When a person buys a house by taking a loan from a bank, they have to follow a certain rules The most important one is that the bank has a right to put the house on auction if that person fails to repay the home loan on time. According to reports, bank auction properties are sold cheaper.
Some things should be kept in mind while buying a bank auction property. Usually, people are tempted to buy a bank auction property because it is sold 20 to 30 per cent cheaper than the market cost. If someone wins the bid on the auction day, they are supposed to pay 25 per cent of the price for the property on the same day, and in the next fifteen days the remaining amount is to be paid, Neha Gupta from Athena Legal said. According to reports, this type of payment is called Earnest Money Deposit or EMD. Gupta added, “If the bid is unsuccessful, the EMD is refunded to the auction participants.”
The buyer who has won the bid should be aware of the tentative date on which the property will be given to him. According to Jain of Agama Law Associates, if the property is under symbolic possession, the buyer has to wait for the bank to have physical possession of the property, which can be then handed over to the buyer after a court procedure.
It should be kept in mind that banks have a right to possess the property without the involvement of a court on the condition that the borrower has defaulted on the loan. They are given a demand notice and 60 days to clear the house dues. The CEO of Bankbazaar.com Adhil Shetty said, “If the borrower does not comply, the bank can take possession of the property and sell it through a public auction. The entire process can take a few months, usually around 4-6 months.”
In a situation where the bank fails to give the property on the due date, after being paid, a buyer has the option to send a legal notice for the possession. If they fail even then, they are obligated to return the amount with interest to the buyer.
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