RERA AND INSOLVENCY: PROTECTING HOMEBUYERS WHEN DEVELOPERS GO UNDER

For middle class families in India a home is the largest purchase that they will ever make. It is paid for in instalments that are saved over years. Then the builder stops picking up calls. The homebuyer learns that the company is in insolvency proceedings. At that point the family’s biggest financial decision becomes its financial risk. India has two laws that are meant to protect this homebuyer: the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Insolvency and Bankruptcy Code 2016 (IBC). On paper these laws work together. In practice a homebuyer whose developer goes insolvent often does not know which forum to approach or how long the homebuyer will have to wait.