Property buyers will now get a five-year warranty against structural defects in their buildings. Till now, these warranties were for a year.
Several builders, in Bengaluru have started including the five-year defect liability clause, as per the RERA Act, in their new sale agreements.
Though this finds no mention in the RERA rules promulgated by the Karnataka government last month, lawyers say wherever the state rules are silent, the central Act comes into force. This means that realtors may also have to include this clause in old agreements in projects that are ongoing, where occupancy certificates have not yet been applied for and thus fall under the ambit of RERA.
According to the new law, a builder will be liable for any structural defect or any other defect in workmanship, quality or provision of services as per the sale agreement if it is brought to its notice by the customer within five years of handing over possession.
“It shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act,“ the law says.
Puravankara MD Ashish Puravankara and Ozone CEO Srinivasan Gopalan said they have started including the clause in their new sale agreements. Citrus Ventures said the same, adding that it will not modify existing agreements but extend the provisions of the clause to them as per the law. Legal expert E Suhail Ahmed said there cannot be a different set of rules for old and new buyers in a project that is under RERA.
Both small and big organised builders say they are ready to be held accountable for any structural defects, including usage of inferior material, structural cracks, wrong planning structure, leakage and dampness, for five years.But they say they are unclear about the definition of “workmanship,“ which can include even tiles, and electrical wirings, where suppliers do not provide warranty for more than a year.
“For me to stand warranty for those items is practically impossible as I get a one year warranty from the suppliers.There is no way we can extend it by another four years from our end and even if it is done, there will be extra cost. For a third party vendor fault, it is not right to blame us,“ Suhail Rahman, executive director of Asset Builders, said.
Realtors are thus deciding to make buyers aware on what constitutes a liability on their part and what they cannot be held responsible for. “We are planning a warranty booklet where it will be stated what is covered and what is not,“ Citrus Ventures CEO Vinod Menon said.
Since the law is open ended, it possibly sets the stage for lawsuits. Extended warranty and other RERA rules will lead to an increase of about 10%-15% in projects cost, builders say . Most of this may be passed on to buyers.