Jayanti Devi (Student) 22 October 2024

Dispute in an under construction property

client/buyer has invested in an under construction property through a sale agreement.

Property approved for bank loan

question is if builder/developer fails to handover or give posession to buyer in case of insolvency or other dispute ,what will happen to buyers money ??

will buyer get back their money through bank auction on the land or will RERA allow all buyers to form an association and take the project to completion ??

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3 Replies

T. Kalaiselvan, Advocate (Advocate) 22 October 2024

If a builder declares insolvency, the fate of an investment in an under-construction property depends on a number of factors, including:

Liquidation

The builder's assets may be sold to complete the project and hand it over to the buyers. However, units that have already been handed over to the allottees are exempt from the liquidation process.

Resident welfare

Buyers may form a resident welfare association to take over the project and it is complete Balance payment

Buyers may be asked to pay the remaining balance to complete the project.

Refund

Buyers may file for a refund by terminating the purchase agreement, but they cannot claim possession of the property.

Buyers can raise claims using Form F from the Insolvency and Bankruptcy Board of India (IBBI). This form can help buyers get a refund, possession, or damages if they don't receive the property.

Insolvency means a company is unable to pay its debts when they are due. This can lead to legal action against the insolvent entity, and its assets may be liquidated to pay off its debts

Dr. J C Vashista (Advocate ) 23 October 2024

It is better to form an association of buyers of property and contest togather.

In an insolvancy proceedings against the builder all the assets of the company shall be taken over by RP, accounted and disbursed to stakeholders as directed by NCLT.