Gujarat RERA Stops Bank from Taking Over Allottees’ Properties

Ahmedabad: The Gujarat Real Estate Regulatory Authority (GujRERA) has issued a directive preventing a nationalized bank from seizing properties belonging to allottees in a case involving a builder’s loan default.

The authority emphasized that homebuyers have legal rights over the properties and instructed the bank to release any properties it had already taken possession of until a final ruling is made.

The matter concerns approximately 40 homeowners from Vadodara who sought GujRERA’s intervention after the builder failed to fulfill project commitments and defaulted on the project loan.

These allottees faced uncertainty as the bank attempted to claim ownership of the properties due to the builder’s outstanding debts.

Advocate Musaib Shaikh, representing the allottees, highlighted the significance of the RERA Act in protecting the interests of homebuyers. He stated, “The RERA Act was enacted to safeguard the rights of allottees.

A bank’s financial claim cannot supersede the lifetime savings of individuals who have invested in their dream homes. GujRERA ruled that the bank has no right to take possession of properties that the defaulting builder has already sold to homebuyers. Furthermore, if the bank has already taken possession of such properties, it must return them to the rightful allottees.”

The situation arose when approximately 40 affected homebuyers approached GujRERA for assistance. These buyers had either completed sale deed registrations or entered into agreements to sell, securing their legal stake in the properties.

However, after the builder defaulted on the project loan, the bank moved to assert its claim over the properties, prompting urgent appeals from the allottees.

During the hearing, the builder failed to appear, raising further concerns about the project’s mismanagement. GujRERA took note of the matter and acknowledged that, while some homebuyers had formalized their ownership through registered sale deeds, others had agreements to sell, which also held legal weight.

Following its assessment, GujRERA ruled that the bank cannot seize any of the 40 complainants’ properties until the final decision in the case is made. The directive aims to protect the homebuyers from undue financial and legal hardship caused by the builder’s loan default.

However, the bank defended its actions, arguing that its claims against the defaulting builder were in accordance with the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. The bank maintained that it had the legal authority to recover its dues by seizing the builder’s assets.

Despite the bank’s position, GujRERA reaffirmed that allottees’ rights must be upheld, ensuring that homebuyers are not penalized for the builder’s financial liabilities.

The final order in the case is awaited, but the current directive provides significant relief to the affected homeowners, preventing further distress and potential loss of property.