Builder asking for extra charges in final demand, what to do?

Following are the surprise/extra charges being asked for in the region at the time of possession. We discuss what are they and what can possibly be done to deal with them:

Water and sewer charges at 15k to 20k:
UP Apartment act clearly states “The promoter shall pay all local taxes including house tax, water tax, sewer tax, until and unless subleases have been executed in favour of the apartment owners”.
So, unless and untill this is specifically mentioned in your BBA, this burden can not be passed to buyer before sub lease is executed.

Labour cess at 19 to 22 psf:
We have discussed Labour cess at length previously.
Labour cess has to be charged at 1% of construction cost equally distributed among all units. This is paid to local labour department.
The transfer of this burden is debatable.

Dual electricity meter charges at 20k to 30k:
Has to be borne by the buyer.
However, this being pretty standard can very well be mentioned as part of Builder buyer agreement (BBA). Builder, however, to make the deal sound reasonable, do not mention this explicitly in BBA.

Advance maintenance charges (AMC) for 3 months to 2 year at 1.8 to 2.5 psf:
This is different from IFMS.
This is the amount which is utilized for maintenance till an owners association is formed.
This has to be paid but the declaration deed (as per UP Apartment act) has to specifically mention the tentative maintenance charges at time of handover.

Interest to buyer @ 18% or 24%:
This interest on delayed payment by buyer is seen to catch the buyer unaware.
Most of the interest is either due to delay from bank or due to some approval delay due to which buyer holds back the payment.
For settlement at time of possession, ensure you keep all communications with builder regarding reason for holding back payment intact.
If you see in a practical way, interest due to delay from bank will practically be (per annum interest for delay e.g. 18% – home loan interest %) i.e. around 6% to 8%. Hence, that burden is still bearable provided its legible.

Additional charges like Communication system, Gas pipeline set up, sinking fund etc:
This amounts to another 10k to 25k.
If these facilities are mentioned as part of specs, the same shall not be charged and court has given rulings against invoking such charges.
Sinking fund is just another way of asking maintenance over and above the AMC.
Before you pay, get a list of things that builder plans to implement over and above promised amenities and facilities under this.

VAT @ approx 4%:
In Faridabad and Gurgaon and few other states in the country, builders are demanding VAT as well. However, since there is a court stay on collection (for concluding the exact applicable VAT), builders are demanding bank guarantee instead.

Escalation charges:
Consumer courts have given judgments against charging of escalation cost as the delay is never due to buyer. This is the case even if such one sided clause that talk of escalation cost exist in BBA.

Farmer compensation/Increased land cost charges:
This has to be necessarily routed through court as builders will try their best to transfer this to buyers.

Comments/Feedback invited.


Last Updated on May 22, 2015 by Go4Reviews

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11 thoughts on “Builder asking for extra charges in final demand, what to do?

  • October 24, 2017 at 11:18 pm

    During the purchase time, my builder offered me all inclusive deal of 30 lakhs, now they during possession they are claiming- Dual meter charge, electricity connection 4KW charge, IFMS, Labour cess, Metro cess, solar water heater charge.
    Further on, out of 14 towers they have build only 4 towers and without developing park/gym/club house and other aminities they are offering me possession. Can they offer possession even when the work is going on in the adjuscent towers? And can they claim above mentioned charges even when they have signed all inclusive deal.
    Although in agreement they have mentioned that various charges may be applicable from time to time. Also they have delayed possession by 16 months(Still for possession they told 60 days after final payment), but they are offering only 5 rs per sq feet where as in delay they claimed @18%.
    My flat is in ghaziabad.

    • October 25, 2017 at 2:25 pm

      Hi, these are standard charges applicable nowadays at time of possession. Just write to them a protest email and later on when you go to consumer forum, you can use that as proof. Regarding amenities/facilities, if builder has got OC, he has rights to offer possession. You must demand copy of OC.

  • August 31, 2016 at 7:24 pm

    My builder in noida sector 77 sent demand with which was not applicable at all. I sent mail asking for clarification also but they kept on saying nothing extra. Now they say that they have sold my flat to someone else. Despite I have paid 100 percent cost. Only ifms, registration was pending and so called penalty. Please advise not allowing to take possession and pressurising me to buy bugger flat.

  • June 10, 2016 at 12:13 pm

    Could you please share the ruling or please provide link for Escalation charges and Farmer’s compensation charges
    I am facing such agreement clause. How it can be challenged when the agreement is already signed.

  • June 6, 2015 at 9:33 pm

    waiting for update sir

  • May 23, 2015 at 9:33 am

    In BBA, the builder keeps the provision of charging hafty interest rate – 18 to 24%-in case there is delay in making payment. On the other side, minimum charges -@ Rs 5/- or so per sft is kept for paying by the builder for delay in completion. Is it correct to charge heavily in case of delay from buyer & pay minimal for the delay on builder part. is this type of anomly ok? Pl have your views on this.

    • May 24, 2015 at 12:07 am

      Thanks for bringing it up. It is definitely not reasonable. Consumer court has directed builders to pay penalty to buyers @ 12% to 18% on many instances citing the same mismatch that you have brought to light.

      • May 25, 2015 at 2:14 pm

        Thanks for yr reply.
        can you please share such ruling by the consumer court .or please provide link.
        I am facing such agreement clause. How it can be challanged when the agreement is already signed.

        • May 25, 2015 at 2:22 pm

          Consumer court asks builder to pay your rent or 12% to 18% interest for delay period. I will get you the judgments by weekend.

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