• How bank recovers money?

Hello,

One of my brother has taken huge personal loan from bank without other family members' knowing. I am not sure whether he can repay it. 

All our properties have 4 owners - my mother, 2 brothers (married) and myself - after my father's death on 1990. 

My queries :
  -If he can't repay loan, will our properties be seized? 
  -Are we legally responsible for repayment of his loan?
  -Is there any legal way to separate ourselves from his financial decisions? 

I am worried that this can happen again and again.

Please advise. 

Thanks in advance.
Asked 7 months ago in Civil Law from Pune, Maharashtra
1) your brother has one fourth share in the properties

2) in case he fails to repay his one fourth share in properties would be attached and sold 

3) other family members not responsible for repayment of loan

4) if possible you should  buy your brother  share in the proprieties  

5)deed of family settlement should be executed duly stamped and registered for division of family properties 

Ajay Sethi
Advocate, Mumbai
23392 Answers
1229 Consultations
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No the properties in question cannot be mortgaged by him because he is not the absolute title holder of those properties. Hence the bank too cannot proceed against properties where third party interests are present. If the bank does proceed under the sarfaesi act you are allowed the appeal under section 17 where the DRT will strike such action of the bank down.

There is no need to separate yourselves from anything unless you all signed up as guarantors and consented to the mortgage. If that's the case then you are equally liable. however you will also have a right to sue your brother later and recover the damages.
Saptarshi Banerjee
Advocate, Kolkata
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My queries :
  -If he can't repay loan, will our properties be seized? 

This being a personal loan, the same would have been sanctioned in his personal capacity and not on the basis of the property, because the bank will obtain legal opinion from the bank panel lawyer before sanctioning loan on the collateral security of the property document produced before them. That time the fact that the property devolving on all the legal heirs of the deceased would be revealed and the bankers would ask the other shareholders to sign the papers  on behalf of the borrower as guarantors.  Since you or others have not signed any paper as a guarantor  for the loan, the property cannot be seized by the bank fgor the purpose of recovery of loan.. 



  -Are we legally responsible for repayment of his loan?

Since you have not stood as a guarantor, you cannot be responsible for his loan.





  -Is there any legal way to separate ourselves from his financial decisions? 

Remaining silent without responding to any call by the bank (in case they might try to implicate) itself would you keep you away from the liability.




I am worried that this can happen again and again.

Do not be worried, dont entertain his request anymore.
T Kalaiselvan
Advocate, Vellore
14170 Answers
128 Consultations
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If he can't repay loan, will our properties be seized? Are we legally responsible for repayment of his loan?

If he is not paid the amount the bank will realise the money from him and from his assets and properties. If you are not the guarantor of the loan then there is need of worry about your property and repayment. 

The person who borrow the loan and the person who entered in to the guarantor are the liable person for default of repayments.


Ajay N S
Advocate, Ernakulam
1918 Answers
19 Consultations
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In the event of his default in repayment of loan the bank can proceed only against his properties and not yours unless any one of you stood as a guarantor to the repayment of loan by him. 
Ashish Davessar
Advocate, Jaipur
18264 Answers
450 Consultations
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