Real estate irregularities: One plot, many owners, courtesy fraudsters
BENGALURU: Rajashekar had bought a plot under Gruha Kalyan project. On Monday, he was at the Criminal Investigation Department (CID) office to submit documents to prove his ownership, following the complaints of huge irregularities in real estate sector. As he was sharing his story with the person sitting next to him, he was shocked to hear that the other person also possessed documents for the same plot. Both of them had purchased the same land from the same owner!
This is one of the many such cases where fraudsters have sold a single plot to many consumers. In several cases, one plot has been re-sold as many as six times with such cleverness that none of the owners could get a hint of foul play, say CID officials, who are investigating the alleged irregularities in the sector. Even the same flats were sold to multiple consumers.
Two days after the criminal investigation department recommended action against 10 real estate firms that duped over 17 lakh people, people are thronging the CID headquarters with complaints. The officials are expecting at least 3,000 to 4,000 more victims to approach the probe agency.
In view of the complainants’ rush, CID has designated a separate area where the victims of the real estate scams could wait for the officers to meet in the headquarters. Over 40 officers have been assigned different fake projects to probe into them.
However, the top brass of the CID did not divulge any information in this regard.
Nanjunde Gowda, DySP of Economic Offences Department at CID, who is investigating the deals made by Dreamz Infra India Ltd, said, “We are expecting 500-600 more victims to approach us. We have come across several cases where the lands have been resold, mortgaged or leased without any notice.”
After the investigations for almost six months, the investigation agency had recently revealed that 422 cases were filed against 10 firms from 2013 to 2016. As many as 17,93,480 people from across the state invested Rs 3,273 crore in these firms.
422
Cases filed by victims of real estate fraud between 2013 and 2016
10
Real estate firms are accused of involving in fraud
18 lakh
Approximate number of people cheated in the state
How they were lured
Victims told Express they were lured with multiple offers by these firms. As soon as they entered the sophisticated offices of real estate developers, they were offered drinks, delicious food, free cab service among other facilities. Some of them who were purchasing for investment purpose said they were also offered tenants and five years of free maintenance. Whenever the victims questioned about the delay in developments, the firms would offer special amenities and demand more money.
Officials verifying loss claims
Some victims are also forging the documents provided by the fake firms, claiming to be cheated with more money than they actually lost.We are verifying the loss amount before reporting it, an official said.
Their nightmare came true
Impressed by ads of Dreamz Infra India Ltd in 2013, Vinay called the firm. He chose a flat in Whitefield priced at D18 lakh. He paid 50% and later discovered the land was sold to a third party.
Dr Lakshmi Narayan Bhajanchatti in 2014 paid D5L for a flat on 13th floor in Sky View Apartment in Devanahalli. The plan approval was for only 10 floors.
Rajani and Sunil Menon in 2015 came across an ad of Dreamz Sadan project in Kundanahalli. The offer was D32 lakh for a 3-BHK flat. The couple paid D9.60 lakh only to be cheated.
BETTER CAUTIOUS THAN SORRY
Shrinivas Rao, CEO-Asia Pacific, Vestian
Recent action initiated by the Karnataka CID against 10 real estate developers is evidence of the widespread malpractice in the real estate industry. About 18 lakh investors, with investments amounting to at least D3,300 crore were reportedly cheated by 10 firms across the state. It is time for both the government and the buyers to act proactively.
While the introduction of RERA is a step in the right direction, buyers also need to be cautious while investing in real estate. It is important to understand that investments promising unrealistic high returns may become another Ponzi scheme. (See tips below).
Today with RERA in place, information is easily accessible online.
Thus, with increasing buyer awareness and digitisation, we hope that the Indian real estate industry would become more credible like the West and ‘fly-by- night’operators who dupe investors get eliminated.
TIPS TO AVOID PITFALLS WHEN INVESTING IN REAL ESTATE
Buyers must make sure that the project they are investing in is RERA registered (applicable to all residential projects - apartments, villas & plots alike)
Buyers should check the credentials and past experience of a developer. Talking to old customers and verifying the status of past projects will be a good decision
Buyers should be cautious before investing in properties near the ‘proposed’ infrastructure projects. It is necessary to verify claims about the ‘proposed’ development by doing in-depth research.
Buyers should carry out rigorous land title and encumbrance checks with the help of a reputed law firm or trusted lawyers. Also, check that the person signing the agreement has actual ownership of the property and is not just a ‘power of attorney’ holder.
Buyers should check the recent value of the property in consideration, with the help of ‘property valuers’ and/or by due market research.
Buyers should never invest in a property without visiting it in person first. One should also visit the locality and speak with residents about the infrastructure there.
It is necessary to check if all approvals and permits are in order as promised by the builder.