I want to purchase a flat from a person whose flat is on home loan. I will buy the flat by taking a home loan as the original title deeds will be with the seller’s bank. What process will be followed in this case?
—Prashant Arora The seller will require his lender’s consent to sell the property to you. There are cases where the lending bank of the buyer refuses to disburse the loan, unless it first receives the title deeds. On the other hand, the lending bank of the seller refuses to hand over the title deeds unless the existing loan is paid off first.
You can organise some interim finance to pay off the seller’s bank and get the title deed and then proceed with the transaction and get it reimbursed from your proposed lender. Alternatively, the existing lender of the seller should give an official letter addressed to your lender stating the list of all documents including the title deeds that it holds as security and also agrees to release the same directly to your lender within a fixed period after receiving the payment. The letter also mentions the outstanding amount on payment of which the entire loan will be treated as fully discharged. It is normal for the amount to be mentioned as of a future date. In such a case, the balance amount of sale price is paid to the seller after receiving the title deeds from the seller’s bank.
Can unmarried couples or friends be co-owners of a flat? Can they avail a joint loan? Or can they individually take loans from banks for the same house?
—Ashish Vohra There is no restriction as to who can jointly own a flat; however, only spouse or closely related individuals such as siblings and parents or children are normally permitted by banks to get joint loans. So it is unlikely that unmarried couples or friends who want to jointly own a flat can get a home loan. In case they are joint owners they have to join as co-borrower for the loan and thus they cannot get an individual loan in case of jointly owned property.
I have a property in Thane, which my brother wants to purchase. My brother wants to avail of housing loan from the bank for the purchase of the property.Will the sale attract a capital gains tax? Do we have to take permission of the society or inform them of the sale? What is the procedure for registration of the property in my brother’s name so that he has a clear title to the property? Will the bank give a loan on transaction of the said property to my brother?
—Ankur Bhatt Sale transaction with your brother will be treated as normal sale transaction and all the consequences will follow so you will have to pay capital gains tax if the sale value is higher than cost. You will have to take permission of the society and even get transfer recorded in the records of the society as well. The process for registration is also the same as those for normal transfer transactions. Your brother will have to pay stamp duty on the value of the property as per the agreement or stamp duty ready reckoner applicable for your property, whichever is higher.
You and your brother will have to go to the sub registrar’s office for registration of the documents. You will also have to file the relevant documents with your society for recording the transfer of the property from your brother to you. The sale will be subject to special scrutiny as the transaction in question will be between close relatives and the lender will want to rule out a sham transaction to raise money at low interest rates.
Harsh Roongta is CEO, Apna Paisa. He can be reached at firstname.lastname@example.org