CHEQUE BOOK

HT Estates - - Front Page - Harsh Roongta

I am plan­ning to buy a bank auc­tion prop­erty from an agent. What pre­cau­tions must I take?

—DL Me­hta Please in­volve a good lawyer be­fore you bid for any such prop­erty. Be­fore you bid, please make sure that the bank has ac­tu­ally taken pos­ses­sion of the prop­erty. It is also ad­vis­able to find out the cre­den­tials of the per­son whose prop­erty the bank is sell­ing so as to en­sure that you do not have any prob­lems af­ter pur­chas­ing the prop­erty, as he can cre­ate prob­lems when you get pos­ses­sion. In case the prop­erty is un­usu­ally cheap, there is very high prob­a­bil­ity of there be­ing more le­gal is­sues.

If the prop­erty (for which I have taken a home loan) goes un­der some kind of le­gal dis­pute or the builder stops con­struc­tion, what will hap­pen to the loan? Will I need to keep paying the EMI? How will the prop­erty in­surance help in such cases?

—Praveen Sinha While the bank’s ap­proval is prima fa­cie a good in­di­ca­tor of the le­gal ti­tle of the prop­erty, it is in your own in­ter­est to do your own due dili­gence be­fore buy­ing it, prefer­ably through a lawyer who is an ex­pert in th­ese mat­ters. Ba­si­cally it is the buyer (that is, you) who has to bear the risk/loss aris­ing out of de­fect in the ti­tle or de­lay in con­struc­tion of the prop­erty. Ti­tle in­surance is still not avail­able in In­dia.

Re­mem­ber, you will need to pay back the loan if things go wrong ir­re­spec­tive of the bank’s ap­proval of the prop­erty. The bank’s prime fa­cie ap­proval does not amount to any sort of guar­an­tee, which will be far more ex­pen­sive.

Your li­a­bil­ity to ser­vice your home loan is in­de­pen­dent of your in­abil­ity to get pos­ses­sion of the prop­erty ei­ther due to le­gal dis­pute or fault on the part of the builder.

The bank does not take the re­spon­si­bil­ity of any de­lay made by the builder in con­struc­tion due to any rea­son. You will have to con­tinue paying the pre-EMI to avoid be­com­ing a de­faulter. The builder gen­er­ally will not com­pen­sate you for the losses due to de­lay in con­struc­tion un­less spec­i­fied by him in the agree­ment.

Prop­erty in­surance does not cover the risks on mat­ters per­tain­ing to de­lay due to the builder’s fault or a le­gal dis­pute. The prop­erty in­surance cov­ers dam­age or de­struc­tion of the prop­erty be­cause of some mishap. Paying the EMI or pre-EMI in­ter­est en­sures your credit his­tory is not spoiled. I stay on rent and would like to take a loan to buy a house in the name of my wife. Am I el­i­gi­ble for a loan or tax ben­e­fits?

—Hasan Ali You can get a loan if your in­come can jus­tify the same. Since the prop­erty will be reg­is­tered in your wife’s name, she will have to be a co-bor­rower.

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