Are there any insurance plans that cover the risk of project delays or abandonment of projects by real estate developers. I mean can I take a risk insurance from booking the housing property until handing over of the property to cover the paid amount to the developer (After having paid, say, 70 per cent of the money, including personal contribution and bank loans to the developer) if the project becomes a non starter. Are such insurance covers available in the market?
- Balaji Radhakrishnan
There is no insurance plan available that will cover the risk of project delays or abandonment of projects in the real estate sector.
However, the recently passed real estate bill would address some of your concerns. The Rajya Sabha has passed the real estate bill in March this year which will now pave way for regulations in the real estate sector. As per the new realty law, all projects have to be registered, builder's must disclose deadline and builder will have to pay interest for missing deadline. However, this does not cover existing/ongoing projects. The bill ensures that 70 per cent of the money taken from buyers has to be kept aside in a separate bank account and this money can only be used for construction activities. This will ensure that the sellers don't invest the money received from one project into another project.