Ownership of condominium units at Grand Apartment may be soon transferred to their buyers, as the government has initiated the process to release the asset which was frozen following violation of banking rules by project developers.

Grand Apartment, a project being built by Sudhir Basnet-promoted Oriental Builders and Developers at Dhumbarahi, comprises 39 condominium units, of which ownership of three units has already been transferred.

But before ownership of the rest of the 36 units could be transferred to buyers, Nepal Rastra Bank (NRB) froze all the assets of the project developer, including that of Basnet and his family members, citing they had obtained loans from Kuber Merchant Finance by violating banking rules.

NRB has now sought the Ministry of Finance (MoF)’s permission to release 36 condo units at Grand Apartment, including the basement, as those who paid advance fees to book the property have been left high and dry.

High-ranking MoF officials told The Himalayan Times that they were positive about the request and may allow NRB to release that particular asset soon.

NRB had asked the MoF to release the asset based on a request made by Citizens Bank International, which has partially financed the Grand Apartment project by securing the same property as collateral. Citizens Bank needs to recover Rs 115.90 million, including Rs 75.30 million in interest, from the project developer.

Citizens Bank has said ownership of apartment units would be transferred if buyers agree to deposit Rs 40 million.

Buyers have agreed to this demand and a tripartite agreement has also been signed between the bank, buyers and the project developer, an MoF source said.

“We hope those who booked units at the apartment will get some respite once the ownership is transferred,” the MoF source said.

This is not the first time Oriental Builders and Developers, the builder of Grand Apartment, has failed to hand over apartment and housing units to buyers.

Earlier, a high-level government commission had found that Oriental Builders had not handed over ownerships of different apartment and housing units despite obtaining Rs 1.36 billion in advance booking fees from buyers.

One potential buyer, Tara Devi Dhakal of Damak, Jhapa, had told the commission that she was yet to receive apartments from Oriental Builders even after making payment of Rs 190 million.

Oriental Builders had started duping home buyers by not transferring ownerships of apartment and housing units after Oriental Cooperatives, which is promoted by the same group, collapsed due to haphazard lending practices and heavy exposure to the real estate market. Oriental Cooperatives owes Rs 5.5 billion to its depositors.

Other cooperatives, like Oriental, that were heavily exposed to the real estate sector a couple of years ago have also suffered huge losses.

Guna Developers, which is promoted by Guna Multipurpose Cooperative, for instance, has not paid back Rs 19.90 million raised from home buyers in advance booking fee, the commission report said.

Sahayata Cooperative, Society Savings and Credit Cooperative and Hero Bahuuddeshiya Savings and Credit Cooperative also collectively owe around Rs 19.40 million to home buyers.

Development so far
• NRB asks MoF to release the asset based on a request made by Citizens Bank International, which has partially financed the Grand Apartment project by securing the same property as collateral

• Citizens Bank needs to recover Rs 115.90 million, including Rs 75.30 million in interest, from project developer

• Citizens Bank says ownership of apartment units would be transferred if buyers agree to deposit Rs 40 million

• Buyers agree to this demand and a tripartite agreement has also been signed between the bank, buyers and project developer

• High-ranking MoF officials say they are positive about the request and may allow NRB to release that particular asset soon.

source: the himalayan times,12 sept 2014