UP-RERA May Auction Unsold Flats Of Defaulting Builders, To Refund Buyers

In a first, the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has decided to auction unsold flats of defaulting developers and use the proceeds to refund investors. The authority is also planning to launch a portal for global e-auction of unsold properties of bankrupt builders, who have already been sent recovery notices. This move puts developers under some pressure to complete their stuck projects at the earliest or risk refunding the entire amount received by buyers.

Officials say they have failed to get any response, for as many as 660 recovery notes sent to defaulting developers. “None of the 660 recovery notes sent to the builders through the district administration in Gautam Budh Nagar has been honoured by the defaulters. So, we have now decided to auction unsold inventories of such builders to return the money to aggrieved buyers stuck in delayed projects, should they want it back,” Balwinder Kumar, member, UP-RERA said.

Homebuyers stand to gain

The recent more would greatly benefit the buyer community, which has been highly short-changed in the Noida real estate markets, which is replete with instances of project delays.

Thirty seven-year old Karnam Jain, who has invested in a Sector 137-based project, says, “It is so much better than staying invested in a project where I have to run to the lawyers every other day. I hope UP-RERA implements this soon. I can use the money to buy a ready-possession property.”

Challenges aplenty

 While homebuyers have welcomed the move, the auction process might not be as smooth. One, auctions are usually carried at a sale value which is lower than the market value of the property. Second, auction of such projects may have dire consequences for developers and may upset the balance. Authorities will also need to have valuers to work out the process.

Recovery roll

Reeling under tremendous monetary pressure, the Noida Authority has got a go-ahead from the state RERA to issues as many recovery notices as required.

“We want to recover as much money as we can, so that flat buyers who have invested their hard-earned money and approached the court with hopes, can be given some relief,” Noida Additional District Magistrate (finance) Munindra Nath Upadhyay said.