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Diary of a distressed property investor, Part III

Diary of a distressed property investor, Part III

My next installment payment has been pushed back by two months. But I’m still in trouble.

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January 20, 2009 10:27 by



I harassed my developer with calls, and threatened to expose them for the lying, unprofessional clowns they are. I forwarded Rera’s regulations to them, demanding to know what they’re going to do about it. And yes, I yelled. A lot.

The more they tried to calm me down, the more I wanted to rip them apart. They had no answers for me. They had no alternative payment plan, and they wanted to know why I was causing “trouble.”

“Because you’re liars,” I said. I could’ve been more diplomatic.

I turned to Rera to find out what would happen if I wanted to get out of the contract. They said that according to their regulations, I can walk away with 70 percent of the money I put in. The remaining 30 percent and my AED10,000 deposit would go to the developer. It’s a big chunk of money to lose.

Then, two days ago, I got an email from my developer stating that they are pushing back the due date for my next installment to April 2009. They still haven’t addressed Rera’s new regulation. They told me that Rera comes out with new laws every day.

“So?” I asked.

“So, a law can come out tomorrow, that’s so!” the sales manager yelled.

I think my developer and I have lost that loving feeling.

So here’s where I stand: my next installment is due in April, and I’m hoping that by that time, my developer would’ve been approved by a bank. If not, then Rera has promised it will prepare a letter addressed to my developer stating that they cannot ask for the next payment until the construction matches the installment.

If by some miracle my developer manages to build enough of the structure to demand the next installment, and they haven’t been approved by a bank yet, I’ll have no choice but to break the contract. I won’t take out a loan to pay for the upcoming installment, because I have no guarantee that the developer will be approved by the time the next payment is due. And the last thing I want is to be in debt.

This is turning out to be a very expensive lesson for me.



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8 Comments

  2. Peter Heydenrych on January 21, 2009 8:08 am

    This gives me more insight and understanding of regulations, rights, the law and the machinations of builders than anything I’ve read in the mainstream press. Great job.

     
  3. Tino on January 21, 2009 9:01 am

    Thanks for doing this – gives the rest of the world valuable insight. Sorry that it’s so financially painful for you.

     
  4. Ben on January 21, 2009 4:32 pm

    Dear distressed investor,

    Thanks for sharing what you are going through with the rest of us; it is a real eye opener especially the part about the Rera regulations not actually being law. I really hope things work out for you and you don’t end up losing money.

    Cheers
    Ben

     
  5. owen on January 21, 2009 4:43 pm

    Sounds like a common problem… sadly.

    JUst one point, you mention that RERA said you could walk away with 70% of your money paid so far, yet they announced before xmas that investors would have to pay 30% of the TOTAL property price, not the deposit amount? Which is correct?!

     
  6. mithun on January 21, 2009 9:31 pm

    You said :

    >>>>>>>>>>>
    If by some miracle my developer manages to build enough of the structure to demand the next installment, and they haven’t been approved by a bank yet, I’ll have no choice but to break the contract
    <<<<<<<<<<<<

    This could happen to any builder, I mean many customers to could do this to builders … i.e. break contracts

    So a lot of builders are also going to be in trouble and further delay or default of deliveries

    The ones who have paid money or continue to pay and try to get possession of an apartment, say to live in it, are going to be at the wrong end of the stick due to defaults

    Looks like the market is in for some surprises

    regards
    mithun

     
  7. Noor on January 22, 2009 7:49 am

    Hi,

    what a sad story you got there.. But this proves only one thing and we should put this right on face of the builders… not all property investors are nice enough to be fooled by people like those who want to rip off money the easy way.

    They should know that RERA is around to stop all their illegal activites.

     
  8. Concerned on January 22, 2009 9:04 am

    Isn’t is concerning that a regulation that the REAL ESTATE REGULATORY AUTHORITY (RERA) issues is not made law immediately or even taken seriously by these developers?

    Personally i think the establishment of RERA is an extremely positive move for this market, however they require more power to ensure their regulations are enforced swiftly and penalties are harsh to those not complying (not matter who owns the development company). In saying this RERA should also provide more training to the developer regarding these regulations other than “letters”.

    How is this property industry ever going to be regulated if what currently happens in this market remains the case – anyone can be a “developer” and do what they please – if the one thing comes out of this “financial crisis” is that all shoddy developers go bust and stop doing what they are not qualified to do it will be worth it and if it teaches people (“investors”) to research their purchase more and ensure what they are buying is true and correct with a LONG TERM outlook then it will be win:win.

     

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