It is binding as per email. But registered release deed is better.
Yes get a copy of the same. They will give it at time of realisation.
Put NOC clause in sale agreement too
Is NOC from NBFC on their letterhead legally binding on them?
I am inquiring about a plot in a residential layout in Bangalore. The layout is BDA approved and title is clear after consultation with local lawyer. However the layout(survey) is mortgaged to VISTARA ITCL. I intend to take one of the plots in the survey. The vendor says that they will issue a provisional NOC from NBFC post agreement (standard format with subject to deposit in escrow account, amount not specified). In the shared sale and agreement drafts, there is no clause for NOC. The property under schedule B is mentioned as free from mortgage/encumbrances. My reality lawyer insists on having release deed from NBFC as mere NOC is not legally binding on them. My questions are: 1. Is NOC legally binding on NBFC. After I confirm with them on the mentioned email for authenticity of the issued letter, is it enough? 2. NOC is issued to developer. Should I also get a copy? Should they issue release deed after funds transfer/sale deed/ registration is done? 3. Should there be a NOC clause in the sale/agreement deed.
Asked 6 years ago in Property Law
Religion: Hindu
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If the developer says they will be unable to provide the registered release deed from NBFC, should i do the transaction or walk away from it? My lawyer says that either they provide release deed, or the NBFC becomes a third party in sale deed. Also the sale deed/agreement is between the developer and me. How will the NOC clause help me? It will only state that the schedule property in question is under mortgage and developer will provide the NOC as required. Which he is doing anyway. Tomorrow if developer defaults on his loan, how will it stop the NBFC from knocking on my door to attach my purchased property?
Asked 6 years ago
The vendor first needs to obtain a letter from the bank with which the property is mortgaged, stating that the bank agrees to relinquish the property documents after the full and final payment of the loan. The buyer will then be required to pay an amount equivalent to the outstanding loan to the vendor’s loan account, after which the process of releasing the documents by the bank is initiated.
an NOC can be obtained from the lender once the loan has been paid off completely.
Mention that the bank has issued NOC to Vendor.
It is necessary to have the Registered release deed. It is mandatory.Noc clause will help you if developer hampers in between the work. Developer needs to execute indemnity to secure the same.
Your lawyer has advised you correctly
2) release deed should be executed by NBFC
3) there should be clause fir NOC in sale deed
If NBFC was not willing to execute release deed don’t go ahead with purchase of plot
2) since plot is mortgaged to NBFC release deed woukd be required
1. If the property you are going to by is mortgaged with a NBFC then without its consent you can not buy this property. Check the consent of NBFC by an advocate.
2. Yes, absolutely.
It is not safe to buy a property which is mortgaged with a financial institution. I can not recommend you to buy this property.
Dear Client,
Certainly builder has taken loan to construct the building and sale to make profit. NOC has no validity, in case of default by builder in paying emis and NBFC will not release it`s right over the property. Choice is yours, better lock the deal in such way, that you directly pay ems to bank.
1. The NOC given by the NBFC will be binding on the finance company.
2. Depends on the prevailing circumstances.
3. Not necessary.
It is better that you do not pursue the matter anymore in that situation.
A good suggestion by your lawyer.
You have to be careful on that aspect because even though the NBFC had given NOC, in the event of default by developer you may be held liable for the payment