ADVOCATES FOR PROPERTY AUCTION IN CHENNAI
In this bad phase of the economy there is instability of jobs. Many people are defaulting on home loans. Under such circumstances the lenders i.e. the banks can repossess the property in a legal way. Such repossessed properties gets sold through physical auctions or e-auctions. Contact top advocates for expert in property auction issues in Chennai.
PRECAUTIONS BEFORE BUYING A AUCTIONED PROPERTY
Before you fix up your mind to buy such auctioned property, let us see some of the precautions you need to be aware of:
Unpaid Municipal taxes or society charges
In general, a person who defaults a loan may have dues of municipal taxes or society charges. The auctioned property gets sold ‘as it is where it is basis’. It is the buyer’s responsibility to pay such outstanding dues. It is wise to find out outstanding payments before buying an auctioned property. Such dues will increase your cost.
Legal due diligence
The bank does not have the legal titles of the auctioned property. In fact, the bank will not take any responsibility for the title. The bank does not become owner of the property. It takes over property possession. It is smart to have a property lawyer investigate the property title. You may need to spend a little money, but it is worth and safe to avoid legal hassles later.
Plan for funds
In a property auction bid, when you are successful, you need to pay the balance amount for property in a short period of time. Unlike under-construction property or ready flat, you have a choice of payment schedule. In case you are unable to pay the balance amount of bid then you will lose your deposit amount of bid. It is important to arrange for money before you plan to bid for auctioned property.
You can get home loan after you buy the auctioned property. But you need to arrange your own funds when buying auctioned property. No bank will finance to buy direct auctioned property.
TDS on purchase consideration
You need to be aware of income tax laws about TDS on buying of property. When you pay for the auctioned property, you need to deduct TDS of 1% on the amount paid to the bank. You need to deduct TDS and credit the account of original property owner and not banker. It is necessary get PAN & original owner’s property details before deducting TDS. When you do not have PAN of owner, then you need to deduct TDS at 20% on payment.
Another important thing is that you need to negotiate with the bank as TDS as part of purchase consideration. If banker does not agree, then TDS will be an extra cost to you.
Banks do not enjoy profits on sale of auctioned property
Banks cannot show profits in their books on sale of auctioned property. They can recover only their dues from sale of such property. If the bid amount is more than loan due, the remaining balance gets transferred to default borrower.
Do your Home work and verify other legal aspects
Many buyers have a blind belief that buying auctioned property from banks has clear title deed. In reality it is not so. Defaulters come up with many charges, making the process tedious. As a potential owner go for real property visit and verify proper society. Verify original sale deed and society share certificate. In case of resale of property, proper transfer and re-registration is must. If the property is more than 20 years old being with out registration. You may have to spend on stamp duty for registration.
Opt to buy through your own legal counselor or bank
A good advocate for property auction can help you to sail through the process with more efficiency. He makes sure all documents like NOC and title deed are good. He ensures the same with defaulter’s bank and other cooperative society as well. Even the buyer can opt for purchasing procedure through banks also. NOC is necessary to get home loan for resale property.
Verify title and conveyance deed before making the payment
A property lawyer will be able to investigate document title with registry of record for at least 30 years. It helps you to understand about history of owners, legal tangle if any before winning property bid.
HOW TO BUY PROPERTY THROUGH BANK AUCTION?
Step 1: Search for the information
It is unfortunate that we do not have organized data available in India. You can get information from newspapers, bank notices or some paid website information. Asset reconstruction company India Ltd is also good source for bank property auction.
Step 2: Run preliminary property check
Once you shortlisted few bank auction properties, do a preliminary property check. You can start with establishing current market price and why the property is being auctioned. You can also check for any legal disputes. Check for auction related details and hot to take part in bid.
Banks do not give property papers before buying the property. Their main goal is to sell the property and recover dues. If you are very much interested in the property, then hire a lawyer. You also need to check the outstanding balance of defaulter.
Step 3: Carry Out physical inspection of property
It would be wise to conduct physical verification of auctioned property. Banks do give inspection date and time in auction notice. If banks notify physical inspection then it is good news. Bank has physical possession of property. It is smart to buy property where bank has property possession. In notional possession the buyer may suffer to take physical possession later. Banks do not cooperate with you after property auction. Sometimes you need to file a case for physical possession which takes years together.
Step 4: Tender Form submission
Fill in the bank auction or tender form and fill in your bid. You need to deposit Earnest Money deposit. It is usually deposited through demand draft. Banks also requires your KYC documents. Keep all documents required for tender form in advance and get ready with your bid amount. Sometimes your bid may get rejected due to incomplete form or KYC documents. Hence be careful.
Step 5: Process of Bidding
It is the process of submitting your bid amount for the auctioned property. Some banks have same form for both tender and bid amount. In many cases, Few banks may have them separate forms. Some banks accept physical tender bids/forms. Some banks accept online tender bids/ forms. You can have many bids in separate tender forms. This depends on the banker’s discretion.
Step 6: On Auction Date
On the auction date visit the bank. If you have won the bid, in usual circumstance you need to deposit 25% of bid amount at the spot. The balance 75% of bid amount needs to get deposited within 15 to 30 days of bid. Do not depend on home loan for financing auctioned property. It is better to depend on your own source of finance than home loans.
Step 7: Sale Certificate
You will get Sale Certificate from Bank. Register this sale certificate in your name with sub-register office. Only then the property title gets transferred in your name.
Step 8: Register Sale Certificate in Sub-Registrar office
When you register sale certificate insist to include defaulter as confirming party. The sale certificate needs signature of authorized bank executive during property registration.
Leading advocates for Property auction disputes in Chennai
Hiring the services of an advocate for property auction is important to avoid any future property litigation. Hence contact our senior advocates today.
Please contact our DRT and DRAT advocates for property issues related to debt recovery.