Flat purchase

Question

► I have purchased flat and given the token amount also and for payment system i had discussed with seller that how i will do the payment. So basically i need 80 to 90 days for complete payment. But after 30 days i will give some part payment and will do registration. But huge loan amount is pending on that laon. So my first doubt whether on my name the flat will be registered if still bank loan is pending? And what is the exact process regarding that??

Answer 1

Dear Client, your concern is very valid and the answer is yes, registration can happen even when a bank loan is pending on the property, but it must be done through a specific and careful procedure.

On your question about whether the flat can be registered in your name despite the bank loan, yes it can but the loan must be addressed as part of the transaction itself. You can buy a property in India with a pending home loan on it. The seller must get a No Objection Certificate from their bank, not object to the sale, and the buyer can pay off the outstanding loan directly to the bank as part of the purchase consideration. The bank holding the mortgage is the critical party whose consent is mandatory.

I will guide you on the exact process in your situation where you are paying in parts and need 80-90 days.

First, before any registration, get an Encumbrance Certificate for the property to know the exact outstanding loan amount and the bank holding the mortgage.

Second, as part of your purchase agreement, negotiate that out of your total payment, the amount equal to the outstanding loan will go directly from you to the seller's bank on registration day. The seller's bank will then issue a No Dues Certificate / Release Letter authorising handover of original documents.

Third, in case the seller has a mortgaged flat, ask the seller to obtain a release certificate from the bank stating it is ready to provide the property documents to the buyer once full payment of the loan is done.

Fourth, on the day of registration, the sale deed is executed at the Sub-Registrar's Office the flat gets registered in your name and simultaneously or immediately thereafter the loan is cleared using your payment. The bank releases the original title documents either to you or to your bank if you are also taking a loan.

You shall also maintain an important caution that is, never register a mortgaged property without first ensuring the bank's NOC and a clear plan for loan closure. If the loan is not cleared and the seller defaults later, the bank has the right to take the mortgaged property even if you are the registered owner. Engage a local property advocate to draft the purchase agreement with these clauses carefully before paying any more money.

I hope this helps, and if you have any further issues, do not hesitate to contact us.

Flat purchase

1 Answer