There is much to be said about markets. Markets are a fascinating creature, capable of being understood by none but the wisest (or wiliest) of purveyors of goods and services. There has scarcely been a person who has gone to the market as a buyer and not been told that “it’s a seller’s market these days”, or having ventured forth as a hapless seller been lucky enough not to run into a “buyer’s market”.
The buying and selling of property is for the most part an experience composed in equal parts of mystery, awe, optimism and foreboding. Most buyers who end up in the property markets are treated to the same creed of clichés.
- It’s a seller’s market
- The property prices have shot up considerably
- The reports of the decline in prices are exaggerated and in any case relate to some other place
- There are just a very few properties up for sale
- I have only one last property left which is within your miserable budget and it is being chased by hordes of buyers brandishing fistfuls of ready cash
- You have to sign on the dotted line right now, or you will lose the property and / or forego the massive discount we are offering at the moment
- And don’t bother to read the contract – it’s a standard form and we get everyone to sign it.
There must be a special section reserved in purgatory for these really reckless realtors who manage to find enough gullible optimists and sell them plots which exist literally and not just figuratively in midair even before the ground underneath has been broken.
The recessionary trends of late have however brought the residents of these future properties crashing down to the earth with a not very pleasant thud. Realtors and developers are reneging on promises by the dozen and there are scores of people who find themselves seeking legal counsel and thereafter crying over the extremely unfair and one-sided contracts they have signed.
The conditions in most of the real estate contracts that one comes across these days are absolutely unconscionable of course. There are contracts which allow builders to delay and defer the construction, completion and handover of flats and houses almost till eternity. There are those contracts which can be annulled by the disgruntled buyer only on the pain of losing not just the interest on the money they had forked over to the developer, but in some cases even the principal amount itself. And then there are those contracts, upon reading which you can immediately conjure up images of a bunch of twisted lawyers and realtors sitting around a table in a dark room cackling with joy at the nightmarish terms and conditions that have dreamt up. One even comes across contracts which allow the buyer a slight window of time to protest the delay or non-delivery of the property beyond which the contracts bind the buyer down with yards of legalese which amounts essentially to denuding them of all legal rights.
Unfortunately enough contracts once signed have the force of law behind them. The law commands you to obey the terms and conditions of the contract you have set your hands to, without affording you the excuse that you did not read the conditions properly at the time. The law has no patience for people willing to profit from windfalls but who blanch at unanticipated losses.
Fortunately however, the law does not tolerate inequity either. If a contract is the result of a fraud or a misrepresentation, it can be cast aside; if a developer or realtor has not told you the truth he cannot profit from it.
But most importantly, the law also recognizes that at times a person may be forced to enter into a contract which is patently and obviously one sided and which is grossly unfair. The law disallows and bars sellers and traders from indulging in what lawyers call “Unfair Trade Practices”. So even if a property agent got you to sign a contract claiming that it was a standard industry practice and form, it remains open for you to show a court of law or an arbitrator that even that so called standard form and practice are deceptive, manipulative or even a result of a cartelization of the sellers.
If you are the not-so-proud owner of a flat or house which exists solely in the imagination of your seller, then notwithstanding that the contract effectively ties you down and leaves you no recourse, you may still be able to have the restrictive covenants and conditions set aside. Your case is even stronger if you can show that yours is not a stray case.
These remedies are exceptions to the general, statutory and common-law laws of contracts and are an effective solution for one who feels cheated or unfairly bound down. Oppressive contracts are repugnant to the law and for that reason, untenable in a courtroom or before an arbitrator.
It is not sufficient for a seller or developer to brandish your signature on a lengthy contract to denude and strip you of your rights. The written word of a contract is sacrosanct but there are very exceptions to the rule and the litany of woes of many who have purchased homes resting on etheric foundations seems, in my opinion, a worthy reason to challenge the sanctimonious sellers.
The first step in your attempt to get any relief would be to have your contract read over. The sooner you do this, the better it would be to avoid any possible pleas of limitation or “time-barred” by the other side. If you are not so fortunate as to be able to spot any clause in the documentation which may help you get what you want, you would need to study what methods for redressal are mentioned in the document. If a contract is silent about the mode of resolution of any dispute, you would have an array of options including the filing of a civil suit, a consumer complaint etc. before an appropriate court. If however the contract mandates arbitration, then your remedy would lie before such a person. Most contracts one comes across however nominate the seller’s own officer or associate as the sole arbitrator and for which reason it is hardly likely that you would get an arbitrator’s judgment (called the “award”) which is likely to explore the larger issues of duress, false promises, monopolistic or unfair trade practices etc.
A much better option might conceivably be a “class action” before a superior court which may explore these issues and eschew the arbitral clause and strike down the oppressive conditions which make the contract contrary to public policy. A class action, or a representative action would have the advantage of not just exposing the malpractices which afflict the realty sector today, but also invite guidelines from a court or even better, prod the legislature out of its lethargy in order to better protect buyers.
As back as in 1916 the learned New York Court of Appeals judge Benjamin Cardozo laid the foundation for Caveat Venditor. Sellers, beware.
(Published in HT Estates, 18th April 2009)
