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Builder bankrupt what to do?

Last updated: July 11 2009
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  • Builder bankrupt what to do?

    Hi All
    Just was thinking in case people have invested money in some real estate residential project and in the middle of the project builder declares itself bankrupt .What are options left with the buyer ?

    Will the buyer lose all the money ?

    Regards
    Pradeep
  • #2

    #2

    Re : Builder bankrupt what to do?

    Originally posted by alkagirdhar1278 View Post
    Hi All
    Just was thinking in case people have invested money in some real estate residential project and in the middle of the project builder declares itself bankrupt .What are options left with the buyer ?

    Will the buyer lose all the money ?

    Regards
    Pradeep

    This is a good topic.....with thousands of crores in debt lot of builders are going to be in this bankruptcy position in next 2-3 years.

    with fiscal deficit reaching 6%, stock market starting to crash again......no one can bail out these debt ridden builders this time.

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    • #3

      #3

      Re : Builder bankrupt what to do?

      Very pertinent question ....

      Originally posted by contra View Post
      This is a good topic.....with thousands of crores in debt lot of builders are going to be in this bankruptcy position in next 2-3 years.

      with fiscal deficit reaching 6%, stock market starting to crash again......no one can bail out these debt ridden builders this time.

      I had this other post yesterday with some gyan on some of the strategies one uses in a difficult market. There was one about Stop Loss.

      So, here it is again ...

      There is a time to pray. And there is a time to act.

      Do some research and determine the financial strength of your builder.

      So long as they are financially sound, pray (that they finish and give possession quickly and that this recession ends sooner than expected so ou have the ability to continue paying EMIs).

      When you realise (earlier than others because you are continuously keeping tabs on the market) that the builder is going under, stop praying and execute a stop loss. You might even be able to come back and buy the same flat at a distress price far lower than the price you exited it at, thereby gaining a lot - both in money terms as well as experience and wisdom!

      If you do not have the money to execute a stop loss, then you should not have gotten into this deal in the first place, not having the financial muscle to get out of it!!!

      In that case, the only option is to wait it out and keep paying the EMIs. Surely, one day the price will come back up to cross your cost. If even this fails, you will lose your home to the entity which was always the real owner of the property - the bank!

      cheers

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