1) land owner should not give any bank guarantee
2) ask builder to give bank guarantee
3) if builder fails to complete construction on time terminate agreement and sue builder for damages
Development Agreement and General Power of Attorney
Hi, Me as land owner had a agreement with builder that “Development Agreement cum General Power of Attorney” with in 2 yrs builder need to finish the apartment and 60% work is finish, now they are reaching out to banks for loan, bank is asking me surety and builder did not pay off bank will sale those apartment own by builder as per agreement this is what bank is saying. 1.Why should as land owner should sign the surety docs for banks. 2. Now they are saying if you won’t sign bank documents we will cancel our agreement then what should I do. 3. What would be the scenario if builder don’t the apartment by required time period and what is action plan.
Asked 6 years ago in Property Law
Religion: Hindu
18 Answers
1. It would be highly unwise to sign as Surety for any Bank Guarantee for the Builder, since this would mean that you become liable for any further failure of builders responsibilities and liabilities.
2. Agreement & POA to builder can be revoked /rescinded, for failure of performance and commitment, as per the Contract Act.
3. Initiate legal proceedings by issuing Legal Notice to builder to complete project, else the contract /agreement stands revoked /rescinded in so-&-so working days. (This has been upheld in a recent HC judgments).
4. AFTER above, you can appoint another Builder to complete the project, without any legal reference or liability to the previous builder.
Banker asking land owner to sign the docs for loan, do i need to sign. Asking POA on loan some one who stays near by?
Asked 6 years ago
1. Loan on Land and Loan on Building project is totally different. IF you sign on loan documents, THEN it would mean that you agree for loan on your land as well.
2. You may sign the documents of Loan to builder, PROVIDED you are willing to share responsibility of Liability of the Building Project (again an unwise decision).
You give surety to Bank and Builder will give surety to you that all his share in the property of building. If he do not complete transaction on time.
Second option ask Bank to take direct surety from builder of his share.
Don’t sign any documents without consulting local lawyer
1. Except the JDA and GPA there is no obligation for the and owner to sign any other document for the bank.
2. Since you are standing as guarantor for the project to be contributed by this builder it is not advisable to sign any document posing as surety even if this costs the whole agreement.
3. I am not sure what is the terms of the agreement and if there is breach of thw agreement you have the option of filing case before the consumer forum.
1. Because you are originally the owner of land and developer is just POA holder.
2. You can go ahead with guarantee but only upto the share of builder flats Even if they are sold.
3. You can file suit for specific performance against builder.
1. You do not have to give surety to the bank, it is the problem of the developer, you may go through the agreement to find out if there is any such clause, if not then you can refuse to give any surety.
2.You can ask them to proceed, there is no compulsion on you to sign any such type of documents with the bank.
3. You can sue the builder on the basis of the agreement entered with you.
The bank cannot ask you to sign the loan application or ask you to furnish security for the loan to be availed by the builder.
1. You can deny giving such surety before the bank .
2. The agreement can be only cancelled as per the terms of the agreement they cannot arbitrarily cancel the agreement.
3. If they fail to complete in time you can seek damages and also cancel POA and agreement.
The builder is taking loan you don't need to sign the loan documents.
1) You are correct, you shall not do that. It is Builder who has to give Bank Guarantee / Surety.
2) Builder is blackmailing you emotionally, as such, if he does not proceed you may cancel the Agreement.
3) Cancel the Agreement
You need to check with your local lawyer / attorney before signing any document.
1. No you doesn't have time sign the same.
2. If there was no condition of signing it earlier you dont sign if they still cancel then file suit for recovery of your damages
3 suit for specific performance is the remedy
Don't sign
Don`t sign any thing neither give surety and guarantee. Guarantee equally liable to pay debt in borrower default in loan repayment.
Development Agreement cum General Power of Attorney dose not bound you to give surety/guarantee for loan. Bank is separate issue and solely of builder business.
If bank refuse to give loan, you are not responsible.
Let the builder cancel the agreement, he is only at loss. cancel the POA.
Banker asking land owner to sign the docs for loan, do i need to sign. -- NO. neither POA should authorize builder to take loan on behalf of owner.
Don`t agree else if builder defaulted in loan repayment, your property may auction.
1. The Bank is playing safe making you the surety since you are the owner of the said land on which the development is taking place.
2. If the developer cancels the development agreement after completing 60% of the development work then they will be at loss and you can enter in to development agreement with any third party which will be beneficial for you.
3. If the builder does not comply with the terms of the agreement, then you have the liberty to cancel the said agreement.
1. If you become the co-applicant for the loan given to the developer, then your land alongwith the building constructed thereupon will be taken possession and sold by the bank in case the developer fails or refuses to repay the said loan.
2. It will not be prudent on your part to get involved in to the matter of loan to be taken by the developer by risking your property./land.
Don't give any guarantee.
Consult and engage a local prudent lawyer for better appreciation of facts, analyse, guidance and proceeding professsionally.