Sudharshan (Finance) 01 August 2012

Urgent- sale deed registration for under construction proper

Hi,

I had booked an apartment in Bangalore which is under construction by paying 15% of the sale consideration. I registered the Sale Agreement and the Construction Agreement with the Builder and the same was provided to the Banker (LIC Housing) for applying Loan. The banker had taken over the original Sale Agreement + the Construction agreement along with other documents from the builder for consideration to my loan application. Loan was sanctioned and a month later in Jun 12 the 1^st check was also released to the builder (no signature was requested from my end in regards to this check being prepared) which was for 40% of the loan amount. Now all of a sudden I get a call from the banker asking me to get the property registered to my name (SALE DEED REGISTRATION).

I am not sure why is this being requested now as the general rule is that I cannot register the property in my name unless the construction is completed and possession is taken by me – correct? I need some expert advice for my situation and hope you can help me out with a legal suggestion. Also help answer a few questions I have in this regard:

1. How can I register an apartment which is still under construction?
2. If I register it then how will the Builder and Banker responsibility ease?

3. Will my position as the buyer be put in some kind of risk as I can only imagine that the banker releases the full amount to the builder and the construction and handover of constructed property ultimately is delayed and possibility of similar risk. How can I cover my risk in such situations?
3. What is the difference between Registration and Possession?

Please guide me with your expertise.

Thanks,
SG

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3 Replies

Praveen Singh (Lawyer) 01 August 2012

Sudharshan,

Your queries are as follows

1. How can I register an apartment which is still under construction?

Sale Deed of an Under construction building can be registered however you can also register an agreement to sell and then a sale deed after completion

2. If I register it then how will the Builder and Banker responsibility ease?

If Agreement to sell or sale deed is registered then your rights in the building would become definite

Banker can not release full amount before completion and it would be stage wise or slab wise disbursed to builder. To address your anxiety you can convince the bank for execution of Agreement to sell.

3. What is the difference between Registration and Possession?

Registration is registering the document with the concerned sub-registrar and posession is actual physical possession of property or a symbolic possession.

Sudharshan (Finance) 01 August 2012

Hi Praveen,

Thank you for so much for your inputs! Further to your reply, I am stil not sure on the part where you have mentioned in response to point 3, what is meant by executing the Agreement to Sell with the Banker? Kindly note that the Agreement to Sale has already been registered by me with the Builder and the document has been provided to the banker. Is this the same agreement you are referring to or something additional.

This also brings me back to point 1 where you have mentioned that Agreement to Sell could be sufficient for cases before completion. I am not really sure why the banker is asking me to get the Sale deed done though!

Also, how can I ensure that the Full amount is not released to the Builder upon executing the sale deed. Is there a specific document to address this specifically.

Thanks again for your inputs, truly appreciate this and looking forward to a response.

Thanks

Praveen Singh (Lawyer) 01 August 2012

Agreement to sell is an agreement prior to the sale deed where builder agrees to execute the sale deed thus it safegauards your rights.

There is no such agreement to not release full amount as otherwise also the bank would only release the payment slab wise if it is a flat as banks interest would not be safeguarded if entire money is disbursed and builder uses the money without constructing the building.