Lodha Group — lodha fiorenza — blindfolding flat buyers and misleading rera

 
1 Review
 Krishnaraj Rao on Nov 18, 2017
If you sign any papers or swipe your credit card at the lodha fiorenza sales office, you may forfeit lakhs of rupees or make a terrible investment. The branding message of “interiors by jade jagger for yoo” hides unverifiable claims, unfair dealings and badly planned towers. If you are a flat-buyer looking for a new good house, or a property investor looking for appreciation, stay clear of lodha fiorenza.

Investors who bought exorbitantly-priced flats in the venezia and sienna towers some years ago are now struggling offload it, even at a loss. They are facing fierce competition from lodha’s sales office, which readily enters into a price-cutting war with them. Security guards give estate agents and investors and owners a hard time, posing obstacles and restricting them for showing flats to prospective purchasers.

Lodha fiorenza consists of four residential towers of about 40 storeys on top of a massive seven-storeyed parking podium, of which 50% is a municipal parking lot. Towers roma and milano are mentioned in detail in rera declaration (http://bit.ly/2zPMN6u), but the declaration is totally silent about two other towers – venezia and sienna; rera has been informed that there are two residential towers on the parking podium! The gigantic structure of lodha fiorenza stands squarely on a service road of western express highway, towering over hub mall, goregaon.

Buying a flat in fiorenza means making an investment of between rs 2.5 to 25 crores. Such investments should be made after careful consideration and proper legal paperwork. But, instead of providing reliable information to facilitate such a decision, lodha sales people actively deprive you of information.

The fiorenza customer is typically a wealthy person with surplus investable income but deficit of time and mindspace; he/she is too busy making money to be careful about how he spends it. Nris on a short visit to india or young couples having huge corporate salaries and high job pressure land up at lodha fiorenza sales office. The plush corporate environment at the sales office fools you into believing that these are law-abiding people. Big mistake! Higher-ups are generally inaccessible, and customers are methodically misled by the sales staff without leaving any documentary evidence that can be used in a court of law.

The advertising claims and brochures portray a stylish premium property, which is far from the ground reality. The designer interiors are mediocre and gimmicky. Half the flats have a view of the greenery of aarey colony, goregaon, but these are noisy flats, with continuous droning and honking of 24x7 traffic on western express highway. That noise penetrates through doors, windows and even walls, and will never be silenced. Smooth-talking sales office staffers lure you to swipe your credit card and sign papers that will suck you into a financial decision that may cause you to forfeit pots of money. You can forfeit as much as 50 lakh rupees, if you signed up for a modest five crore rupees flat! The terms and conditions of a barely-legal document called “application form” will kill you!

This application form is a top-secret document. You get to read the application form only when you are about to sign it. Customers sign it carelessly because the sales staffers give them verbal reassurances, such as, “that clause does not apply to you, sir, ” or “madam, this form is just a formality to show that you are interested”. You are expected to pay a token amount of minimum rs 8.10 lakhs, but they will initially accept less.
Did you sign and did you pay? Congratulations, sir/madam, you are now like a fish that swallowed the bait; the hook is in your throat.

Open space and fire norms violations

Fire safety is a huge issue. Fiorenza gives no access to fire-fighting vehicles on three sides, and very limited access on one side i. E. From the busy service road in front. There are no open spaces around the parking podium for a fire-brigade vehicle to go around this structure. Worse still, there is absolutely no access for fire-brigade vehicles to climb to the amenities level on top of the six-storey podium – the only part of this residential complex that offers a tiny bit of open green space to 500-odd flats in the tower. Access to fire exits is restricted by doors kept permanently locked. Even the residents of this complex are given restricted access; the swipe card of a resident gives him access only to his own tower, but not to the neighbouring towers. The security guards exist to safeguard lodha’s property and restrict the residents.

You won’t get land conveyance

The flat buyers are told that lodha fiorenza stands on “freehold land”. Not true. The title verification document (http://bit.ly/2zOGGQ4) on rera website says:

• “… there are no material changes taken place with regards to the title of nirlon as an owner and lodha pranik landmark developers private limited as a developer of the said property subject to always mortgage referred therein.”

• “suit no. 2496 has been filed by the hub mall premises cooperative society limited (Plaintiff) against the company and others before the city civil court, dindoshi.in the said suit, the plaintiff has sought to allege inter alia that the development of the lodha fiorenza project by company is contrary to the provisions of law and that the defendants be statutorily prohibited from carrying on development of the lodha fiorenza project contrary to the sanctioned layout plan in as much as no consent of the purchasers of the units of hub mall was obtained for the development of the lodha fiorenza project and that the loading of tdr on the project to be declared illegal.” this matter is currently stuck in appeal before bombay high court.

