Let us first understand what kind of properties do banks put up for auctions. The properties (residential or commercial) on which the borrower has defaulted on paying EMI's for three consecutive months. The banks then serve notice to the borrower to resume the repayment. If the borrower starts paying the EMI's the notice is withdrawn. The borrower is also given a chance to explain himself, in such cases banks often help the borrower by giving extensions on emi payments. Otherwise, the banks wait for 60 days and after another 30 days they start the bank auction process.
Steps to buy a property through a bank auction.
1. Where to find properties that are being auctioned by banks?
Banks usually put notices in national newspapers with all the details of the property being auctioned. There are notices on the property being auctioned as well. These days banks also advertise on big platforms online mentioning the property details, date of auction and such details.
2. Benefits of buying bank auctioned properties
Industry leaders say that one of the major benefits of buying such properties is that they come on big discounts. You can get a deal upto 25-30% off on the market value. Also since the banks are auctioning the property - these properties will usually have clear titles.
3. Problems with bank auctions
You need to be aware that in bank auctions, you do not get access to property papers before purchase and hence title verification is not possible. So do try to hire a legal expert, a lawyer who can help with the process. Check that there are no legal disputes on the property, and physical condition of the property.Also ensure that bank has physical possession of the property. It may take years to get physical possession sometimes.
Also verify the outstanding balance on the property and the difference between the outstanding and final auction price. If auction price is more, then the outstanding amount can be paid by the bank to the defaulter. If the outstanding amount is more than the auction price, then the defaulter has to pay the balance to the bank.
4. Submitting your bid for bank auctions
You can collect Tender Form and along with that deposit Earnest Money Deposit, which can be deposited through a banker's cheque or a DD. Banks also demand for KYC documents along with the Tender form. You need to submit everything before the tender closing date.
There are many ways to submit your bid. In many cases tender form and the bid form are one and the same. In some cases, you will have to submit the tender form physically and big form online. If the bank is conducting e-auction, you can even bid the amount multiple times during the process of auction.
5. Auction Results
On the auction day you need to visit the bank. The bank announces the highest bidder as the winner of the auction. If you win the auction, then be prepared to pay 25% of the amount within 24 hours (this includes EMD deposited with tender form) and rent 75% needs to be paid with a time period specified by the bank.
6. Property Registration in your name
Once you pay the bank the entire amount, the bank will give a Sale Certificate, which you need to register at the sub-registrar's office. The sale certificate should also be signed by the bank office during the property registration.
To cover their losses, banks hold a variety of property auctions. I am aware of how to buy bank auction property in India. I will surely help you. Buying bank-auctioned properties is beneficial as the banks estimate the property's value to be between 15% and 20% below the going market rate.
How to Buy Property from Bank Auction?
Let me share the steps by which Bank auction commercial property along with residential, industrial, and agricultural properties;
Finding Bank auction property listings:
The IBAPI portal serves as a common platform for banks, starting with Public Sector Banks, to display information about mortgaged properties that are to be sold at an online auction.
Inspect property details:
The main problem with bank auctions is that one can't obtain property records to do title searches before making a purchase. Banks are hesitant to provide a lot of details. If you seriously want to buy the property, you can avail the NoBroker legal assistance for this procedure.
Send in the Tender Form:
Now you can obtain the tender form in this step and deposit the EMD (earnest money deposit) with it as well. Demand drafts or banker's cheques are usually used to deposit EMD. Before the tender closes, please review all the information in the tender form and submit your offer.
Auctions:
There are several methods available for placing your bid. You can use the bidding form to submit your bid. The majority of the time, the bid and tender forms are interchangeable. To put it briefly, you can submit a bid using a tender form.
Date of Auction:
Check to see if you won or lost the bank auction by going to the site, bank, or auction venue on the day of the auction. If you win the auction, you must deposit 25% of the winning bid—including the EMD—within 24 hours of the tender form being submitted. After the date of the bank auction, the remaining 75% of the bid amount must be deposited within 15 to 30 days.
Sale Certificate:
following the 75% remaining payment. The bank will issue you a sale certificate, but the title transfer is not complete until the sale certificate is registered at the sub-registrar office.
In the Sub-Registrar office, register the sale certificate:
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How to Buy Property in Bank Auction?
Srinivas
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February 10, 2021
2021-02-10T21:48:59+00:00 2023-11-26T12:05:59+00:00Comment
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