Overview
One often hears of great bargains offered by banks in repossessed/foreclosed properties. Although the offers are tempting, since they are offered at a 30-40% discount from market rates, one has to be careful while buying such properties/flats as many, if not all, have glaring shortcomings in their legal status. Many lack the proper building permissions and others lack permissions which are specific to Navi Mumbai.CIDCO Role
Navi Mumbai was formed by acquiring land in the 1970’s by CIDCO, which was designated as the planning authority for Navi Mumbai. Villagers were compensated as per the land acquisition act and given adequate compensation along with land which they could sell in the open market to builders or build on it themselves. The scheme for such construction was called Sade Barah Takka (12.5%) GES (Gaothan Expansion Scheme).Since CIDCO is the planning authority, it framed rules under Navi Mumbai Disposal of Lands Act and Navi Mumbai DIsposal of Land Rules. These rules also incorporated conditions for sale of flats/Shops/Land which defaulted on mortgage/loans taken from banks.
Documents Required
- One should make sure that the following documents are in place before purchasing the Flat/Shop/Land:-Building permissions from CIDCO/NMMC (CC, OC, Sanctioned Plans)
- Society Formation/Registration Documents
- CIDCO Conveyance Documents of the Society
- CIDCO approved List of Members of the Society (This list is approved by CIDCO on its letterhead before the Conveyance application of Society is Processed by CIDCO.
- CIDCO Final Order in Favor of the Society
- Mortgage NOC obtained by defaulting owner from CIDCO
- NOC from society allowing the bank to repossess and sell the flat
- District Magistrate Court (Collector) Order for foreclosing the loan and repossessing the flat/shop issued under SARFAESI ACT and Rules
- NOC from CIDCO for selling the flats via Auction (To be obtained by the Bank from CIDCO)
- Once these documents are available, one can bid in the online auction of the bank.
Banks do not have adequate legal documents
Our experience shows that most banks do not display any of these documents online and they do not maintain any of the documents at the site of the flat/building.They lure buyers to their office on the pretext of showing documents. They will not allow you to take copies of the documents and will tell you to find out CIDCO approvals on your own.
This only means one thing : That the documents are not complete. Almost 100% of the banks do not have the CIDCO NOC for selling the flat. They lure buyers with false and fake promises and ‘as is-where is’ condition.And most of the people who do not have any knowledge of the process, end up buying a problem property and repent later.
After winning the bid/Auction
On winning the bid, the bank issues a certificate of sale (a letter on the letterhead of the bank stating that you have won the bid and paid the money)
Once the certificate of sale is issued, it is then registered along with a sale agreement at the Registration office of the Revenue Department. Stamp Duty on the Auction Price or the Ready Reckoner Rate (whichever in higher) has to be paid. Registration charges also have to be paid.
After that the winning bidder has to approach CIDCO with a full set of documents and affidavits and NOCs and obtain the CIDCO NOC for the sale. If the payment is without a loan or in one shot, then CIDCO will issue a Final order directly, or else one will have to obtain a CIDCO NOC for availing a bank loan after part payment, and then apply for a Final order after making the balance payment via Loan Disbursal. Final order will have to be obtained from CIDCO after execution and registration of the Sale Deed.
Once the certificate of sale is issued, it is then registered along with a sale agreement at the Registration office of the Revenue Department. Stamp Duty on the Auction Price or the Ready Reckoner Rate (whichever in higher) has to be paid. Registration charges also have to be paid.
After that the winning bidder has to approach CIDCO with a full set of documents and affidavits and NOCs and obtain the CIDCO NOC for the sale. If the payment is without a loan or in one shot, then CIDCO will issue a Final order directly, or else one will have to obtain a CIDCO NOC for availing a bank loan after part payment, and then apply for a Final order after making the balance payment via Loan Disbursal. Final order will have to be obtained from CIDCO after execution and registration of the Sale Deed.
Illegal terms and conditions imposed by banks/As-is-where-is pre-condition
In a new development, PNB bank sold a property worth crores via Bank Auction by making the buyer sign a ‘as-is-where-is’ clause. The High Court has ruled that all such clauses are illegal…and if there is any legal title issue pre-existing, the bank cannot shrug its responsibility on the basis of ‘as-is-where-is’ clause. PNB had to refund the entire amount.
