In this article, we will discuss “how to buy a property through bank auctions in India”. Bank auctions are a long and slow process. Anyone can buy a property through bank auctions from a bank which declares such auction in a newspaper and also on their website. There are different banks which offer people to buy property from their bank. These banks also lay down different terms and conditions to buy a property through auctions and these terms and conditions of the auctions are available on bank’s website or in a newspaper where they offer such property to be sold through auction. It is not easy to participate in a bank’s auction because it is not an easy affair and some people are not familiar with the rules and procedures of the bank’s auction. There are many investors and brokers who want to take these properties at lower prices and this is done by the bidding process. A person who has the highest bid can buy the property according to the terms and conditions of the bank. Perhaps, we all know that why banks auction these properties. There are many people who make default in payment of loans and sometimes they take money for other purposes and make default in returning the amount. Now, the bank forwards a letter to the defaulter or the customer to respond to the letter that why he is not paying the amount and why the bank should not initiate an auction of his property. The customer is also given a period of time to reply to the letter and the period of time is fixed at 60 days. If the bank does not get any reply then the bank will initiate the auction of his property or if he replies to the letter but it does not satisfy the bank then also bank can initiate the auction of his property. But if the customer pays the payment within the specified time then the notice is withdrawn. When the bank finds that they are not satisfied with the customer’s activities or the customer is unable to fill the requirements that are unable to pay the loan or has no proper objection then bank offers the property for auction to the people and they declare such auction in a newspaper and on their website along with terms and conditions of the auction and till then they seize the property. They also mention the date, place and time of auction.
There are some benefits to buy a property through bank auction such as —
- The best advantage is that an individual bags the property at lower prices than market price.
- Sometimes, an individual gets a property where he or she always wanted to buy but due to scarcity of money or unavailability of the property.
- The buyer has fewer burdens of legal liabilities of the property.
- These properties arise fewer disputes. So, people are more interested to buy properties from the bank.
- The buyer has the opportunity to inspect the property before they buy that property.
Challenges in Buying Auctioned Properties:
- Many people have witnessed that bidding is the biggest challenge. It is seen that expecting the highest bid is nearly impossible.
- You can’t buy the property at your desired value which you perhaps decided before the auction.
- Buyers can’t negotiate the terms of purchase of the property. This type of negotiable can be done in other property deals but not in bank’s auction.
- Sometimes, it is seen that surprises and unexpected shocks are also found after submitting the winning bid.
Steps to follow to buy a Property through Bank Auction:
- Search for Bank Auction Property – This is a tough step to follow since in India few banks provide the information of bank auction property. So, it is better to search bank auction property online and then if you don’t get proper information then contact to the bank or it is sometimes seen that banks give notices on the notice board of their respective banks. So, one can follow that and get other detail information from the bank. Sometimes the bank publishes about the auction in the newspaper mentioning the terms and conditions of the auction along with date, place and time of the auction.
- Check property Details – Now, you have to check the property details, auction-related details and other legal disputes related to the property. The problem here is that you will be given no access to the property papers before you buy the property.
- Physically inspect the property – It is necessary to inspect the property physically. Banks specify the inspection date and place of the property. So, you can inspect the property and find some details on the property.
- Submit tender form – This step says you to collect tender form. When you submit the tender form, you have to deposit Earnest Money Deposit along with the form. Earnest Money Deposit is paid through the bank’s cheque or demand draft. Before submitting the form or before filling up the form just check the details of the tender form.
- Bidding – There are different ways to submit the bid. Anyone can submit the bid through bidding form but in most cases, it is seen that bidding form and tender form are the same. If anyone wants to submit the bidding form separately then they can do that if there are many bids. It is also observed that the bid form is submitted through the online and tender form is submitted offline.
- Auction Date – Go to the bank to check that you have won the bid or not. If you win the bid then submit 25% of the bid amount within 24 hours to the bank and the rest 75% within 15 to 30 days.
- Sale Certificate – Here, it says that you have to submit or clear rest of the amount that is 75% of the amount to the bank and after paying it, the bank will provide you with a sale certificate but title transfer will not initiate until you register the sale certificate from the sub-Registrar.
- Register Sale Certificate – Now, you have to register the sale certificate and the Authorised Bank Executive will sign the sale certificate at the time of property registration.
These were the steps to have to follow to buy or purchase a property through bank auction in India.
“State Bank Of Hyderabad vs M. Somasundaram on 29 August 2005 Debt Recovery Appellate Tribunal – Madras”
In this case, it is observed that the property of the defendant was mortgaged to the appellant bank and this property was brought to sale by auction. The respondent, in this case, bought the property and afterwards he came to know that there were dues in respect of the property such as electricity bills, water bills, property tax and some amount payable to the flat owners association then he reported this to the tribunal or recovery officer to pay back the amount and the recovery officer forwarded the same to the bank and the bank answered that it was taken in consideration and the upset price was reduced. So, the auction purchaser or the respondent cannot claim this but the tribunal allowed this complaint or claim. The court here said that the bank should pay the respondent some amount which is fixed by the court and flat owners association amount was disallowed.
“Syndicate Bank vs M/S Ssp Tradex Private Ltd. & Ors. on 4 May 2018 Delhi High Court”
In this case, it is seen that the borrower had mortgaged his property and took a loan from the bank and he failed to repay the amount. The bank to recover the amount filed a complaint and the bank was given liberty to auction the property. Here, the respondent offered to buy the said property and he paid the earnest amount to the bank but afterwards, M/s Ansal Properties and Infrastructure Ltd claimed that they have rights in that property. So, the respondent forwarded a letter to the bank reporting about the matter and also mentioned that he will pay the rest amount when the bank gives him the assurance that there are no liens or encumbrances in the property. The respondent also filed an affidavit and also asked for a court order if any to M/s Ansal. The bank and the borrower filed an application to withdraw the permission to sell the property to the respondent. The respondent challenged this and claimed to refund the earnest amount that is rupees 2 crores. The court directed to refund the said amount along with 9% interest to the respondent.
The above body talks about the steps to buy a property through bank auction along with case laws to make you understand about the bank auction. Before proceeding for bank auction anyone can approach an expert to know the necessary measures they should take to buy a property through bank auction.