One of my friends has entered into an agreement to buy a flat 3 years back on payment of nominal advance. Subsequently he got to know that the flat is mortgaged with a nationalized bank with respect to working capital loan by the seller.
Further to this there was a dispute with the bank and bank had moved under the SARFAESI Act to take possession of the flat. Owner moved to the DRT and the bank subsequently transferred the rights to a ARC company.
Now the seller is claiming that he has mutually settled with the ARC Company and will be getting the title deeds and original sale deed shortly and willing to sell the flat on payment on balance amount.
1. What precautions my friend should take now? Is a Non-encumbrance certificate from the ARC and seeing the original title deed with the seller will be sufficient?
2. Can he safely make payment by DD on day of application for registration with the Sub-Registrar?
3. Will doing a search now will help before the settlement is done to check for any other encumbrance / mortgage?
A comprehensive guideline to obtain a clean title will be greatly appreciated.
Thanks in Advance