The rera declaration (http://bit.ly/2zPMN6u) cryptically mentions four litigations pending in the city civil court and bombay high court. Details and documents of these are not disclosed.

Club & gym are bones of contention

There is inherent discrimination in the distribution of recreational facilities, which is not only unlawful, but will also lead to quarrels between cooperative societies of different towers. There is one common club, gymnasium and swimming pool for 460 residents of venezia, sienna and roma towers, and there is a separate equal-sized special club, gym and swimming pool exclusively for 45 residents of milano tower. Both are located within milano tower. Sharing the maintenance costs between towers will be a huge cause of quarrel for years and decades to come.
Even outsiders may be allowed to use the club, swimming pool etc, according to lodha group. The draft agreement to sell (http://bit.ly/2itQrcA) defines club very cleverly. Clause 1.15 says, “”club” shall mean any recreation facility constructed for the use of the purchasers of units in the project or the larger property.” clause 1.32 of the draft registered agreement states, ““larger property” means the land with details as described in annexure 1 (Description of larger property). For clarity, there may be other building (S) and / or project (S) which will be constructed on the larger property.” larger property means the land plot occupied by lodha fiorenza plus raheja sherwood plus hub mall, and other land owned by nirlon.

Common areas is defined in the real estate regulatory act section 2 (N), including staircase, terrace, club, recreational open spaces, etc. However, lodha’s draft agreement robs this term of its meaning by defining common areas and amenities in annexure 7 as things that are provided within the flats, such as “ipad controlled homes with lighting and ac control; ‘digital hollywood’ in each residence with access to central database with 1000’s of movies, shows and games; italian marble flooring in living/dining, puja, passage and master bedroom, ” etc. Etc.

Common parking for outsiders’ vehicles and fiorenza residents

The bottom three floors of the six-storey parking podium are a municipal public pay-and-park. The upper three floors are for the 1000-odd cars belonging to 500-odd residents. With 2000 vehicles and a single common entry and exit ramp, there will be a traffic jam every morning and evening!
A further cause of unhappiness will be the building maintenance. The bottom three floors will presumably be maintained by the municipal corporation, while the upper ramps will have to be maintained by the federation of cooperative societies formed for the towers. The maintenance quality between the two will naturally differ, and this will impact the condition and life of the entire six-story podium structure, and the four towers built on it.

Lodha does not accept rera as authority

Clause 1.5 of the draft registered agreement defines “authority” as “ (I) any nation or government or any province, state or any other political subdivision thereof; (Ii) any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission or instrumentality; or (Iii) any court, tribunal or arbitrator.” clause 1.43 defines rera as “real estate (Regulation and development) act 2016 and the rules framed by the relevant state government thereto and any amendments to the act or the rules.” both definitions omit to mention the real estate regulatory authority appointed by the state government.

The draft registered agreement and other documents uploaded (Or omitted to be uploaded) by lodha group are a complete basket of monkeys. They merit a separate article. So, let us now focus on the application form for the remainder this article.

Deceitful clauses in application form

1. The customer fills up the dimensions of the flat without any proofs, and undertakes to be bound by what he writes. At the outset of this form, the lodha group customer is required to state, "i hereby apply for the allotment of the abovementioned units. I confirm that all the details have been filled up by me or at my instance, and i have thereafter signed the application form. I confirm that the details provided by me are true and correct. I have read the terms and conditions and agree to be bound by the same." not only the details of applicant and co-applicant are to be filled up by the customer, but the carpet area in square ft. And sq. Metres, and the dimensions of the exclusive verandah / balcony / open terrace ("evbt") of the flat are also to be filled up by the customer in his own handwriting. One may ask, based on what does the customer fill out these details about the flat? The answer is, based on a simple computer printout on a plain white paper without a letterhead or signature, which is given to the customer. How can you know that these dimensions are correctly mentioned in the laser printout? And the answer is, blind faith. Even after persistent and written requests, lodha group flatly refuses to provide any certificate or drawing signed by a civil engineer or architect etc. Stating the dimensions of a particular flat. The sales staffers insist that even they are not authorized to part with any document, or send an email stating anything at all.

2. The customer fills up the "date of offer of possession". The sales staff verbally inform you of the “tentative” date, but don’t give you anything in writing.

3. The customer effectively undertakes not to deduct tds on his payments to lodha group, and “authorizes the company to deduct applicable tds and make the necessary payments to the relevant authorities on behalf of the applicant."income tax law casts a duty on the flat-buyer to deduct tds and remit the deducted amount to the department. Does signing the allotment letter of lodha group free the customer from his statutory obligation to deduct tds on large property transactions? No. But lodha group will not delete this misleading clause.

