When Builder Defaults - Bank: 0 Homebuyer: 1

Tenor

All over the country, which means mostly in NCR, uncountable homebuyers are paying for two houses without owning a single one. 

Bewildered? Let Us Explain. 

Say you live on rent and one Valentine's Day, you go and buy yourselves an apartment in an under construction project. You get a mortgage, your bank gives the builder his money and you bravely start paying your pre EMIs, along with your rent. 

Then one day, you wake up to some protests on TV and learn that the builder you trusted with all your money has done the great disappearing act and your dream home is now in limbo. Plus, you are now paying for two houses and you own zilch. So, that's that. 

Hang On, There's Hope For You Now

Per standard procedure, when a developer defaults on debt, the bank(s) funding the project's construction promptly take possession of the unfinished project and auction it to recover their dues, leaving would-be homeowners on a cocktail of antidepressant and hypertension meds.

However, per this report, the Supreme Court has recently put the interests of homebuyers above that of the project funding banks, in the event of a real estate builder defaulting on financial and delivery commitments.

Does It Need A Tweak In The Book?

Yes. The apex court thus clarified that in case of a conflict between the Real Estate (Regulation and Development) Act and recovery proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), the former will prevail.

Word On The Street

😍 Homebuyers: "This will certainly go a long way in giving relief to homebuyers, as they will not have to fight two-front battles, i.e., one with the builders and another with the banks."

😣 Banks: "It will affect their right to possession in the event of a default. If homebuyers claim interest in the builder's property, it will be a major setback for banks, and they will be hampered."

😤 Folks On Twitter: "Hey! What about shipyards and airlines?"