In light of the observations of the Delhi High Court on unauthorized construction, Banks/FIs before extending credit facilities shall follow the RBI guidelines stated below.
- When an applicant owns a plot/land and approaches the banks/FIs for financial help to construct a house, the lender has to obtain a copy of the sanctioned plan by a competent authority in the name of a person applying for credit facility before sanctioning the home loan to the applicant.
- Further, the applicant has to submit an affidavit-cum-undertaking to the bank, while applying for the credit facility, that he shall not violate the sanctioned plan, construction shall be strict as per the sanctioned plan and it shall be the sole responsibility of the executants to obtain completion certificate within 3 months of completion of construction, failing which the bank shall have the power and the authority to recall the entire loan with interest, costs, and other usual bank charges.
- An Architect appointed by the bank must also certify at various stages of construction of a building that the construction of the building is strictly as per the sanctioned plan and shall also certify at a particular point of time that the completion certificate of the building issued by the competent authority has been obtained.
- In such cases where the applicant desires to buy a built house or flat, it is mandatory for him to declare by way of an affidavit-cum-undertaking that the built-up property has been constructed as per the sanctioned plan and/or building bye-laws and as far as possible has a completion certificate also.
- An Architect appointed by the bank must also certify before disbursement of the loan that the built property is strictly as per the sanctioned plan and/or building bylaws.
- Banks shall not extend loans in respect of those properties that fall in the category of unauthorized colonies unless and until they have been regularized and development and other charges paid.
- No loan should also be given in respect of properties meant for residential use but which the applicant intends to use for commercial purposes and declares so while applying for a loan.
. Key steps include:
- Title Verification: Ensuring clear title and absence of encumbrances
- Agreement to Sell: Outlining the terms and conditions of the transaction
- Stamp Duty and Payment: Completing statutory payments
- Registration of Sale Deed: Registering the transaction with the local sub-registrar
- Possession and Handover: Physical transfer of the property
- Utility Transfers: Updating ownership of services such as electricity and water
Essential Documentation
Some of the crucial documents involved in a property transaction include:
- Registered Sale Deed
- Encumbrance Certificate
- Approved Building Plan and Occupancy Certificate (if applicable)
- Property Tax Receipts
- Khata Certificate/Extract (in certain states)
Need for Legal Assistance
Given the complexity and risks associated with real estate transactions, legal counsel is strongly advised. Professional guidance helps ensure that all legal and procedural formalities are properly observed, minimizing the risk of future disputes or liabilities
Disclaimer: The information provided herein is exclusively for educational purposes. The information is based on publicly available sources and subject to change. The author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/real estate decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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