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Sunday, July 21, 2024

A Ray of Hope for Homebuyers Amidst Real Estate Insolvency Struggles

In the ever-evolving landscape of Indian real estate, where the dreams of nearly 20,000 homebuyers hang in the balance due to the insolvency woes of major builders such as Jaypee, Amrapali, Unitech, Today Homes, Supertech Logix, and Ajnara, the Insolvency and Bankruptcy Board of India (IBBI) is gearing up to introduce pivotal amendments. This comes at a critical juncture when the sector, accounting for 21% of admissions but only witnessing 15% of resolutions, requires a nuanced approach to streamline operations and instill confidence among stakeholders.

At the heart of the proposed changes lies a fundamental shift in how homebuyers interact with the insolvency process. The IBBI envisions a scenario where resolution professionals are mandated to register each project under the Real Estate (Regulation and Development) Act (RERA) and establish dedicated bank accounts for each project. This move serves a dual purpose: offering immediate relief to those entangled in the insolvency process and providing a robust assurance mechanism for potential homebuyers.

The suggested flexibility in possession transfer is a noteworthy stride. With Committee of Creditors (CoC) approval, resolution professionals could potentially transfer possession of units to allottees either on an ‘as is where is’ basis or by settling any outstanding balances. This proves to be a significant boon for individuals who have not only paid the full amount but have also taken occupancy, adding a layer of practicality to the resolution process.

Recognizing the need for safeguarding homeownership, the IBBI proposes the exclusion of properties where allottees have taken possession from the liquidation estate. This strategic move ensures that homes already assigned to buyers remain under their ownership, even in the event of the builder facing liquidation, providing a sense of security amid financial uncertainties.

Acknowledging the complexity of companies with multiple projects, the IBBI suggests a pragmatic approach. Resolution professionals are encouraged to invite separate resolution plans for each project, thereby simplifying the resolution process. This not only expedites the overall resolution timeline but also makes individual projects more appealing to potential buyers based on their perceived risk and viability.

These proposed amendments, while holding the promise of alleviating the predicament of existing homebuyers, also aim to instill confidence in those considering real estate investments. Importantly, the IBBI’s focus on regulatory enhancements signifies a nuanced approach, avoiding the need for sweeping legislative changes. As stakeholders eagerly await these changes, there is a collective hope that they will usher in an era of greater transparency, efficiency, and assurance in the Indian real estate sector.

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