How to buy Bank Auction Property ?

Buying a bank auction property can be a smart way to buy property at much less price, but it requires careful legal search and knowledge of entire process attention to detail. In this guide, we’ll break down how to buy bank auction property and offer some practical tips to help you buy bank auction property in Pune safely.

Why Bank auction mortgaged property?

Properties are auctioned by banks when a borrower defaults on their loan payments. Typically, this happens after missing three consecutive home loan EMIs classifying loan as NPA. Bank thereafter follows process given under SARFESAI Act which ultimately result in auction of properties.

Steps to Buy Bank Auction Properties in Pune

1. How to find Auction Properties

There is separate website https://ibapi.in/ designed by  Ministry of Finance, Government Of India to provide a common platform to display details of mortgaged properties to be auctioned online by Banks. One can check newspapers, notices at bank branches, and websites of Asset Reconstruction Companies (ARCs) for properties . To make your search easier, narrow down the list to specific areas, then visit the bank’s branch or check their website for auction notices.

2. Verify Property Details

Once you find a property you’re interested in, it’s important to do some research. Check the market price, and try to find out if the property has any legal disputes. Since banks typically don’t share full details about the property’s title, it’s recommended to consult a lawyer or property expert. Additionally, make sure the outstanding balance on the loan isn’t higher than the reserve price. If the auction price is lower than the outstanding amount, the defaulter is still responsible for paying the balance.

3. Search for Outstanding Dues and Government Claims
Before bidding, you must perform a comprehensive due diligence check beyond just title verification. Check with the housing society if there are any unpaid society maintenance dues — these can legally be claimed from the new buyer. Similarly, verify pending property taxes with the municipal corporation. Importantly, perform a CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India) search to uncover any registered charges, such as central or state government tax dues or second mortgage claims, as these dues hold priority over all other claims including that of the buyer. These searches will give you clarity on the total financial exposure and potential liabilities attached to the property.

4.Inspect the Property

It’s always a good idea to inspect the property in person. Most banks now provide inspection dates in the auction notices. If the bank has physical possession of the property, this means there will be less probability that you will get entagled in legal battle for possession . However, if the bank has only symbolic possession, you may face legal challenges in gaining access even after the auction.

5.Submit the Tender Form

 To participate in the auction, you need to submit a tender form along with an Earnest Money Deposit (EMD), which is usually paid by online, banker’s cheque or demand draft. Ensure that the form is filled out completely and submit it before the closing date. Incomplete forms, such as missing KYC documents, are commonly rejected.

6. Bidding

 Bidding can be done either by submitting a bid form along with the tender or through an online platform in the case of e-auctions. In some cases, multiple bids can be submitted. Banks may allow competitive bidding, especially in an e-auction, where you can place multiple bids within a set time.

7.Auction Day

On the day of the auction, attend the venue or check online to see if you’ve won the property. If you win, you’ll need to pay 25% of the bid amount within 24 hours, including the EMD. The remaining 75% should be paid within 15 to 30 days. Keep in mind that securing a home loan for a bank auction property can be difficult, as many banks are hesitant to finance foreclosed properties.

8.Sale Certificate

After paying the full amount, the bank will issue a sale certificate. However, the title transfer is not complete until the sale certificate is registered at the sub-registrar’s office.

9.Register the Sale Certificate

 To finalize the transaction, the sale certificate must be registered with the local sub-registrar. Ensure that the defaulter is also included as a confirming party during registration, as this clarifies the legal transfer of the property.

By following these steps and taking precautions, you can successfully navigate the bank auction process and secure your dream property at a discounted price. Always remember to proceed without intermediaries and, when in doubt, seek professional advice.