Best Transfer or Takeover of a Project by Another Developer Lawyer

Projects change hands more often than buyers realise. A developer runs out of money and a bigger group steps in. A landowner falls out with its development partner and brings in another. A fund that financed a stalled project takes it over to protect its investment. A group restructures and moves a project into a different company. In the NCR, where hundreds of projects have stalled over the past decade, takeovers have become one of the main ways homes eventually get built.

Before RERA, buyers often found out about a change of developer only when a new name appeared on their demand letters. Section 15 of the Real Estate (Regulation and Development) Act, 2016 changed that. Now a promoter can't transfer a project to someone else without the consent of two-thirds of the buyers and the approval of the authority. This page explains how Section 15 works, what counts as a transfer, how the process runs, and what a takeover means for buyers, the outgoing developer and the incoming one.

What Section 15 says

Section 15(1) provides that the promoter shall not transfer or assign its majority rights and liabilities in respect of a real estate project to a third party without obtaining:

• the prior written consent of two-thirds of the allottees, excluding the promoter; and
• the prior written approval of the authority.

Two provisos matter a great deal:

• the transfer or assignment does not affect the allotment or sale of units already made by the outgoing promoter; and
• for counting the two-thirds, an allottee is counted as one, regardless of the number of units booked in his name or in the name of his family. Joint allottees of a unit are treated as one.

Section 15(2) then says that once the transfer has been permitted by the allottees and the authority, the incoming promoter must independently comply with all pending obligations under the Act, rules and regulations, and the pending obligations under the agreements for sale the outgoing promoter signed with buyers. It adds that the transfer doesn't give the incoming promoter any extension of time to complete the project. If it defaults, it faces the same consequences for breach or delay as any promoter under the Act.

In short: buyers keep their allotments and agreements, the new developer steps into the old one's shoes, and the clock doesn't reset.

What counts as a transfer

The trigger is a transfer or assignment of "majority rights and liabilities" in respect of the project. That clearly covers a direct transfer of the project, its land rights, approvals and buyer contracts from one company to another. Other arrangements are less clear.

• Sale of shares in the promoter company. If the promoter is a company dedicated to a single project and its shares are sold to a new group, the promoter itself doesn't change, but control does. Whether this falls within Section 15 is debated. Some authorities have required disclosure and approval for changes in control, and state rules or regulations sometimes deal with it expressly. A cautious approach is to tell the authority and update the registration, and to take advice on whether consent is needed.
• Joint development and collaboration agreements. Where a landowner and a developer are both promoters, a change in their arrangement, such as the landowner bringing in a new developer, is likely to be a transfer of rights and liabilities.
• Bringing in a co-developer. Some arrangements bring in a second developer to complete the project while the original promoter remains. Depending on the split of rights and obligations, this may or may not be a transfer of majority rights. State policies on co-developers, discussed below, have added detail for some areas.
• Transfer of part of a project. Transferring a phase or a group of towers raises the same issues, applied to that part.
• Internal group restructuring. Moving a project from one group company to another is still a transfer, even if the ultimate owners are the same.

Where there's doubt, the safer course is usually to treat the arrangement as needing Section 15 compliance, or at least to seek the authority's view before completing it. A transfer later found to have needed consent and approval can be challenged by buyers and can lead to penalties.

Other approvals that may be needed

RERA approval is only one of the approvals a takeover needs. Depending on the project, there may also be:

• approval from the development authority or land-owning agency (for example, Noida, Greater Noida or YEIDA for leasehold land in UP), which typically has its own policy and fee for transfer of a lease or change of the lessee's shareholding;
• in Haryana, approval under the town and country planning department's policy on change of developer or beneficial interest in a licence, which also involves fees and conditions;
• consent of lenders who hold security over the land, receivables or shares;
• approval of the Competition Commission, in the rare cases where the size of the parties crosses the thresholds; and
• court or tribunal approval where the project is under an insolvency process or a court's supervision.

These processes often run in parallel with the RERA process, and the order in which they are obtained matters. A takeover that has RERA approval but not the development authority's consent can stall, and vice versa.

How the Section 15 process usually runs

1. Due diligence by the incoming developer

Before committing to anything, the incoming developer needs to know what it's taking on. Because Section 15(2) makes it responsible for all pending obligations, the due diligence must go well beyond the land and approvals. It should cover:

• the title and land rights, including any dues to the development authority, which in Noida and Greater Noida can be very large;
• the approvals, their validity and conditions, and what's still pending;
• the buyer book: every allotment, agreement, payment received and outstanding, cancellation, and any special terms (such as assured returns, subvention schemes or discounts);
• pending complaints, orders and recovery certificates before RERA, consumer forums and courts, and the total amount of interest and refunds already ordered;
• the project account, audit reports and any gap between what was collected and what was spent on the project;
• the physical state of construction, its quality and the cost to complete;
• contracts with contractors, consultants and suppliers; and
• debt and security over the project.

The single biggest risk in most NCR takeovers is the liability for delay interest to existing buyers, which can be very large for a project several years late. The incoming developer needs a clear view of it, and a plan for dealing with it, before signing.

