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Mahesh   26 December 2016

Redevelopment_bank guarantee

What is bank guarantee ? If the society going under redevelopment should they go for bank guarantee? if builder is not providing bank guarantee any other alternative there? Do builder provide bank guarantee for re-development project currently?


 3 Replies

Kishor Mehta (CEO)     27 December 2016

Sir, It is in the interest of the society to ask Banker's guarantee from the builder. Good luck, Kishor Mehta

G.L.N. Prasad (Retired employee.)     27 December 2016

A Bank steps into the shoes of builder to assure that if such commitment is not fulfiled by builder on a specific date, without any questions asked, Bank will pay the guaranteed amount as stated in Bank guarantee, without any questions.

This gives assurance to the FLAT owners that they will get back the money / money's worth from Bank without entering into litigation with builder.

If the builder is not providing a BG, purchasers should have trust and confidence and must be prepared to face such litigation from builder due to non completion of project in time.  BG gives a fear to Builder.  

rajeev sharma (Advocate Ex senior manager law )     27 December 2016

Bank gurantee is similiar to any gurantee given by a person to another person that if any act which is required to be done by a third person is not done the person giving the gurantee will do that act or will compensate the damages suffered by that person. In your case the bank may give gurentee that in case the builder does not pay agreed amount to you the bank will pay.The bank gurantee will give you an extra protection and in case the builder fails to pay the agreed amount the bank will pay.Carefully read the contents of bank gureantee before entering into it.If the gurantee is about delivering the re developed flats be more cautious and do not enter inthe bank gurentee unless the now flas are mortaged to bank other wise the bank will not have any right to execute any transfer deed in your favour.

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