We're planning to buy a flat in Bangalore from NRI. To buy this property the seller had taken loan from an Indian bank(he was Resident Indian at the time of buying). Now he wants us to pay him around 50% of the sale consideration so that he can close his loan. How can this be done, how can we pay him and also safeguard ourselves, what can be the process followed here. We're not taking any loan to buy this property.
Asked 12 months ago in Property Law from Bangalore, Karnataka
You can enter into regd agreement for sale with seller
2) pay 20 per cent consideration and balance amount within period of 3 months
3) regd sale deed to be executed at time of making balance Payment
4) in the alternative Take home loan from sane bank . Seller loan can be transferred in your name
First and foremost you should enter in to an agreement of sale with the seller outlining the terms of payment (i.e 50% of sale consideration to bank and remaining to seller) and have it signed by both the parties and in front of reliable witnesses.
After the agreement of sale is entered in to the following are the recommended steps:
1) Make a payment of 50% of Sale consideration or the Exact amount outstanding to the bank that has sanctioned the loan in the form of demand draft drawn in favour of the loan account of the seller.
2) The demand draft should be payable to Mr.XXX, Loan account number xxxxx,_____bank Payable ____.
3) Obtain a loan closure letter from the bank(preferably on the same day when the Demand Draft is handed over) and keep it with you for your records.
4) If the loan is obtained by deposit of title deeds, then you and the seller should make a joint written request to the bank to handover the original title deed to you after the registration of sale deed between you and the seller. Take an acknowledgement from the bank manager that he has received the letter and will do so as mentioned in the letter.
5) If the loan is obtained by simple mortgage, then the banker should handover the original title deeds to you after cancellation of mortgage deed and immediately on the same day the seller and you should register your sale deed and you should take the possession of the property.
Hope this helps.
1. You can enter into an Agreement of Sale with the seller, wherein the loan amount due from him to the Bank can be given to the seller as advance money through Cheque or DD and see that he clears the due loan amount to the Bank in your presence and get the original documents of the flat from him.
2. In the Agreement of Sale there should be a penalty and specific performance clause.
3. In the alternative, let the seller execute indemnity bond for the money received from you.
Enter into a contract, the paramount consideration is execution of an agreement. Write a detailed agreement about the value of the flat and transaction details. The 50% an amount should be given by way of Cheque or Demand draft to seller. The loan transaction to the bank and payment of money for closing of bank loan also mention in the agreement. The loan sanction from the bank shows the seller has absolute ownership over the property and the title is perfectly valid.
1. If the property has been mortgaged by him then the permission of the mortgagee i.e bank is required to be obtained to sell the property as a mortgage results in creation of a charge on the property in favour of the mortgagee.
2. The banks allow closure of loan through one time payment. Once the loan is repaid in entirety he can execute the sale deed in your favour.
3. Enter into an agreement to sell with him, in pursuance of which you can pay him any percentage of sale consideration.
4. Get the agreement drafted from a lawyer to safeguard your rights.
If the vendor is insisting 50% of sale consideration to be paid to him, you can enter into a registered sale agreement with him reciting all the conditions that are meant to safeguard your interet in the property as well as your money paid towards advance.
You can make the payment by cheque or DD or by bank transfers/NEFT etc so that you have an evidence for the payment.
Since the property is already on mortgage loan with the bank, you have to wait for the discharge of loan and release of title documents from bank after that.
You an be able to get a registered sale deed executed in your favor only after the bank loan is fully discharged.
Take the assistance of an experienced advocate for drafting the registered sale agreement.
Such Transactions has to be dealt very cautiously - you need not to pay the NRI - and below is the procedure for such transactions explained with example.
Assuming that the NRI bought this property at 50 lacs and has paid 10 lacs by himself and 40 lacs through bank loan. Over a period of time he has repaid say 5 lacs to the bank. So an outstanding loan is 35 lacs.
Now he sells this property to you for 70 lacs, Here 35 lacs is to be paid directly to the bank by you (the cheque / DD of 35 lacs will be made in favor of the bank directly) and the balance 35 lacs has to be paid to the seller / NRI.
Before paying this an Agreement to sell mentioning the terms of payments / purchases need to be executed.
DO NOT PAY all the money to the seller straight away ..... when you are buying a property with loan on to you need to clear all outstanding by paying it to the bank.
Best of luck
Few queries have risen in my mind after reading the responses for which i am requesting reply:
1) What should be the denomination of stamp paper for "Sale agreement" and should it be notarized or registered.
2) In case of registration will this amount be adjusted in final sale deed registration amount.
3) There are 2 owners seller and his wife does both of them need to be present or only one owner is enough if other has power of attorney( they live outside India NRIs)
Asked 12 months ago
1) agreement for sale can be on Rs 500 stamp paper and be notarised
2) yiu can register agreement if you so desire
3) one seller presence is sufficent if he has been given POA by other co owner
1. Preparation of sale agreement and getting it registered shall be taken care of the document writer, he knows the proper stamp duty as well as the stamp paper denomination as well as per the local laws in that regard. Do not go for a notarised sale agreement, it will not be valid and not admissible as evidence in court when there is a dispute in this regard at a later stage.
2. Yes, the stamp duty paid towards the registration of sale agreement shall be adjusted in the registered sale deed stamp duty.
3. If one vendor is possessing power of attorney deed in his favor in respect of the other joint owner to sell this jointly held property on her behalf too, then he can sign once for him and again for his principal.
Rs.500 stamp paper is used for executing a sale agreement. Sale agreement should be registered is the best option for a buyer. If you register the agreement then it should be more valid than not registered. A power of attorney for one seller is enough for executing a sale agreement. Contract of sale is termed as a sale when seller agrees to transfer the property to the buyer for a consideration.
1. The denomination has to be in accordance with the stamp duty act of the state, so this can be answered by only a local lawyer. The agreement is not required to be registered.
2. The amount paid as advance is to be adjusted from the total agreed sale consideration.
3. The presence of one joint owner will suffice if he holds a GPA for and on behalf of other.