2. The commercial deal

The outgoing and incoming developers agree on the terms: what is transferred, what is paid, who bears which past liabilities, and how the risk of unknown liabilities is handled. Indemnities from the outgoing developer are common but are only as good as its ability to pay. Escrows and holdbacks are often more useful.

The deal should be conditional on the buyers' consent and the authority's approval, and on any other approvals needed. It shouldn't be completed before those are in hand.

3. The proposal to buyers

The buyers' consent must be informed. The communication to buyers should explain who the incoming developer is, its track record and financial strength, the revised schedule for completion, how the project will be funded, what will happen to buyers' existing agreements and payments, and how delay interest will be handled. Many authorities expect a standard consent form, and some have prescribed one.

Buyers who don't respond aren't counted as consenting. Getting two-thirds of buyers to sign is often the hardest part of the process, especially in large projects where many buyers are NRIs, investors who have lost interest, or people who have stopped trusting anything the developer says. Meetings with buyers, the association of allottees and their lawyers, with real answers to their questions, are usually necessary.

4. The application to the authority

The application typically includes the agreement between the developers, the buyers' consents (with a list showing how two-thirds has been reached), the incoming developer's details, track record and financial position, the revised schedule and financing plan, the status of approvals and the development authority's position, and an undertaking by the incoming developer to comply with Section 15(2).

The authority will scrutinise the consents, sometimes verifying a sample directly with buyers, and will want to be satisfied that the incoming developer is capable of completing the project. It may impose conditions.

5. Implementation

Once approved, the registration is updated to show the new promoter, the project account is transferred or reconstituted, buyers are formally notified, and the new developer takes over construction, sales and buyer communication. The new promoter is responsible for quarterly updates and all other compliance from then on.

What a takeover means for buyers

For buyers in a stalled project, a takeover can be the best news in years. It can also be a source of new problems if it is poorly structured. A few things to look for before consenting:

• Your agreement stays. Section 15 says the transfer doesn't affect your allotment. The new developer must honour your agreement, including price, specifications and possession terms. Be wary of any consent form that asks you to sign a new agreement on worse terms as a condition.
• Delay interest. Under Section 15(2), the incoming developer takes on the pending obligations, which includes liability for delay under the agreement and the Act. In practice, takeover proposals often ask buyers to waive some or all past interest in exchange for a firm completion date. Whether that is a good bargain depends on the project. You're entitled to know exactly what you're being asked to give up.
• The new completion date. Ask how it was worked out, and what happens if it is missed. The Act says there's no extension of time just because of the transfer, but in a stalled project, the practical question is when the flat will really be built.
• Funding. Where is the money to finish coming from? Your remaining instalments, the incoming developer's own funds, unsold inventory, a fund such as SWAMIH, a bank loan? A takeover without a funding plan is just a change of name.
• The development authority's dues. In Noida and Greater Noida, unpaid land dues have held up occupancy certificates and registries for years. Ask how they will be dealt with.
• Existing orders. If you already have a RERA order or a recovery certificate, check what the proposal says about it. The incoming developer may seek to restructure such liabilities, but it can't simply ignore an order in your favour.

Buyers deciding whether to consent should ideally act together, through the association or a buyers' group, and take advice on the proposal as a whole. A group can negotiate better terms than individuals, and the outgoing and incoming developers know that they need the group's support to reach two-thirds.

Takeovers through other routes

Section 15 is the route for voluntary transfers. Projects can also change hands in other ways.

Authority action under Sections 7 and 8

Where a registration has been revoked or has lapsed, Section 8 requires the authority to consult the appropriate government and take such action as it considers fit, including carrying out the remaining development by a competent authority, by the association of allottees, or in any other manner. Some authorities, including UP RERA, have used this power to hand stalled projects to the allottees' association for completion, sometimes with a new developer appointed by the association, or to arrange completion through a government agency. Buyers in such projects usually still need to fund the remaining work through their balance payments, and the process can be slow, but it has helped in some long-stalled projects.

Insolvency resolution

Where the developer is in insolvency under the Insolvency and Bankruptcy Code, 2016, a resolution applicant whose plan is approved by the committee of creditors and the National Company Law Tribunal effectively takes over the project. Homebuyers vote as a class in the committee of creditors through an authorised representative. How far Section 15 applies alongside the IBC process is a question the tribunals have dealt with on the facts; in practice, the IBC process, with homebuyers' vote and the tribunal's approval, is usually treated as sufficient. See our page on builder insolvency.

Court-supervised completion

In a few very large failures, courts have directly arranged completion. The Supreme Court's Amrapali judgment in 2019 directed that the group's projects be completed by NBCC, a government company, under a court-appointed receiver. That's an exceptional remedy, not a route available on request.

State policies on stalled projects and co-developers

Governments have also tried policy solutions. In UP, following the recommendations of a committee set up by the central government on legacy stalled projects, the state adopted a package in late 2023 under which developers of stalled projects on Noida, Greater Noida and YEIDA land could get relief on interest on land dues, and which allowed for co-developers to be brought in, subject to conditions such as paying a part of the dues and registering pending flats. Haryana has its own policies on change of developer for licensed colonies. These policies sit alongside RERA; they don't replace Section 15. A co-developer arrangement may still need buyers' consent and the authority's approval, depending on how it is structured.

