In the present case, the approach taken by the Public Sector Bank is legally more conservative and risk-averse, whereas the position taken by the private bank and the builder reflects the commercially prevalent practice commonly followed in under-construction and pre-registration assignment transactions in Bengaluru. Since the flat has not yet been registered and the present owner merely holds allotment and contractual rights under the builder-buyer agreement, what is effectively being transferred to you through the tripartite assignment agreement are those contractual rights. Upon execution of a valid assignment agreement and acknowledgment by the builder, the builder may legally execute the final sale deed directly in your favour without necessarily requiring the original allottee to be a confirming party to the conveyance deed. Therefore, the builder and private bank are not legally incorrect in stating that the final registration can proceed directly between the builder and yourself after the assignment is recognized.
However, the PSU bank’s insistence upon the current owner being a confirming party is primarily a matter of title-chain security and lending risk management rather than a strict legal mandate. PSU banks generally adopt a more cautious approach in assignment transactions, particularly where the original allottee is an NRI, because they seek to ensure that the original allottee expressly confirms the transfer, acknowledges receipt of consideration, waives all future claims, and binds himself to the final conveyance so that no dispute may subsequently arise regarding validity of the assignment, receipt of payment, or authority of the builder to transfer title. Therefore, although the law may not strictly require the seller to be a confirming party, banks are entitled to impose stricter internal lending requirements for protection of their mortgage and title security.
A properly drafted and duly stamped tripartite assignment agreement certainly constitutes an important title document and substantially supports the chain of title by evidencing transfer of the allottee’s rights in your favour. In many transactions financed through private sector banks, such assignment agreements, together with builder acknowledgment and transfer endorsement, are treated as sufficient for proceeding with registration directly in the purchaser’s name. Therefore, your understanding that the assignment agreement demonstrates relinquishment of rights by the current owner is legally correct. Nevertheless, whether the PSU bank is willing to accept the assignment agreement alone in satisfaction of its internal compliance requirements remains entirely within the bank’s discretion and credit policy framework. The issue is therefore not merely whether the assignment agreement is legally valid, but whether the bank considers it sufficient protection from a lending and mortgage perspective.
Even where the original allottee does not become a confirming party in the final sale deed, your title may still remain legally secure provided the assignment agreement is properly executed, the builder formally endorses and recognizes the transfer, all consideration payments are properly documented, all dues and liabilities are cleared, FEMA and NRI compliance requirements are satisfied, and the final sale deed clearly recites the complete assignment history. However, from a purely practical and litigation-risk perspective, the absence of the original allottee from the final conveyance marginally increases future risk because your title chain would then depend heavily upon the validity of the assignment agreement, the builder’s authority to recognize the transfer, and proof of complete settlement between you and the original allottee. This is precisely the additional layer of protection which PSU banks seek through insistence upon the seller acting as a confirming party.
If physical presence of the NRI owner is difficult, alternatives may still be explored depending upon the bank’s willingness. In several transactions, banks accept separate confirmation letters, assignment acknowledgments, no-objection declarations, indemnity documents, or notarized and apostilled declarations from the NRI allottee confirming transfer of all rights and receipt of payment. Some banks also accept builder-issued transfer endorsements together with fresh allotment letters in favour of the purchaser and irrevocable relinquishment confirmations from the original allottee. Ultimately, however, whether such alternatives are accepted depends upon the specific PSU bank’s internal legal and mortgage policy rather than upon strict statutory requirements.
As regards the issue concerning property ID, khata, and property tax, the absence of property ID or khata at this stage is not uncommon in recently completed projects in Bangalore. Nevertheless, before registration and loan disbursement, it is important to ensure that there are no pending statutory dues, no unresolved builder liabilities, no BBMP compliance issues, and no encumbrances affecting the project or unit. The assignment agreement should also clearly specify responsibility for all dues, taxes, maintenance charges, and liabilities accrued prior to transfer so that no ambiguity arises subsequently.
Accordingly, while the law does not make it absolutely mandatory for the original allottee to become a confirming party in the final sale deed, the PSU bank is within its rights to insist upon such participation as an additional safeguard. Your tripartite assignment agreement does significantly strengthen and establish the title chain, but whether it alone will satisfy the PSU bank remains a matter of bank policy and risk assessment rather than pure legal validity.