5. Detailed payment schedule or"milestones"enables customer-relation staff to tighten the screws. Annexure a of the application form has a detailed schedule stating that the customer will be required to pay rs 8.10 lakhs upon booking and 9.9% less booking amount within 21 days of booking.in subsequent points, the milestones specify payment of 10.10% within 42 days of booking, 20% within 90 days of booking, 20% within 144 days of booking, and the remaining 40%"on initiation of possession". (The sales team verbally assures you that this schedule is “not applicable to you”, but insists nevertheless that you must sign on that page also, “because it is just a formality” and “we are not authorized to change the draft of application letter” and also, “we follow this format for all lodha projects”.) the customer is required to stake large amounts in the region of rs 25 lakhs to 2.5 cr, or even higher, on the basis of zero information about lodha fiorenza and its individual towers. Sales office personnel tell you that “you have to give us something to show your seriousness”, but they refuse send you an email about mundane project details!

On a separate page, under the heading"booking amounts", the terms & conditions state that “i, the applicant, undertake to make payments in accordance with the schedule of payments, time being of essence”. The term booking amounts means the amount that the applicant pays prior to the registration of agreement to sell (I. E. The two initial payments totalling 9.9% of the total consideration amount). The terms & conditions mention that if there is non-receipt of booking amounts or any part of the payment, or if there is any breach of the terms and conditions by the applicant, booking amount 1 and 2 (Or 10% of total consideration, whichever is higher) shall be forfeited. This means, if the customer pays any money to show his seriousness in buying a flat, it will never be refunded under any circumstances, and if he happens to pay a larger amount, even exceeding 10%, prior to registration of agreement, the entire amount can be forfeited for a wide variety of reasons!

6. The consideration amount can be unilaterally increased! Under the heading"schedule of payments", point no. 7.5 of the terms & conditions says,"the consideration value shall remain fixed as stated in the application form, save and except for proportionate share (In ration of carpet area) of any increase in costs/charges levied by any statutory authority... And on account of any increase in the cost of construction due to depreciation of the rupee by more than 5% beyond the prevailing exchange rate with us dollar as on the date of construction of the building. The applicant shall pay such proportionate share as demanded."why? Why does the rupee-dollar exchange rate have anything to do with the price of lodha fiorenza? In what way does the dollar exchange rate affect the construction or maintenance costs of lodha fiorenza in mumbai? Is the raw material or labour sourced from the usa? The sales office reassures you that this clause is not applicable currently (“unless war breaks out with pakistan or china”) but they and their higher-ups bluntly refuse to delete it! They insist on you accepting and signing the application form in its entirety, and reassure you that none of those “standard clauses” will be misused to your detriment. Can you trust them?

7. Not all building approvals have been obtained, and the customer waives his right to raise any objection. Under the heading,"plans & specifications", the terms & conditions say,"the applicant is aware that while the company has obtained some of the approvals, certain other approvals (Or amendments to current approvals) may be received from time to time. Having regard to the above position, the applicant has applied for the unit, and agrees to abide by the terms without any objection of demur, and waives his right to raise any objection in that regard."the question is: exactly which approvals are referred to in this clause? Lodha group has not uploaded commencement certificate on the rera website; could it be that the all-important cc was not received by this project? Doesn’t it lend credence to the allegations that development of the lodha fiorenza project by company is contrary to the provisions of law and contrary to the sanctioned layout plan?

8. Builder is allowed to make all sorts of amendments to the plans and layouts, and customer gives consent! The terms & conditions say,"the applicant hereby confirms that the company may make amendments to the plans or layouts of the project, the building or unit as required... This may include any change wherein the company, if permitted by the relevant authorities, tranferring the construction permissible on the property on which the project is being developed (Property) to any other property or transferring to the property the construction permissible on any other property at any time prior to conveyance of the property to the federation / ultimate organization... The applicant gives his consent for such changes." what one understands from this is that lodha group may intend to either take the fsi from the land plot on which lodha fiorenza is built and exploit this fsi to construct somewhere else (I. E. Transfer of development right i. E. Tdr of lodha fiorenza being used on some other lodha project), or alternatively, utilize the fsi or tdr taken from some other project site and use it at lodha fiorenza project. Lodha group insists that you sign this waiver!

It must be stressed that real estate regulatory act does not allow allow unilateral forfeiting of booking amounts, etc., nor does it allow builders to keep the customers in the dark and bind their hands and feet with discriminatory clauses. This method of dealing with customers amounts to unfair trade practices, punishable not only under rera but also under the competition act 2002, which defines such acts as “abuse of dominant position”.

