What should a buyer do if builder declares insolvency?

Homebuyers associated with insolvent projects should explore protection granted by the law and compel the state authority to  ensure that either the delivery of the project is seen through, or the money invested is returned. So, you decided to purchase a property, and were waiting for the construction to complete. The work started in full swing, but one day, you find out that the builder is no longer “there”. Worse, they have gone bankrupt, and declared insolvency. Among many other things, the recently executed RERA (Real Estate Regulation and Development) Act has tightened the noose around builders, thus, prompting many of them to escape the ambit of the state regulator. For buyers, on the other hand, it’s not exactly a smooth ride ahead. Of course, in some cases, the government will intervene and monitor the cash flows of your builder. This also includes the administration ensuring that the project is completed by a third party, notwithstanding the developer. As a buyer, here’s what

What if your builder is declared insolvent?

With the recent spate of builders filing for bankruptcy in most metro cities, buyers have been left in a turmoil about the status of their under-construction homes. It becomes crucial to know the recourses homebuyers have access to if their builder goes insolvent. Check them out in the article below! A buyer’s worst nightmare is having his builder go bankrupt. Such an event can bring the construction of his property to a standstill, putting his investment at significant risk. What is scarier is that as per the provisions of the Insolvency and Bankruptcy Code, 2016, buyers may be at the losing end in such a scenario, especially if the builder owes massive debts to creditors such as banks and other financial institutions. What is insolvency? Insolvency refers to a situation when a company or an individual cannot meet its financial obligations to its creditors or lenders. A builder may file for insolvency when he is unable to clear his debts once they become due. In order to be declared i

Buyer Guide: When to Buy? Role of CIBIL

In order to understand a CIBIL or CIBIL TransUnion score, it is essential to know what CIBIL is. Credit Information Bureau India Limited (CIBIL) is the first credit information company founded in India. It records and maintains credit details of individuals. These include details such as payment records of loans and credit card bills received from member banks and financial institutions. This information is then used to create Credit Information Records (CIR) and credit scores. This is shared with all the banks and financial institutions for evaluation and sanctioning of different types of loans.   CIBIL score and its calculation In the last five years or so, the Indian financial market has become quite stringent. Therefore, it is essential to maintain a healthy CIBIL credit score. Your CIBIL credit score is generated basis the CIR created and is used for evaluating your eligibility for any kind of borrowing. A CIR is an individual's credit payment history across loan types and cre

Buyer Guide: When to Buy? Assessing your Affordability

Buying a home is probably one of the most important decisions of your life. However, in India, this decision is often taken as a result of societal pressure to be an owner rather than a tenant. Nonetheless, such financially binding decisions should not be taken in haste and under pressure. It requires detailed understanding and planning of finances, so as to avoid any economic strain later on.  As, more often than not, buying a home involves taking a loan, there are certain factors one must consider before finalising the purchase. Thus, before one understands how to finance a home, it is essential to know how much one can afford.     EMI Affordability Equated Monthly Installment or EMI is the most important factor when it comes to home loans. Buying your dream home may become a nightmarish experience if the EMI is not within your comfortable reach. EMI affordability is determined by factors such as your monthly income, the number of working years left and existing liabilities.  Net mon

Buyer Guide: What to Buy? Residential vs. Non-residential land

Investing in land is significantly different from purchasing a built property. However, the returns on investment are largely governed by the type of land you invest in. One of the most frequently asked questions by all investors is – Which offers better ROI – residential land or non-residential land? Little do the buyers realise that there are various types of non-residential land, each having its own set of challenges and prospects of growth. If you are facing this dilemma of which type of land property to buy, it is essential to understand the types of land parcels and the kind of returns on investment you can get from that piece of land. Based on usage, land is broadly classified into residential and non-residential. Non-residential land is further classified into – Industrial Commercial Agricultural   Out of all, independent buyers can opt to invest in industrial, commercial and agricultural land. The Government holds the land reserved for recreational and transport purposes and a

Buyer Guide What to Buy? High-rise vs. Low-rise

Growing population and limited land as a resource have paved the way for vertical expansion in Indian real estate. As a result, residential buildings in many parts of the country are constructed as high as 100 floors, conveniently qualifying as skyscrapers. While the idea of living at higher floors may sound enticing to many, it may not appeal to those who prefer living closer to the ground. As per the Indian Building Code norms for fire safety, all buildings up to the height of 15 m from the first access point for a fire engine, are considered low-rise constructions.       While high rises can accommodate plenty of housing units across floors, low-rise buildings generally offer four floors or less. In low-rise builder floor units, a single dwelling is provided on every floor.  While buying an apartment, you may often face the dilemma of whether to buy a unit on a lower or a higher floor. Many a times, this decision may also depend on the city in question. For instance, in Delhi NCR, l

Buyer Guide: What to Buy? Established or Small-scale Builders?

The real estate market has a plethora of developers – new as well as established – making an array of offerings in a bid to expand their clientele. Every developer, irrespective of the company’s brand equity, carry distinct advantages and drawbacks. Therefore, in order to make an informed home buying choice, a prospective buyer must weigh the pros and cons while selecting a real estate titan or a new entrant in the builder fraternity. Here are a few points that you must keep in mind when deciding on a developer:   RERA Certification: The most reliable and cut and dried measure of credibility is a RERA certificate. All real estate developers are mandated to register under their respective State’s regulatory authority. By purchasing in a project by a RERA-registered developer, you can safeguard your investment in the event of delayed possession, incomplete project or faulty or substandard construction.   Credibility: One of the key advantages of buying a property from a reputed develop