Legal issues between developers and landowners or buyers can arise at any stage of a real estate project, often leading to tension during the handover process. If buyers encounter problems, they have the option to pursue legal action. However, one may first seek arbitration through the Real Estate and Housing Association of Bangladesh (REHAB), which provides an avenue for redress.

Real estate experts advise selecting a company with a proven track record of successful projects and a reputation for delivering quality service to customers. Clear communication before making a purchase is crucial. Ensuring that all necessary documents, agreements, and clauses are included in the transaction papers helps mitigate disputes after the purchase or completion of the agreement.

"The terms, conditions, and signatures in the agreement must be validated by government-approved real estate gazetteers to grant legal rights. If someone is unsure about the clauses or their validity, they should consult an expert or lawyer to verify the documents," says A K M Rafiul Islam, Head of Sales at Sheltech (Pvt.) Ltd.

Since 2004, REHAB has offered an out-of-court settlement option to address increasing disputes. Through its Mediation and Customer Service Cell, REHAB facilitates mediation between its members and clients, enabling cost-effective and timely resolutions. Any party—developer, landowner, or customer—can access this service.

Individuals can file a complaint with the Mediation Cell for a nominal fee if a dispute arises. A former judge oversees the mediation process, working to settle issues amicably without resorting to a lengthy procedural process.

"REHAB addresses allegations against its members through the Standing Committee on Mediation and Customer Service, which meets every Saturday for a minimal fee. We have successfully resolved numerous disputes and aim to address issues promptly. This committee is coordinated by a former judge, with elected REHAB directors serving as chairman, co-chairman, and members. Upon receiving a complaint, we forward it to the accused party and request a response. We then arrange a meeting between both parties to facilitate mediation, which may require one or multiple sessions," says Md. Wahiduzzaman, President of REHAB.

He further explains that this process benefits both parties—whether a landowner and developer or a developer and apartment buyer—by enabling them to resolve disputes outside court, as court settlements are often time-consuming and expensive.

Many agreements include clauses stipulating that disputes must first be resolved through arbitration before pursuing litigation. If an out-of-court settlement fails, the matter typically proceeds to court under the provisions of the Real Estate Development and Management Act, 2010.

"For arbitration settlements, the agreement must explicitly include an arbitration clause. If the arbitration decision (award) favours the buyer of an apartment, it must be enforced through the court. However, if arbitration is not mentioned in the agreement, litigation becomes the only option," explains Md. Amir Khasru, an advocate at the Supreme Court of Bangladesh.

According to Section 15 of the Real Estate Development and Management Act, 2010, there are provisions addressing the failure of a developer to deliver the real estate. It states:

1. If the developer fails to deliver the real estate within the time specified in the agreement, they must refund the total amount paid for the real estate, along with compensation specified in the agreement, through an account payee cheque within six months.

a.  Provided that if the buyer and developer mutually agree to extend the delivery deadline through a supplementary agreement, the buyer shall be compensated as per sub-section (2).

2.  If the amount or rate of compensation is not specified in the agreement, compensation at the rate of 15% on the total paid amount shall apply. The developer must pay the total money along with compensation in no more than three instalments within six months.

Md. Amir Khasru elaborates that litigation depends on various factors. For instance, if one party claims the agreement has not been fulfilled, they could seek compensation, a stay order, or a directive to enforce the agreement. However, litigation is often a lengthy and complex process.

He advises buyers to ensure arbitration clauses are included in their agreement papers. These clauses provide a clear legal basis for dispute resolution through arbitration, which is comparatively easier and more efficient than litigation. Without such a clause, arbitration cannot serve as a viable option for settling disputes.