Points To Check Before Opting For Such A PlanThree critical safeguards that buyers must put in place before investing into such offers are:
1. Ensuring that the developer does not have two different pricing structures (i.e. one for construction-linked and another for possession-linked plans). If there are two such different pricing offers, then the developer has already built in the cost of funding that is applicable for a possession-linked plan. This effectively means that the buyer is indirectly funding the developer, and that is not an attractive scenario.
2. Establishing that the developer has all necessary approvals in place. Buyers funding the developers without approvals is like any another non-approved deposit collection scheme that can catch the eye of financial regulators like SEBI and RBI. Buyers need to use caution while investing in any project where approvals are yet to come and there is a assured-return type of structure. These are very risky structures and have high chances of default and delay in terms of payments.
3. Reading the fine print. Laypeople generally do not read those critical few lines at the end of the document before investing, but there is a huge risk of losing money by such oversight. For instance, the connotations of terms such as ‘Act of God' as well as other obscure verbiage in the terms and conditions present a risk to buyers that do not understand them. Any condition that de-risks or absolves the developer can be perceived as a risk of losing the 20-25% of the initial investment. It is therefore prudent for the buyer to review all points mentioned in such an agreement.
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