Mayank Gupta 28 April 2023

How to safeguard myself in buying property

I am looking to buy a house for Rs 36 Lakh. My idea was to give 20 Lakh via DD to the seller and take loan of another 16 Lakh. The house has existing loan of 23 Lakh from Jammu and Kashmir Bank. The bank is willing to open a new loan for me of 16 lakh but wants us to clear the existing loan first.

The seller is suggesting that I put 18 Lakh in account while he will make the remaining 5 Lakh to the bank. But I have concerns about making advance payment of 18 Lakh. What if the seller backs out after his loan is cleared?

I suggested the bank to transfer the existing loan to me but they are refusing to do it and insists on clearing loan. They are suggesting that I start my loan procedure and when everything is finished and loan is approved, I make payment in seller account and within 2 days they will start my new loan.

But my concern is what if seller took his original documents from bank once loan is finished and backs out of the deal. I do not think that bank will protect me here. Would it not be better if I contact my own bank and seek to transfer the loan to make deal safer.

Please tell me how to proceed on this

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4 Replies

T. Kalaiselvan, Advocate (Advocate) 28 April 2023

It is not advisable to clear the bank loan lying on the name of seller.

The loan you can avail from the bank will be based on the sale agreement entered with the seller.

The bank cannot transfer the loan to your name because you are not the title holder, therefore until the title to the property is on your name you cannot claim any benefits as a right over the property.

you may better enter into a sale agreement and pay the amount as advance towards the sale consideration amount and get the agreement registered on a tripartie agreement by involving bank also in this.

This will prevent the seller to sell the property to a third party

Mayank Gupta 28 April 2023

Hello Sir,

Thanks for the reply. What if I make a sale agreement with seller on ₹100 Stamp under which it is mentioned that I will pay 18 Lakh to clear the loan and submit this agreement to bank when applying for loan. Will this protect me?

Shashi Dhara 28 April 2023

You have to register it ,if not you will have irreparable damage.

T. Kalaiselvan, Advocate (Advocate) 28 April 2023

It is not your burden to clear the loan or any liability of the seller.

If you want to purchase the property, then you may enter into a sale agreement with the conditions thereon as per law and can transfer the advance amount as mentioned in the sale agreement in favor of the seller. Let him clear his loan or do whatever he would like to do with the amount.

If he is not performing his part of contract within the time stipulated in the sale agreement then he will be liable for the legal consequences when you approach court with a suit for specific relief against the seller in this regard.

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