Sale deed is necessary to confer clear and marketable title to property
2) mere possession does not confer title to property
3) take loan from family members and get registration of flat done in your name
Impact on buyer in case builder Bankruptcy, if Possession taken but Registration not done (Gurgaon)
Hello Sir/Madam, I am a buyer in a Property of Ansal API in Gurgaon. I have been given possession of my flat in October 2018, but not yet done the Registration due to my financial constraints. I plan to do the Registration as soon as I manage the funds, but recently got some news on an insolvency case going against Ansal API. I got anxious about what happens if the builder files for bankruptcy before I complete the registration of my flat. I have the following major queries: 1) Will I get impacted even though I have taken the possession of my flat? If so, then in what ways? 2) Can I do the registration after the builder files for bankruptcy? 3) What are the best options for me at present since I have some financial crisis? Looking forward to your reply and kind help. Thanks and Regards,
Asked 6 years ago in Property Law
Religion: Hindu
13 Answers
1) As of now the flat is still builder property and in your possession.
2) So get first on paper property on your name by way of registration at any cost. Paperwork should be clear, means clear title property.
1 .see in case the flat is not registered to you the property can be taken over in the insolvency proceedings.
2. You have to do same before bankruptcy proceedings are initiated and moreterim against the builder is passed.
3. You should manage funds and get the flat registered.
The right to property must transferred from builder to you, before the builder is declared insolvent, by way of execution of sale deed not necessarily be registered at the time of execution. It may be got registered within permissible time limit by paying applicable fines.
After builder is declared insolvent he/she shall cease to hold any right to any of his/her property and in such case your claim will be transferred into the distribution process where of course it will get first priority over other claims as per recent directives/guideline issued by Supreme Court in this regard.
Hi, it is advisable to get the registration done .. However, delaying registration will not impact the ownership title of your over the property , as per agreement holding charges will be levied on the allotte..Even if the builder approaches for insolvency, we can get the registration done through court ..
No if you have possession and you paid the full amount you don't have to worry
You are only in possession you are not registered owner, registered property on your name.
Thanks for your prompt reply. I understood that I need to get the registration done before the builder (Ansal API) is declared insolvent. So, I need to arrange funds and get the registration done, which might take some time. Also, once the Insolvency process starts, the timeline is 6 months with a provision for additional 3 months. The case at hand is Jaypee Infratech, whose insolvency process is going on for more than 1 year and still hasn't been decided yet. So, I request you to answer with a practical viewpoint in the case the insolvency process starts on the builder (I am specifically talking about Ansal API in this case). 1) Suppose till I manage to arrange the total fund for registration, the insolvency process starts but not decided. Can I get the registration done within that insolvency timeframe? Or do I need to get the registration process completed before even the insolvency process starts? 2) Suppose, am not able to do that in any case and the builder is declared insolvent. Do I loose the flat and all my hard earned money in that case? Or I'll get the value of the flat back according to the 2018 amendment in the Insolvency and Bankruptcy Act? Thanks and Regards,
Asked 6 years ago
You can done it during process. And the Insolvency professional tries to revive the company it's not always company turns insolvent. No you will not lose it as you are legitimate purchaser.
1)
once a builder files for insolvency, the National Company Law Tribunal (NCLT) will appoint an insolvency resolution professional who will attempt to resolve the builder’s financial situation. If a revival is not possible, he will verify the claims of creditors, and oversee the liquidation and settlement process.
Buyers may use Form F issued by the Insolvency and Bankruptcy Board of India (IBBI) to raise their claims, which can be for the refund of the amount they had invested in the builder’s project, the damages suffered by them due to the non-execution of their purchase agreement, or for receiving possession of the property they had paid for.
2) If a builder is declared insolvent, IBC provides two options – resolution or liquidation. The resolution process will involve an analysis of the builder’s financial position to see if the business can be rescued or revived. If the first option is not viable, the builder’s assets will be liquidated and the proceeds will be used to clear the creditors’ claims.
1. You can get it completed during the process before order of tribunal of moretium in case the order is passed you may have to file claim for your amount as creditor and submit it. You have to be committee of.creditors.
2. You may get the amount back according to proportion of company asset and creditors at hand as per IBC code.
You have already got possession
You don't have to get anything else from the builder except getting your document registered
Also its not that you are claiming refund of money from builder
So i fail to understand how is the builder being declared insolvent and your pending registration, anyway connected?
Also the object of the IBC law is not to declare a person insolvent but to prevent him from being declared as such. Thats why it is known as insolvency resolution process
Also once the above process begins there is an automatic stay against all proceedings against the builder till the process gets completed with the time limit of 180 days extendable by 90 days, ie in aggregate 270 days
This in no way would mean that the builder cannot do registration of a pending document. The stay or moratorium as it is known, is against legal proceedings and not against registration by a builder of an agreement executed by him with a flat buyer
1. You may wait and see the developments on this and if possible then you can get the property registered on your name with the help of the builder who may even file an IP case.
If builder declares himself bankrupt, buyer may have two options:
- To seek to recover advances paid to builder, in which case, Insolvency & Bankruptcy Code has granted buyer a status of Financial Creditor and hence first right on money realised from sale of builder’s assets.
- Intention to continue in the project, in which case RERA would intervene and ensure transfer of project to another developer or association of allottees.
Thus, there are sufficient safeguards in law to protect buyer’s money. However, in an eventuality of bankruptcy of builder, timeline of recovery of money or completion of project will get stretched owing to procedures of law.
3. You can approach RERA if the situation occurs as anticipated.
1. You can get the registration process completed at the earliest before the IP case is decided by the court.
2. You may have to decide about it after the court has passed the judgment in this regard under the provisions of the referred law.