What Happens to Your Property if the Real Estate Company Goes Out of Business?

Imagine you’ve invested in a property, and everything seems to be going well. Then, suddenly, the real estate company you’ve been dealing with goes out of business. This can be a stressful situation, that could make you feel anxious and frustrated. However, understanding what happens next and knowing your rights can guide you through it effectively.

When a real estate company goes out of business, buyers can face various challenges depending on the type of investment they made or relationship they have with the company.?

Two key scenarios determine the impact: land banking and development projects.

1. If you are Land Banking with the company:

In the first scenario, buyers invest in land banking, where they purchase land with the intent of holding it for future appreciation.?

If the company goes out of business, the outcome depends on whether the buyer has paid in full or is still making installment payments.?

If the buyer has completed full payment and the ownership documents were properly transferred, they may not face significant issues unless there are legal complications related to the land itself, such as government claims or disputes from original landowners.?

However, if the buyer is still making payments when the company shuts down, recovering their investment can become challenging.?

Without full ownership, the buyer risks losing the property altogether since the company may not be able to finalize the sale or refund their payments.

In real estate, many companies do not fully pay for the land before selling it to buyers. Often, they make partial payments to original landowners and complete the purchase as they sell more plots.?

If the company goes out of business before fully paying, the original landowners may reclaim the land, leading to potential disputes, even for buyers who have completed their payments. This uncertainty underscores the importance of verifying ownership records and payment status prior to investing.

2. If the Real estate company is in charge of Development and Building Projects:

The second scenario occurs when the real estate company is responsible for building and developing the property.?

If the company goes out of business before completing the construction, buyers may be left with unfinished properties or underdeveloped estates.?

If you have made full payment and your construction is complete, the only challenge you will face is that the estate might not develop quickly since the developers are out of business.

But if you have completed payment without transfer of ownership, there is a problem.

For buyers still on an installment plan, the company's collapse complicates matters further.?

Without a developer to complete the project, they might be unable to continue their payments and could lose both their investment and the opportunity to own the property.

How do you resolve your property issues when a real estate company goes out of business?

To tackle these issues, different approaches are necessary based on the specific situation.?

If a buyer has fully paid for land under a land banking scheme but faces ownership disputes due to the company’s financial troubles, the best course of action is to seek legal assistance.?

A lawyer can help prove ownership, negotiate with landowners, and ensure that proper documentation is secured.?

For buyers who have not completed their payments, legal intervention is also needed, but the focus should be on recovering the investment or negotiating alternative solutions with stakeholders involved.

For those affected by the failure of a development project, buyers who have paid in full should first confirm whether legal ownership has been properly transferred.?

If infrastructure is incomplete, they may need to form a cooperative with other buyers to either hire a new developer or push for government intervention.?

Buyers still on installment plans must carefully assess their legal options, as stopping payments could lead to losing the property, but continuing payments without a developer may not be practical.?

Seeking legal counsel is the best way to determine whether a refund, renegotiation, or other solutions are possible.

Ultimately, conducting due diligence before investing in real estate is important.?

Ensuring that the company fully owns the land and that they have a history of completing projects can help buyers avoid these risks.?

If issues arise, acting swiftly with the assistance of legal professionals can improve the chances of securing one’s investment.

CONCLUSION

While the closing of a real estate company can feel overwhelming, knowing your rights and taking proactive steps can help you safeguard your investment. Make sure to secure your important documents, and seek legal advice . Being prepared is your best ally! Remember, if you’ve bought a property legally and have the right paperwork, your ownership is safe. However, if there are any pending payments or incomplete developments, ensure to involve a lawyer.

Best Regards,

Joan Obi-Okuhon,

Real Estate Advisor.