Issue - Home Loan Insurance with Home Loan and Booking amount deduction by seller

Hello!
A sale agreement was made with a property consultant (seller) in July. The property is in Gurugram and is valued at 75 Lakhs. I paid 15 Lakhs so far as down payment/booking amount via cheque. I informed them that I need to take home loan of 35 Lakhs and the remaining amount will be paid as down payment. The seller told me they can help me get the loan processed through a DSA. All documents were submitted and bank staff informed me the loan was approved. At the final stage, right when I was about to be issued a sanction letter, I re-confirmed about how much EMI can I expect and they gave me an amount. They also casually brought up about Home Loan Insurance which was yet to be included in that amount. I researched about this insurance and called them later to inquire more and told them I do not want it but they kept calling it mandatory to process the loan further. A lot of discussions happened in the last 3 months, in person, over calls and emails. I asked them several times to provide me a written document that states the insurance is mandatory but they failed to do so. They would get annoyed each time or start raising their voice or just tell me to apply elsewhere as they cannot process my loan further without insurance. Just an fyi my salary, credit score, job stability, repayment history, everything is great! Defaulting on a loan is very low risk here.

I raised the complaint via email to the bank - no response!
I visited the bank branch to convince the bank staff who were handling my application - no luck!
I visited the bank branch to speak with manager who did not meet me and instead sent some guy from his team who created a scene and tried to intimidate me by raising his voice when I asked him about their internal policy for the so called Mandatory insurance.
I asked to provide me sanction letter or loan refusal reason in written - no response!
I finally raised this issue to NHB last week and waiting.

Now in all this chaos, the seller was well aware about this issue as I have been fully transparent but they have at all times sided with the bank calling this insurance mandatory. The seller has now started threatening me that if I don't close the deal by paying the remaining amount within 3 days and also visit the bank for signature, they will put the flat on resale and deduct 10% from my payment. They keep saying that I am making excuses and there are a lot of other customers who are looking to purchase this flat.

Need to know my rights here on how to proceed -
1. My sale agreement was registered on 4th July but shows no time limit on registry or on closing of the deal.
2. There is a clause that clearly mentions that if bank fails to disburse the loan, full agreement amount will be refundable.
3. The seller is backing out from the deal but putting the blame on me so they could deduct money.
4. Do I need to file a case in consumer forum? How much time does it take if I choose to file?

Thank you very much!!

Asked 3 years ago in Property Law

Religion: Hindu

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9 Answers

First of all get a letter/notice from the builder/seller with the clauses that he would invoke to deduct the 10% amount from the refundable amount with the reasons stated therein.

The sale agreement is executed by a registered document hence the seller cannot unilaterally cancel the sale agreement without your consent or cooperation.

You can send a complainant against the bank which refused to offer the loan without insurance with the banking ombudsman and also IRDA to take proper action against the bank for this malpractice.

You can drag the seller to the consumer forum if he is threatening to deduct the exorbitant amount and to cancel the sale agreement unilaterally, besides you can loge a complaint with RERA also agaisnt the builder/seller

T Kalaiselvan

Advocate, Vellore

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Talk to Advocate T Kalaiselvan

File complaint against bank before banking ombudsman that bank is forcing you to take home insurance from said bank

2) if it is public sector bank you can also raise grievance with PM portal

3) seller cannot deduct 10 per cent from earnest money paid by you as there is no clause in sale agreement that payment has to be made within stipulated period

4) since bank has failed to proceed your loan full amount is refundable

5) cases before consumer forum take attests 2 years to be disposed of

Ajay Sethi

Advocate, Mumbai

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If time is not mentioned in agreement, it has to be finalised within reasonable time which is about 90 days.

By traying to compel you for insurance, bank has failed to disburse loan. You are entitled to full refund with interest.

Blaming is one thing and proving is different thing. It is not possible for the seller to prove what he blames.

Issue a lawyer's notice giving every detail referring to correspondence and emails and seek refund withing one month. After that file a complaint in District Consumer Forum. You will get refund with interest, compensation for mental harassment, cost of complaint and lawyer's fee. Under Consumer Protection Act, 2019 proceeding are very fast. It will take about 6 months to get final

Ravi Shinde

Advocate, Hyderabad

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If it's registered already what time limit you need.

Yes as per the terms amount needs to be reimbursed

The said approach of seller is illegal you can approach court in this case

You can't file case against seller in consumer court as he is not a service provider

Prashant Nayak

Advocate, Mumbai

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1. firstly you will have to file a complaint against the bank with the banking ombudsman. details are there on the RBI website

2. the seller will be bound by the contract and he cannot impose unilateral terms on you and threaten for deducting 10% of the sale price

3. if the seller has refused to refund your money and is threatening to put the flat on resale then you will have to file a suit against him for specific performance of contract if you wish to enforce the contract against him or if the contract has worked out because the bank is not granting the loan without the insurance then you can sue the seller for recovering your money so far paid to him and seek a declaration from the court that you have a charge on his flat until your money is refunded

4. consumer complaint can be filed against the bank. if you choose that then you cannot approach the banking ombudsman. you can approach the banking ombudsman only if you wish to avail the loan from the bank without having to take the insurance which the bank alleges is mandatory

Yusuf Rampurawala

Advocate, Mumbai

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Few more concerns -
1. Is there any time limit within which a buyer has to get registry of the flat done or make the remaining down payment to the seller? The date section is blank in my sale agreement so I don't think it specifies any time limit, however the agreement was registered on 4th July.

2. If I do not wish to take the Home Loan now, can I still pursue the complaint with NHB for compensation? I have felt mentally harassed and so much distress was caused in the last 3 months. A lot of effort, money and time went in vain. I just do not want to chase something if there is nothing left in my interest.

3. Does it make sense to take the deducted amount from the seller now and then file a case for deducting money without any reason? Or would accepting of refund (after 10% deduction) mean I can no longer drag him to court?

Thank you!!

Asked 3 years ago

If date section is blank then time is not essence of contract

2) you can file complaint against bank and seek compensation

3) you can accept deducted amount under protest

Ajay Sethi

Advocate, Mumbai

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1. The sale agreement will contain the details and time limit for registration of the sale deed.

Otherwise the time limit is 3 years from the date of sale agreement.

2. You are approaching the NHB to get your grievances redressed.

Hence it would be better that you don't withdraw the loan application till the NHB disposes your complaint.

3. It is advisable that you proceed with the case as it is.

In case you feel that the refund with deduction would be safe for the money you invested, you may accept the refund by endorsing "without prejudice" and pursue the complaint subsequently.

T Kalaiselvan

Advocate, Vellore

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