Latest Reforms In Real Estate CIRP: Strengthening Position Of Homebuyers

These reforms are based on a series of Supreme Court judgments that duly acknowledged the hardships faced by homebuyers. In Chitra Sharma v. Union of India^[1], the Court had taken judicial notice of the existing fact that homebuyers were remediless under the existing regime of insolvency, and it was necessary that there be a provision to involve these buyers in such resolution proceedings on defaulting developers. This received further crystallisation in the case of Pioneer Urban Land & Infrastructure Ltd. v. Union of India^[2], where the Court upheld the 2018 amendment that classified allottees as financial creditors to allow them the right of action under Sections 7 and 21 of the IBC. Yet, even under this legal equivalence, the real attitude towards homebuyers was unequal and did not always involve them in possession, decision-making and transparency.

The 2025 regulations now attempt to bridge this practical gap. Perhaps the most transformative of these is the provision allowing the resolution professional to hand over possession of completed units to allottees during the corporative insolvency resolution process, even during the moratorium under Section 14 of the Code^[3]. Until now, courts had to intervene on a case-by-case basis. In Alok Sharma v. I.P. Constructions Pvt. Ltd^[4], the NCLAT permitted execution of sale deeds during the moratorium where possession had already been granted. Similarly, in NOIDA v. Lotus 300 Apartment Owners Association^[5], the Supreme Court permitted the continuation of registration of sale deeds to avoid consumer injustice. The 2025 amendment codifies this principle into regulation, authorising the RP to hand over possession upon fulfilment of certain conditions, full payment by the allottee, approval by the Committee of Creditors with a minimum of sixty-six per cent voting share, and a written request from the allottee^[6]. This is a deeply progressive move. This reflects upon the transition out of adversarial approaches in litigation, to process-oriented resolutions that advance accountability in contractual fairness. It enables bona fide purchasers to receive houses without delay pending the approval of the plans or court supervision, and therefore not being deprived any longer in the desire to have confidence in the insolvency framework.

The reforms also address another major issue in real estate insolvency, the absence of the involvement of land owning or statutory development authorities. In some prominent instances like in Jaypee Infratech^[7] insolvency, the lack of or unwillingness of the public authorities to act as part of the resolution process resulted in the delay or failure of the implementation of the plan. The NBCC Supertech controversy is also one such incident where the delay in cooperation by YEIDA hampered the resolution process. The latest framework makes it compulsory that the meetings of the Committee of Creditors be opened up to participation by the competent statutory authorities, including development authorities, municipal corporations, and RERA. Their inclusion, though not as voting participants, makes key approvals like occupancy certificates and land use permissions form part of the resolution plans at their inception^[8].

Moreover, the presence of RERA in CoC meetings is supposed to provide some technical scrutiny into the ongoing construction and see to it that the welfare of consumers comes first. This is in line with Section 25A of the IBC, which regulates the entitlement of any authorised representative of a financial creditor who is a member of a class. In a harmonious interpretation with the Real Estate (Regulation and Development) Act, 2016, it becomes emphatic about involving homebuyers in decision-making processes through institutional channels.

Another crucial reform lies in the recognition of homebuyer associations as resolution applicants. Critical terms in the submission of resolution plans up to the recent past include performing security and earnest security and deposits, which effectively lock out allottees from proposing plans on their own projects. The February 2025 revision proposes a graded easing. Any associations of creditors representing at least ten per cent by value or one hundred allottees (whichever is lower) can now submit resolution plans to be approved by the CoC. The performance security requirement can be done away with by the Committee once the proposal is found viable^[9]. This promotes group action among the home buyers, particularly in scenarios where no other bidders are willing to show their interest in a pending project. It returns the power to the people who have the most stake in the completion of this project.

To support the large group of homebuyers, the amended framework proposes the concept of facilitators. Where the numbers of creditors within a given class exceed a thousand, facilitators of up to five per class may be appointed to assist the authorised representative in reaching out to the population and building a consensus. This tackled one of the central implementation dilemmas that had beset previous initiatives: the overwhelming size and diversity of the homebuyer population. The agents are regulated insolvency practitioners and their fee is limited to twenty per cent of the fee of the authorised representative, allowing affordability^[10].

Access to information and transparency have also been enhanced. Resolution professionals must now prepare a detailed project status report within sixty days of the insolvency start. In this report, important details are included, like the status of land title, the approvals secured, any pending litigation, and construction progress. In other earlier cases, like Manish Kumar v. in Union of India ^[11], the Supreme Court observed that homebuyers have had trouble engaging in meaningful participation on account of information asymmetry. This new requirement aims to ensure that homebuyers and creditors have full information to make important decisions about resolution plans. In addition to the provisions of IBBI, state RERA bodies have continued to supplement these reforms. An example is the recent change in the Maharashtra RERA registration certificate format, which aims at increasing transparency by requiring information on built-up area, number of units, and other construction priority dates through the use of QR codes^[12]. In a similar way, Odisha RERA has also constituted a Conciliation and Dispute Resolution Cell to facilitate dispute resolution between promoters and allottees, which may prevent further developments of disputes to insolvency.

Collectively, these multi-layered reforms represent a shift from reactive litigation to a proactive resolution. They are refining the position of the home buyers not merely as financial creditors who have a right to vote, but as rightful stakeholders in the future of the project they have invested in. They also represent a level of regulatory maturity that considers real estate insolvency as not being standard corporate insolvency, both in the nature of the assets involved, as well as in the constitutional and consumer rights ramifications it presents. As our nation continues to fine-tune its insolvency architecture, the 2025 IBBI reforms stand out for their calibration of economic and equitable concerns. They make sure that no longer does the future of real estate projects remain inside a closed room, but that the decisions are made in collaboration with those people who will someday end up living in the spaces that such projects purport to offer. The journey is not over yet, but the path is certainly clearer.