R BALAJI | JULY 3, 2014 | The Hindu Business Line

CHENNAI : The best option for home buyers in Prime Sristi Housing property, which collapsed last week, is to approach the consumer court to file a ‘deficiency of service’ on the developer, according to leading legal experts. Those who have taken a home loan insurance will get a part relief on the construction component but the lion’s share of investment relating to the land cost will be stuck, says housing finance executives.

“The borrowers are getting emails from nationalised banks which have lent money. I trusted the banks; I even paid fees for them to check if documents and approvals are in order,” lamented a borrower. Last Saturday, the 11-floor residential property under construction at Porur, on the outskirts of Chennai collapsed. Death toll in the tragedy has crossed 50.

Saddled with home loan

However, the other innocent victims are the buyers who will be saddled with the home loan while the asset has vanished.

An advocate explained that a bank is within its rights to enforce the loan as terms and conditions cannot be met now. The interest will keep mounting if there is a delay. Ideally, buyers will have to repay the loan and opt for a consumer complaint for compensation from the builder.

A senior executive in a housing finance institution pointed out that typically a buyer gets up to 80 per cent of the price of the house as a loan.

If the institutions have protected the loans with an insurance, it will only cover the construction component and not the undivided share of the land. The land cost could be anywhere up to 70 per cent of the project.

Source : http://goo.gl/phwbRk