Krishnaraj rao
Krish. Kkphoto@gmail.com

Complaint Status


[Nov 18, 2017] Lodha Group customer support has been notified about the posted complaint.
Updated by Krishnaraj Rao, Nov 20, 2017
Buying a flat from Lodha Group can land you in deep trouble with the Income Tax Department. The small print in Lodha Group's Application Form compels you to not deduct TDS on your installments as required by law. Lodha's sales staff and Application Form illegally compels you to delegate your legal responsibility to Lodha. Such delegation can land you in deep trouble. Not only will you invite penalties from the Income Tax authorities, but worse, it can lead to scrutiny of your tax returns. Nobody in his right mind wants to invite I-T scrutiny through careless actions, but that's what can happen to you if you blindly trust Lodha's paperwork!

As a flat purchaser, you have a statutory obligation under section 194-IA of the Finance Act to deduct tax and furnish details of your property transaction to the Income Tax department. There are no exemptions. Read this article (http://bit.ly/2hDZIy1 ) to understand your obligation as a flat-purchaser. There is no provision allowing you to transfer this legal obligation to the builder!

TDS needs to be deducted each time while paying the installment, and it needs to be deposited by way of return-cum-challan (Form 26QB) within seven days of the following month of making the payment. Failing to do so can attract late filing interest of 12 % per annum, plus a penalty of upto Rs 1 lakh under Section 271H.

For example, if the consideration value of your flat is Rs 2 crore, then TDS @ 1% would be Rs 2 lakh. Failing to deduct and remit this amount yourself can make you liable to pay late filing interest of Rs 2, 000 for every month of delay. Here is a specimen of the I-T notice (http://bit.ly/2zVBCcz ) you are liable to receive.

It is possible that Lodha's accountants will pay the TDS on your behalf, but this convenient arrangement is at your risk, not Lodha's. If Lodha's CAs default, then you will receive the notice and pay the fine. Moreover, Lodha may refuse to allow the TDS deduction, with the result that you will pay the TDS amount and fines from your own pocket!

WHAT LODHA'S APPLICATION FORM SAYS:

Check out page 5 of Lodha Group's obnoxious Application Form (http://bit.ly/2z41NKP ). It says this:
"The Applicant has authorized Lodha to pay TDS on his behalf. The Applicant acknowledges that the TDS will be payable by the Company only in the name of the Primary Applicant. In the event the applicant wishes to pay the applicable TDS on his own, a written request to the effect shall be given to the company on tds@lodhagroup.com, and thereafter the applicant shall submit the Challans for payment thereof to the Company within 7 days of the relevant due date for payment of TDS, failing which a tracking charge of Rs 1000/- per challan per month shall apply."

WHAT ARE THE IMPLICATIONS?

Firstly, signing the Application Form quietly removes the power of the home buyer to deduct TDS from the amount payable to Lodha. The only acceptable lawful position is that that the buyer will deduct TDS and remit it. Lodha's Application Form makes it the default position that the buyer will NOT deduct TDS, leaving it to the builder to do so. Lodha incites you to commit an offense that will land you in trouble with Income Tax authorities. (Remember, Lodha Group will not face any consequences for this, because it is your legal obligation, not Lodha's!)

Secondly, in the Application Form, Lodha threatens to illegally penalize you @ Rs 1000 per month per challan if you insist on deducting and paying the TDS yourself, if you are not prompt in giving the challan to Lodha. This fine is gratuitous, because the law puts the onus on you to do so promptly! The law states, "Every person responsible for deduction of tax under section 194-IA shall furnish the certificate of deduction of tax at source in Form No. 16B to the payee within fifteen days..."

Thirdly, the motive for Lodha's actions appear to be illegal. The question arises: why is Lodha going out of its way to coerce, threaten and dissuade flat-buyers who wish to fulfill their legal obligation? The most plausible explanation is that Lodha Group is trying to avoid disclosing certain key facts and figures to the flat-buyer and possibly, the Income Tax department also. Also, it is likely that Lodha is partially evading taxes in this way. As the clause in the Application form is underhand and sneaky, the motives appear to be illegal. Income Tax authorities should carry out a probe to find out what Lodha is hiding!

ISSUED IN PUBLIC INTEREST BY
Krishnaraj Rao
[protected]
krish.kkphoto@gmail.com
[protected][protected][protected]

ALSO READ:

1. How Lodha Group's "Application Form" Traps Unwary Customers
( http://bit.ly/2jFXfYk )

2. Measure your flat, Lodha Group has cheated you
( http://bit.ly/2zSiEUx )

3. Lodha Group is defrauding flat buyers in Carpet Area
( http://bit.ly/2j8wM1E )

4. Lodha Fiorenza – Misleading RERA, Blindfolding Flat Buyer (http://bit.ly/2B8vR9A )
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