Legal advice for apt and landowners as developers abandon projects

In a city where buying a flat or developing a house often involves a major financial investment, an unfinished building can leave landowners and buyers in serious trouble. When a developer abandons a project or fails to hand over a flat on time, affected parties may seek legal remedies, including contract cancellation, refunds and compensation.

Khondokar Md Akhter Hossain, Advocate Bangladesh Supreme court told that landowners and flat buyers have several legal options when developers fail to meet their contractual obligations. The remedies depend on the terms of the agreement, the reasons for the delay and the applicable laws.

Akhter Hossain said a landowner who wants to cancel an agreement should first issue a notice to the developer in accordance with the contract.

If the developer does not respond or the dispute remains unresolved, the landowner may seek cancellation of the agreement through the court.

The same principle applies to developers who want to terminate agreements with landowners. They must follow the relevant legal procedures and contractual conditions.

Registered agreements require particular care, as attempting to cancel them unilaterally without following the proper legal process can lead to further disputes.

When a developer abandons a project midway or violates the terms of an agreement, the affected landowner can lodge a complaint with the relevant authorities.

If the developer is a member of the Real Estate and Housing Association of Bangladesh (REHAB), the landowner can also file a complaint with the organisation.

Akhter Hossain said action may be taken against a developer if the allegations are proved under the applicable rules. However, any action involving the cancellation of a licence depends on the powers of the relevant authority and the applicable legal provisions.

Landowners may also seek remedies through civil courts. Depending on the circumstances, they can pursue legal action under the Real Estate Development and Management Act, 2010.

The reasons behind a construction stoppage are crucial in determining who is liable for the losses.

If construction is halted because of unpaid water, electricity or gas bills from an earlier period, or problems with land mutation, the landowner may have to compensate the developer if the responsibility for those problems rests with the landowner.

However, the situation may be different if the developer is responsible for the stoppage.

If construction is halted because the developer has deviated from the approved design, failed to obtain the necessary approvals or committed other irregularities, the developer may be held responsible.

The terms of the agreement, relevant documents and the actual reasons for the stoppage must be examined before liability can be determined.

A construction stoppage alone does not automatically establish that either party is at fault. It is necessary to establish who breached the agreement and caused the loss.

Flat buyers also have legal options if developers fail to deliver properties within the agreed timeframe.

Their primary right is to demand the handover of the flat in accordance with the agreement. Depending on the circumstances and applicable law, they may also seek a refund of the money paid and compensation.

Section 8 of the Real Estate Development and Management Act, 2010, requires the relevant terms and conditions of property transactions to be specified in the agreement.

Section 15 contains provisions on refunds and compensation when a developer fails to hand over a flat within the stipulated period.

Where the agreement does not specify the compensation rate, the law provides for compensation at a rate of 15 per cent, subject to the applicable statutory conditions.

The agreement, payment receipts, handover deadline and other relevant documents are important when determining a buyer's rights and pursuing a claim.

Landowners and buyers should preserve all documents related to the project before pursuing legal action against a developer.

These include the registered agreement, land ownership documents, mutation records, relevant tax papers, construction approvals and the approved building design.

Payment receipts, bank transaction records and proof of instalment payments are also important.

Copies of notices sent to the developer, any replies received, photographs of the abandoned construction site and records of relevant communications can help establish the facts of the dispute.

Such documents can help demonstrate a breach of contract, establish the extent of the loss and support a claim for appropriate legal remedies.

Careful preparation of the agreement is one of the most important steps in reducing the risk of disputes between landowners, developers and flat buyers.

The agreement should clearly state the project completion deadline, flat handover date, payment schedule, responsibilities for obtaining approvals, conditions for contract termination and compensation provisions.

If a developer stops construction, the affected party should review the agreement, preserve the relevant documents and consult a lawyer. A formal notice may be necessary before further legal action is taken.

If the dispute cannot be resolved, the affected party may approach the civil court or pursue other remedies available under the law.

For landowners and flat buyers, understanding the agreement and keeping proper records can make a significant difference when a property project runs into trouble.