8. Unwarranted Delay
In the realm of real estate, inordinate delays in possession after payment represent a pervasive issue that continues to plague homebuyers, particularly in the domain of under-construction properties. While certain delays may be justifiable due to factors like labour or material shortages, natural disasters, or socio-political unrest, many builders resort to providing false excuses driven by their own profit motives. The lack of regulatory oversight enables unscrupulous builders to divert funds from investors towards the acquisition of additional land rather than the intended purpose of project construction. Despite the implementation of regulatory measures like RERA, which aims to curb such malpractices, the problem of prolonged delays persists, leaving homebuyers in a state of limbo. Builders often attribute delays to bureaucratic hurdles in obtaining approvals from civic authorities, deflecting accountability from their own mismanagement. Consequently, homebuyers find themselves in precarious situations, having already invested substantial sums with no tangible progress in sight. The ramifications of these delays extend beyond financial strain, as affected individuals contend with the added burden of paying rent alongside interest on home loans. Moreover, the legal recourse available to aggrieved parties often entails protracted legal battles, further exacerbating their plight.
With numerous instances of delayed projects inundating courts across West Bengal, prospective homebuyers must exercise vigilance and due diligence under the guidance of an experienced property lawyer in West Bengal to mitigate the risks associated with inordinate delays in real estate projects or any such property frauds in West Bengal.
9. Fake Promises
Fake or false promises, a common tactic employed by developers to entice potential buyers, pose significant risks to unsuspecting investors in the real estate market. Builders often capitalize on the competitive nature of the market by making exaggerated claims and offers designed to inflate the perceived value of a property. These promises may include assurances of below-market rates, guaranteed returns on investment, swift delivery within unrealistic timeframes, buy-back schemes, and penalty clauses for delays. However, it’s essential for buyers to exercise caution and scepticism before succumbing to these enticing offers. While these promises may seem compelling at first glance, there is no guarantee that the builder will fulfil them. In many cases, developers may use investors’ funds to pursue other ventures or generate higher returns, leaving buyers empty-handed. Real incidents underscore the perils of placing blind trust in such promises, with builders often failing to honour their commitments due to financial mismanagement or insolvency. Additionally, buyers should remain vigilant for red flags such as exaggerated amenities, unfeasible completion dates, and hidden charges not disclosed in the initial agreement.
By adopting a discerning approach and conducting thorough due diligence under the guidance of an experienced property lawyer in west Bengal, investors can safeguard themselves against the pitfalls of false promises in the real estate sector or any such property frauds in West Bengal.
10. Forged or Fake Documents
False documents represent a significant threat to the integrity of real estate transactions, posing grave risks to unsuspecting buyers. Dishonest developers and real estate brokers frequently resort to forging counterfeit documents to facilitate the sale of properties that may not legally belong to the seller. These fraudulent practices encompass a wide range of documents, including sale deeds, occupancy certificates, and building plan approvals, among others. By presenting fabricated paperwork to buyers, developers and agents seek to absolve themselves of any accountability for the transaction’s outcome, effectively washing their hands of responsibility. Moreover, the use of fake documents not only undermines the validity of the sale but also places homeowners in a precarious position, as they may be held liable for unknowingly engaging in transactions based on falsified information. To mitigate the risks associated with false documents or any such property frauds in West Bengal, buyers must exercise vigilance and diligence in thoroughly examining all property-related paperwork. This entails scrutinizing each document for authenticity and verifying its legitimacy through independent channels or seeking legal assistance from an experienced property lawyer in West Bengal. By adopting a cautious approach and conducting meticulous due diligence, buyers can safeguard themselves against the perils of fraudulent documentation in real estate transactions.
Understanding Property Fraud in West Bengal
Buying a home is a significant milestone, both financially and emotionally. However, the real estate sector in West Bengal is plagued by property fraud, perpetrated by dishonest developers, brokers, and lenders. Kolkata police have initiated a case following a complaint by a private bank on Theatre Road, alleging that six flats in a four-storey building located in Khardah were sold to 125 buyers who secured home loans from the same bank, subsequently defaulting on their monthly repayments. The alleged cheating scheme involved the use of genuine KYC documents by buyers to obtain loans, with the developer selling the same flats to multiple buyers, altering property nomenclature and sizes to evade detection. As a result, the bank was defrauded of approximately Rs 1.2 crore. Despite the bank’s right to possess the property upon loan default, complications arose as multiple buyers, including those from other banks, had secured loans against the same property, preventing any bank from taking possession. The arrest of eight individuals reveals the involvement of a larger racket, including the developer and fake purchasers utilizing authentic documents to facilitate fraudulent home loan transactions.
When such reprehensible property frauds in West Bengal are happening, it is becoming more and more important for the homebuyers to safeguard their investment with the help of an experienced property lawyer in West Bengal.
Preventive Measures against Property Frauds in West Bengal
In conclusion, the article sheds light on the pervasive and intricate nature of property fraud in West Bengal, illustrating the various tactics employed by unscrupulous builders and developers to exploit unsuspecting homebuyers and how the investors can safeguard themselves against such property frauds in West Bengal. From title deception and project plan deviations to forged documents and unwarranted delays, the real estate landscape is rife with risks that necessitate vigilance and thorough due diligence from prospective buyers. The case highlighted involving multiple buyers securing loans against the same property underscores the magnitude of the issue and the dire consequences it can entail for both financial institutions and individuals. As the real estate sector continues to burgeon in West Bengal, it becomes imperative for regulators, developers, and buyers alike to collaborate in implementing stringent measures to curb fraudulent practices and uphold the integrity of property transactions. By fostering transparency, accountability, and regulatory compliance, stakeholders can work towards creating a more secure and trustworthy real estate environment conducive to sustainable growth and consumer confidence. Ultimately, awareness, diligence, and collective action are paramount in safeguarding against property frauds in West Bengal and preserving the interests of all stakeholders in the real estate ecosystem.
For more guidance related to buying a flat in West Bengal, click here.
Sep, 2024
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