Independent Houses in Patancheru | Good time Builders

‘Crises are challenges, not calamities. One can never be prepared for any calamity.’ 

As the wise saying goes, same was the case with all of us when we were badly hit with Covid 19. The real estate, though a very firm company was also paralysed. 

Resilient Real Estate 

Real Estate couldn’t shield itself from the heavy blow of the pandemic, and there came a halt to the construction along with a delay in handing of the projects. The reverse migration of the workers and an interruption in the supply chain fuelled the agonies of the developers. Handing of the projects as per the contracts was impossible.

The developers were frantically hunting for some clause which could give them some relief from the penalty which they would have to pay in case of delay in the projects from the date that is mentioned in the contract. To the delight of the developers, came out the Clause of Force Majeure as a saviour from their contracts.

What does Force Majeure Mean

 Force Majeure is an event of effect that can neither be anticipated nor controlled. It can be an act of God or human actions that include war, armed conflict, terrorist attack, labour strike etc.

A disaster is regarded as a Force Majeure event based on the below mentioned criterion:

1. a) It is an unforeseeable event.                                                                                    b) It must be outside the control of either party.                                                            c) The contract could not be completed due to the calamity.                                          d) The clause of Force Majeure should have been included when the contract was prepared.

Why Force Majeure 

 Force majeure covers extraordinary circumstances as well as natural calamities. An event can be defined as force majeure when certain conditions are fulfilled which include externality, unpredictability and irresistibility of the event. Construction contracts usually include this clause to protect the parties in the event that a part of the contract cannot be completed due to causes which are not in control of both the parties. 

God’s Act

An act of God is an event for which no party can be accountable. It is an event that is beyond the control of the parties and it relieves one or both the parties from the liability to complete the contract.

Force Majeure invoked

The Ministry of Finance announced a 6 months extension for the registration and completion date for all 

registered projects which expire on or after March 25, 2020. The Finance Minister has termed the Coronavirus as  Force Majeure event for the real estate sector and this decision was welcomed by the developers because they felt that only force majeure can act as a saviour. 

Government declared Coronavirus pandemic as Force Majeure. Here are a few highlights of the declaration :

• Covid 19 should be treated as an event of Force Majeure under RERA.
• If needed, Regulatory authorities can extend for another period of three months.
• Fresh ‘Project Registration Certificates’ will be issued automatically with revised timelines.
• Timelines will be extended for various statutory compliances under RERA, concurrently. 

Appeal of Home Buyers

With salary cuts and job losses, home buyers may find it unbearable to pay both, the EMI and the rent. They expect the EMIs to be deferred by a tenure equal the force Majeure period, without any burden of added interest. They should also be allowed to take an exit from the contract without any penalty in case they are unable to bear the home loan. They wish to get some legal protection under the Doctrine of Frustration of Contract’.

Doctrine of Frustration

Doctrine of Frustration is an event that prevents the completion of performance of a contract and ends in frustration or end of the said contract.

Force Majeure – A Saviour

Real estate got a breather when the Finance Minister disclosed about Rs. 20 lac crore Coronavirus stimulus package. The Finance Minister directed RERA to consider the entire duration of the Covid 19 pandemic in India as Force Majeure event. In this way Force Majeure was invoked and came as a Saviour to the pandemic hit real estate. 

 ‘Even the darkest night will end and the sun will rise.’ How true is this!!