How to get money back from the Builder for Incomplete Flat or Delayed Possession?
Everyone has a dream of owning a flat in their lifetime and with home loans easily available in India, more and more people rushed to book flats. The builders saw the golden opportunity of growth and earning as government introduced Income Tax benefits for home loans. The housing industry boomed and more and more builders entered the market in hopes of reaping lots of profit. After few years, lakhs and lakhs of people are left heartbroken as the builders failed to keep their promise. Many projects are delayed or left incomplete and many times the builder has just collected crores of rupees and vanished. The homebuyer are suffering mentally, physically and financially. They have to pay the EMIs to the Bank for the home loan, installments to the builder, as well as rent of the flat they are living in. There is not much that homebuyers could do legally as the realtors had made them sign one-sided agreements.
Here is the most effective way to recover your money or flat:
- Are you one of the homebuyers who are suffering because the builder has not given possession?
- Is your dream home incomplete and your money is stuck for many months or years?
- Are you running here to there trying to find out how to recover your money or get your flat registered?
- Have you formed a group of aggrieved homebuyers and approached Courts or RERA but nothing concrete has happened?
Don’t worry! Now you can recover your investment or get possession of your flat from the debt ridden builders through a time bound law. you can initiate Insolvency proceedings against the defaulting builder in the National Company Law Tribunal (NCLT). On August 9, 2019, the Supreme Court gave a landmark judgement that gives homebuyers all the rights of a financial creditor under the Insolvency and Bankruptcy Code, 2016.
Understand The Insolvency Procedure
You can individually or along with other suffering homebuyers, banks, etc. initiate Corporate Insolvency Resolution Proceedings against the fraudulent builder, who cheated you of your hard-earned money. The minimum default amount is one lakh rupees, naturally the builder owes more than that to you.
You will now be treated at par with other lenders like banks and other financial institutions. As a financial creditor you will get the right to be represented in Committee of Creditors (CoC).
Once the application is filed in the NCLT, it will verify the authenticity of default and will either accept/reject the application within 14 days as prescribed under the law. As soon as your application is accepted , the insolvency process will begin against the real estate company.
Know The Benefits of Insolvency
1. Best Among All Legal Options:
If your builder fails to give occupancy certificate of flat or reimbursement of invested money, then you have 3 legal options:
- RERA Act
- Consumer Act
- Insolvency and Bankruptcy Code (IBC)
Filing for Insolvency against the company will give you an upper hand above the other 2 as the Supreme Court in its latest judgement has made clear. The Apex Court said that in case there is a conflict between the 3 then IBC shall prevail over the others.
2. Fastest Mode Of Recovery:
- Once your insolvency application is accepted by the NCLT, then you should forget all your worries.
- Insolvency is a time bound solution and a solution is worked out within the period of 6 months.
- In complicated cases an extension of another 3 months is granted by NCLT.
- In any case the procedure is completed in 9 months time.
- In comparison to this, RERA and Consumer Act are lengthy and time consuming process which may take years.
3. Hassle-free Procedure:
- If you are thinking that the insolvency procedure is very difficult and complicated for a person like you, don’t worry.
- All you have to do is pick a professionally sound firm and hand over your documents to them.
- Thereafter, the insolvency professional will take care of everything; notice, petitions,etc.
- They will help to file an application under Section 7 of the Code.
- They will make sure that the application is properly filled so that it doesn't get rejected by the NCLT.
- The Insolvency Professional selected by you will work on the entire process.
4. Sure Shot Result:
- The IBC has been formulated to bring about maximization of value of assets of the defaulting firms.
- If a revival plan is not resolved within 180 days then the applicant automatically moves to the next stage of Insolvency Process, i.e. liquidation
- In any case you will get relief at the earliest.
The recent judgement has opened a door which will surely bring relief to all homebuyers who are suffering due to fraudulent companies. If you are an allottee but your flat is still incomplete or delayed or work has stopped altogether, Insolvency is the remedy to recover your Money Back.
The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.