In a groundbreaking move, the Indian Bank (IBBI) has recently ushered in a wave of relief for homebuyers, unveiling amendments to liquidation rules that could reshape the real estate landscape. The pivotal amendment dictates that if a buyer of land or a house within a real estate project is granted possession, the property will be immune to the often tumultuous liquidation process.

The official notification, released on February 12, highlights the amendment’s core principle: when a borrower company transfers possession to the customer in a real estate project, the property will be excluded from liquidation proceedings. Rajiv Kumar, former chairman of the Real Estate Regulatory Authority of Uttar Pradesh, commended this move, stressing its importance in preventing properties from becoming entangled in insolvency proceedings, leaving buyers without possession.

The Insolvency and Bankruptcy Regulator, in a consultation paper dated November 7, 2023, proposed the adoption of an insolvency process for individual projects, aiming to attract more bidders in various real estate-related insolvency cases. Furthermore, IBBI advocated for an enhanced role for real estate regulatory authorities, suggesting the mandatory registration of all real estate projects undergoing resolution with the respective regulatory bodies.

Real estate advisory firm Anarock Capital enthusiastically welcomed the amendment, predicting substantial relief for homebuyers. Ashish Aggarwal, Senior Vice President of Research and Investment Advisory at Anarock Capital, expressed, “This will provide significant relief to homebuyers, granting them the right to voice their opinions in the committee of lenders. With time, the number of lawsuits in the bankruptcy. process is also expected to decrease.”

The Amitabh Kant-led committee on real estate projects emphasized the necessity for reforms in the Insolvency and Bankruptcy Code (IBC) to address the complexities of the real estate sector. The committee’s report further recommended the transfer of possession and ownership of land, apartments, or buildings to allottees during the resolution process.

Through the February notification, IBBI enacted 12 crucial amendments designed to streamline the liquidation process. These changes aim to boost transparency and empower the advisory committee. The liquidator is now required to consult the advisory committee on various aspects of the process before making decisions. For instance, before finalizing a report, the registered valuer must explain the valuation methodology adopted. Piyush Aggarwal, Associate Partner at Aquilon, affirmed that the notification’s purpose is to strengthen the authority of the advisory committee.

In conclusion, these amendments mark a turning point for homebuyers, ensuring that possession remains a priority even amid insolvency proceedings. The real estate sector stands to gain from increased transparency, reduced legal disputes, and an empowered advisory committee, promising a more resilient and consumer-friendly environment. As IBBI charts this new course, it heralds a future where homebuyers can navigate the real estate market with increased confidence and security.