Because these policies are revised from time to time, anyone relying on one should check the current version and its deadlines.

For the outgoing developer

A developer handing over a project often wants a clean exit. Section 15 doesn't fully provide one. The incoming developer takes over pending obligations, but the outgoing developer isn't automatically released from liability for its own past defaults, and buyers may still pursue it, particularly for amounts it received and didn't spend on the project. Authorities have sometimes held both the old and new promoters liable, depending on the terms of the transfer and the facts.

Points for the outgoing developer to consider include:

• how existing orders and recovery certificates against it will be dealt with;
• whether buyers' consents include any release, and if so, whether the release is fair and clearly explained (an unclear release is likely to be read against the developer);
• how money it collected and didn't spend on the project will be accounted for; and
• its own continuing compliance obligations up to the date of the authority's approval.

For investors and funds

Investors and funds that step in to rescue a project, or that enforce security and take control, are in the same position as any incoming promoter once they or their nominee become the promoter. They take on pending obligations under Section 15(2), including buyers' agreements, and they can't claim an extension of time because of the transfer. That needs to be priced into the deal.

Funds that only lend, without becoming the promoter, aren't promoters under Section 2(zk) just because they finance the project. But the line can blur where a lender takes control of the project's operations, sales or funds. Structuring matters.

An illustration

Here's a made-up example. A developer launched a 700-unit project in Greater Noida West in 2014, with possession promised for 2018. Work stopped in 2019 with the structures of six towers up to various floors. The developer owes the Greater Noida authority a substantial sum in land dues. About 550 units are sold; 150 are unsold. Around 200 buyers have RERA orders for refund or interest, and some have recovery certificates.

A larger developer is interested in taking over. Its proposal is to complete all towers within 36 months, funded by buyers' balance payments, the sale of unsold units and its own funds. It asks buyers who want their flats to give up delay interest up to the date of takeover, in exchange for a guaranteed completion date with a penalty if it's missed. Buyers who would rather leave will be refunded their principal in instalments over three years.

For the takeover to work:

• the incoming developer must get at least two-thirds of the roughly 550 allottees (counting each as one) to consent in writing;
• UP RERA must approve under Section 15;
• the Greater Noida authority must approve the change, probably under the state's stalled-projects policy, with a plan for the land dues;
• any lenders with security over the project must consent; and
• the buyers with existing orders and recovery certificates need a fair solution, because their orders don't disappear.

For buyers, the proposal deserves careful thought. Giving up years of delay interest is a real cost. But a flat finished in three years with a credible developer may be worth more than an order against a developer that can't pay. Buyers who have already received a refund order may prefer to hold out for payment. Those who want the flat may decide to accept. The point of the consent process is that each buyer decides with the full picture in front of them.

How we help

For incoming developers and investors: due diligence focused on RERA liabilities; structuring the transaction; drafting the transfer documents; preparing the proposal and consent forms for buyers; meeting buyers and their association; the Section 15 application; coordinating with the development authority, lenders and other regulators; and post-takeover compliance.

For outgoing developers: negotiating the transfer, protecting against continuing liability as far as the law allows, and handling the authority process.

For buyers and associations: reviewing takeover proposals, advising on whether to consent and on what terms, negotiating with the developers, raising objections with the authority, and protecting existing orders and claims.

For buyers in projects that have stalled with no takeover in sight, see our pages on group complaints, refunds with interest and builder insolvency.

Frequently asked questions

Can a builder transfer a project to another developer without asking buyers?

No. Section 15 requires the prior written consent of two-thirds of the allottees, excluding the promoter, and the prior written approval of the RERA authority.

How are buyers counted for the two-thirds consent?

Each allottee counts as one, regardless of how many units he or his family has booked. Joint allottees of one unit count as one.

Will my agreement still be valid after a takeover?

Yes. The transfer doesn't affect allotments or sales already made, and the new developer must comply with the pending obligations under existing agreements.

Does the new developer get more time to finish?

Not because of the transfer. Section 15(2) says the transfer doesn't extend the time for completion, and the new promoter is liable for delay like any promoter.

Do I have to give up delay interest to consent?

Not by law, but many takeover proposals ask for it. Whether to agree is a commercial decision for each buyer. Make sure you understand exactly what you're giving up.

Is a sale of the builder company's shares a transfer under Section 15?

It's debated. Some authorities and state rules treat a change of control as needing disclosure or approval. Take advice before relying on a share sale to avoid Section 15.

Can RERA hand a stalled project to the buyers' association?

Yes. Under Section 8, after revocation or lapse of registration, the authority can arrange for remaining work to be done by the association of allottees or by others.

What about the development authority's approval?

For leasehold land in Noida, Greater Noida and YEIDA, and for licensed colonies in Haryana, the land authority's own transfer policy and fees also apply, alongside RERA.

General information about transfer of real estate projects under Section 15 of the Real Estate (Regulation and Development) Act, 2016 and related provisions. State policies on stalled projects, co-developers and change of developer change over time and have their own conditions and deadlines. Not legal advice.