• Rights and liability of seller to handover / refuse original to buyers financing bank

Dear all, 
I'm a seller of my property which is mortgaged with a bank. The purchaser is an individual who is purchasing the property with approx 65% own contribution and approx 35% bank loan. As per norms and mortgage procedure my bank loan has to be paid in full before my bank can handover original documents to the purchaser bank and the said term is also mentioned in the agreement to sale. The purchaser has paid me their own contribution and I have remitted to my bank in favor of loan repayment which is updated and Principal Outstanding letter thereafter and statement of loan account has been handed to the buyers bank. I also requested the society to issue me an NOC so it can be submitted to the buyers bank as per the demand made by them to the buyers. Now the buyers bank first ask me to co-sign a triparte agreement which is their own format created by merging 'Triparte agreement ' and 'interim collateral agreement' they also insisted I co-sign a 'irrevocable power of attorney'. The only document which is with me is the Share Certificate because the society has delayed in issuing it and now in the latest demand they have said they need my Original Share Certificate and an Original Society NOC prepared according to their format in lieu of which only they will release the 'Principal Outstanding Amount ' DD. When I enquired that is it a banking rule as per which I have to submit these originals before even receiving any payment from them they said its their process and if I want the money released I have to comply. Their intent is to create a charge in favor of bank directly from the society but they fail to acknowledge that until they release the value equal to the principal outstanding in favor of my loan repayment how can I handover any original document to them whether it's the Share Certificate or NOC. They have stalled the process now and it's a difficult situation for the buyer and me. I have few questions to ask here
1) Is this practice of the buyers bank justified 
2) What are my liability in this case and rights 
3) Will I be justified to refuse to comply with such demands of the buyers bank
4) How can the buyer and me handle this situation with the buyers bank.
I have already explained to the bank manager that I have handed over the NOC issued prior by the Society and if they want I can attach the original share certificate as well which should be sufficient because the matter of creating a charge in favor of themselves can also be executed by them directly with the buyer and I don't need to be a party to such undertaking as its in addendum to the current NOC issued by the society to me favouring the buyer
Asked 4 years ago in Property Law
Religion: Christian

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7 Answers

Firstly, as it has already been mentioned in the present query that bank is demanding original copy of the NOC when there is no liability for you to provide the same to them.

Secondly, it is also true that the agreement of the loan would be interest eh favour of the buyer now not with you whcih makes it clear that you may have the liability to get the clearance from the previous bank, just to make it easy for the present buyer to have a easy loan from the bank.

Thirdly, this is not been the regular practice of the banks, but yes, it is also not wrong to say that they do that to be in the save position from any future incumberrance without knowing that it may not affect themin either way.

Sanjay Baniwal
Advocate, South Delhi
5464 Answers
13 Consultations

5.0 on 5.0

1

1)bank would not release any funds unless its interests are protected

2) hence it is insisting that tripartite agreement be executed

3) no need to sign any irrevocable POA

4)your offer is reasonable .

5) NOC issued by society and handing over share certificate to bank is sufficient to protect bank interests

Ajay Sethi
Advocate, Mumbai
87973 Answers
6207 Consultations

5.0 on 5.0

your buyer can simply take over your pending loan with your bank

the principal outstanding of your bank can be financed by the lender bank of the buyer

you can take NOC of your bank and execute agreement for sale with your buyer and register the same

thereafter submit all original documents to the buyer's bank and in lieu of that the buyer's bank can release the DD towards principal outstanding of your bank. The DD can be directly made in the name of your bank. For the balance sale price due to you from your buyer, the buyer's bank can make a DD in your name

why all these complications when things can done simply?

Yusuf Rampurawala
Advocate, Mumbai
6882 Answers
79 Consultations

5.0 on 5.0

Dear Client,

This can be done on same moment by give and take.For grant of loan all original documents ( chain of documents ) shall mortgage with bank than after only loan released but all this happens on same moment after execution of sale deed.

You can refuse and tell them give and take.

And after sale of flat, you do not own to bank, so don`t agree with any liability in case of default on repayment of loan by buyer.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

Hi,

You may ask the bank to enter into an agreement for transferring of amount in your bank and get the documents on the same day.

Ganesh Singh
Advocate, New Delhi
6646 Answers
16 Consultations

4.5 on 5.0

1. Different banks follow different norms and the practices or procedures.

There is no common procedure on this, the banks are entitled to frame their own rules for granting the home loan, if you are a seller then you can ask your buyer to comply with the requirements and you may cooperate to an extent possible by you.

2.You may have to comply with the statutory requirements.

3. It is the buyer's problem, you may have to cooperate with the buyer to furnish the requirements which are reasonable, it is not necessary that you have to oblige with the unreasonable demands made by the bank,

4. Why are you bothered about the buyer's bank, if the bank is not cooperating then he may choose another bank.

You do not have to oblige with the unfair and unreasonable requirements that the bank may try to impose as a condition, let the buyer solve the issue or by choosing another bank

T Kalaiselvan
Advocate, Vellore
78131 Answers
1543 Consultations

5.0 on 5.0

1) Is this practice of the buyers bank justified

Answer: Technically speaking you should have handed over the share certificate long ago. So the bank is doing it duty;

2) What are my liability in this case and rights

Answer: Your rights are protected, because of the agreements executed. So do no worry;

3) Will I be justified to refuse to comply with such demands of the buyers bank

Answer: You can ask them or ask your lawyer to represent you in the banking transactions;

4) How can the buyer and me handle this situation with the buyers bank.

Answer: You can withdraw from all of this. You can ask the buyer to pay you the 65% and you can repay the loan entirely. Then ask the buyer to purchase the rest from his bank loan etc.

Consult a local lawyer to resolve this amicably. The bank is simply trying to defend itself and their customer.

Gowaal Padavi
Advocate, Mumbai
1920 Answers
5 Consultations

5.0 on 5.0

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