Hi, I have purchased a flat in Pune. We have also done registration for the flat. At the time of registration, I knew that builder has taken loan from a co-operative bank (this loan is mentioned in the agreement). But what I did not know that there is some dispute between builders and their bank regarding this loan. I got to know about dispute when my bank asked for NOC from builder's bank in order to issue me loan. Then builder informed me that they have dispute with their bank, and the bank will not give NOC. Instead builders can help me getting loan from private sector banks. I have concern regarding this dispute between builders and their bank. Builder has assured me that there is no problem, project is completed, and they also have completion certificate. On my insistence, builders have also promised me to give written letter on their letter head that if any claim comes on my flat from their bank, builders will take responsibility of it. Will this letter have any legal validity? Should I go ahead with this transaction? I think I am the last buyer in this project (definitely among the lasts if not the lasts) Builder also mentioned me that though there is a dispute, but their bank will never claim project. Instead, bank will claim (if they do) another showroom and office owned by the builder. I have done some online research and found that bank has put builder's show room on sale in October 2016. I must mentioned that I have already paid Rupees 20 Lakhs (including stamp duty) to builder. What options do I have if I have to cancel the agreement.
First answer received in 30 minutes.
Lawyers are available now to answer your questions.
If your bank rejects your loan application on account of failure of builder bank to give NOC then you cancan cancel your agreeamnr and seek refused from builder as title is not clear and marketable
2) if builder refuses to give refund file complaint before consumer forum against builder and seek refund of money paid by you with interest
3) also seek litigation costs and compensation for mental torture undergone by you
4) don't go ahead with the transaction
Thanks Ajay! One thing I missed to mention is that I have done small modifications in the flat. I am thinking if I cancel the flat, builder might claim inflated compensation for the modifications. Given this constraint, I am not in favor of cancellation until and unless it is really necessary. If I go ahead with this transaction, what can be possible implications for me? If builder does not repay the loan, is there any chance that their bank will have legally valid claim on whole project or my flat?
1) if builder agrees to execute indemnity bond to indemnify you in case any claims are made by the bank you can sue the builder in case bank raises any claims
2) obtain copy of loan agreement signed by builder with bank
3) it is necessary to peruse said agreement
4) bank would sue the builder to recover its money with interest and seek attachment of his property
A property under mortgage cannot be sold during the subsistence of mortgage except with the prior consent of the mortgagee.Thus, unless the builder's bank issued a NOC to builder for sale of this flat to you, technically the builder could not have sold this flat to you. However, since you due-diligence says that the bank has already proceeded to seek possession of the builder's private building and showroom there does not appear to be a problem. Having said that, you should still take the latter which the builder is proposing to give you so that in future if an ugly situation comes, you may file a lawsuit against the builder for refund of the sale consideration together with compensation.
I have concern regarding this dispute between builders and their bank. Builder has assured me that there is no problem, project is completed, and they also have completion certificate. On my insistence, builders have also promised me to give written letter on their letter head that if any claim comes on my flat from their bank, builders will take responsibility of it. Will this letter have any legal validity? Should I go ahead with this transaction? I think I am the last buyer in this project (definitely among the lasts if not the lasts)
There seems to be trouble brewing between the bank and the builder.
If the builder has not repaid the loan availed from the bank then the bank may initiate recovery action under the provisions of sarfaesi act, which may endanger your investment also.
Better take a legal opinion from a local lawyer by producing the relevant documents and take his advise on all such further issues.
I must mentioned that I have already paid Rupees 20 Lakhs (including stamp duty) to builder. What options do I have if I have to cancel the agreement.
The builder's oral assurances or the assurance given under his letterhead cannot be enforced in court of law when there is a dispute before the court.
If you want to cancel the proposed purchase, you can communicate your decision to the builder mentioning the dispute as the reason for cancelling the booking and demand refund, please send this notice by registered post.
. If I go ahead with this transaction, what can be possible implications for me? If builder does not repay the loan, is there any chance that their bank will have legally valid claim on whole project or my flat?
The bank may initiate legal action for recovery of loan as per the provisions of law in this regard including under the provisions of sarfaesi act, hence you may better take an opinion from a local lawyer also by producing all the relevant papers and explaining him the circumstances and take decision based on all the suggestions you have received