Possible issues in a Home Loan

A Home loan is a long term legal contract between a bank and the customer, so knowing the legal terms and conditions included in the process is better for those who are planning a house in coming future.

While going through the process of a home loan a customer might face different type of legal issues. So avoid all those issues and to have a hassle free home loan experience, please follow the below tips and please be aware of the legal factors included in your home loan application.

1.    Home loans process starts with the documentation in which the documents which you submit will have a great value in completing the case, so please do not submit any fake documents and don’t try to misguide the bank to avail the loan as the banks have the right to take legal action against those persons who tried to misguide the bank. Details which you mention in the application form should not have any discrepancy, banks will verify the details mentioned in the application and if the bank notices any discrepancy then it can reject the application form with out any prior notice.

2.    Please keep all your receipts of the amount paid towards the credit cards which you settled previously because bank may ask for the receipts of the payments once the details are found in CIBIL.

3.    When the customer submits the property documents banks will verify the property details given by you and the documents will be scrutinized by the advocates and search report will be obtained from the concerned sub-registrar office for the details of deeds and the vendors. If there is any discrepancy in the documents banks will ask the customer or vendor for clarification or for other supporting documents.

4.    Property will be evaluated by the technical valuers and if any deviations observed in the property then customer need to submit additional documents.

5.    Once all process is completed the vendor need to verify all his original documents with the bank official before disbursement of the loan and the customer need to submit latest EC recording all transactions of the property in original.

6.    Customer need to sign all the legal documents and the Home Loan agreements in regard of the disbursement of the loan and the property will be hypothecated to the bank till the loan is repaid back in full after the registration. Customers are suggested to read the agreement copy before signing it.

7.     If the customer gets defaulted in repaying the loan bank can appoint agents to collect the EMI’s from the customers and the customers will have to co-operate with them.

8.    If the customer fails to pay the EMI’s then the bank will cease the property to cover the loan amount taken by the customers, and once this happens the customer will be added into the defaulters list of the CIBIL (Credit Information Bureau of India Ltd).

Every customer is suggested to take as much less amount as possible from the bank to save the interest paid on the loan to be punctual in repaying the loans to keep your credit history good.

Is your property legally clear?

An investment in the real estate is a good idea as it gives great returns in coming future. Most of the people take properties or houses by availing the loans from the banks. Usually builders say that their property is approved from the banks and ask them to submit the documents in that bank. But one should verify the legality of the property before availing the loan from the bank.

We are giving here some simple steps to verify the legality of the property and the different types of cases and their solutions in the legal verification of the property, But before that please understand the type of documents.

Different types of documents in the property registration

Agreement of sale: This is the document which shows the details of the vendee or Executants the person who is selling the property and the vendee or Claimants the person who is buying the property and the details of the property completely.

Here both the parties will agree the laws of land and do the transaction of the sale of the property by entering into this agreement in the presence of witnesses.

Sale Deed: A document which gives the purchaser a complete power and possession of the property in all means. In this vendor is the person who sells the property and vendee is the person who purchases the property. The vendor will transfer all the rights and grants over the property to the vendee by receiving the sale consideration amount which they agreed upon. These documents should be registered in the sub registrar office by paying the stamp duty to the government.

General Power of Attorney (GPA): It’s a document in which a person transfers all the power and rights over a property to the other person. If the document is registered then the Vendee gets all rights to execute all the future transactions.

If the document is not registered then the vendee can’t execute the future transactions on his own, the vendor has to sign the document then only the document gets the validation, if the vendor won’t sign the document the registration or the transfer of property is not valid.

Agreement of Sale cum General Power of Attorney (AGPA): It’s a document in which the vendor agrees to sell the property to the vendee and transfers all his rights and powers over that property to the vendee. If the document is registered then the vendee gets all the rights to execute all the future transactions otherwise the vendor also should sign the documents of the future transactions.

Legal heir document: It’s a document which should be duly attested by the class I magistrate to get the validation. If the person on whom the property is registered gets expired with out writing any will then the document which shows the legal rights holders on that property is “Legal Heirs certificate”.

All the persons whose names are mentioned in the Legal heirs’ certificate should sign the documents then only that transaction is valid.

Encumbrance Certificate (EC): It’s a certificate which we get in the sub registrar over a property. It includes all the details of previous registrations and the details like date of registration, names of Executants and claimants, Document No.

All the above are the documents which we normally find in the property transaction.

Now if we look at the legality of the property please follow the below steps to verify.

  1. Please collect all the legal documents of the property for the last 20 years
  2. The first point of the legal verification of the property is “the present vendor should be the previous vendee”.

E.g.:-

Document Registered In 2008           Document Registered in 2005

Vendor: P. Chandra Bose Ashok Kulkarni

Vendee: Anil Kumar                                             P. Chandra Bose

If you see the above example then the present vendor Anil Kumar has got the document registered from P.chandra Bose in 2008 , and P.chadra Bose has got it from Ashok Kulkarni in 2005 like so.

  1. Please read the sale deed completely to clarify your self that there are any mortgages created over that property by the vendor.
  2. Please cross check all the past registration details with the Encumbrance certificate.
  3. If any GPA’s or AGPA’s are there then please check they are registered or unregistered ones.
  4. Please check with the constructed area and the sanctioned area of the property by verifying them in the plan.
  5. Take Certified copies (CC) from the registration office and check whether all the documents are valid or not.
  6. Please cross check the plot no, house no and the boundaries in the document and the existing ones.
  7. Please collect property tax paid receipts and check whether they paid regularly or not.

And the last but not least is get a legal opinion from a legal advocate before going for a home loan to ensure a smooth loan processing.

Are your Basics right?

Home loan is a product for which a customer needs to go through with the long process to get the loan for the desired property, for which the customer needs to do lot of ground work in terms of his/her profile to get accepted by the bank.

With the current financial markets being more volatile one should make a right move in the view of financial decisions. If you are taking a loan or you are planning for any insurance or any other financial product then please be aware of the financial terms and conditions of the bank. If you planned for any housing loan then take care of your basics which will affect the loan processing. Banks are very keen about the past history of the customer too.

Credit Information Bureau of India limited (CIBIL) is a service that provides the details of customers past records and accounts in association with all major banks in India.

Banks will take the CIBIL statements of applicants with their DOB, Pan Number, Driving license and passport number. A customer who applied for a home loan was rejected due to the written off of the credit card accounts in the co-applicants CIBIL statement which is a recent incident in a leading bank. Please be aware that in the current scenario getting a home loan or any financial product is tougher than before with the considerable changes in the processing.

Coming to the information in application form one should give only useful and appropriate information that will be a positive point to your home loan processing. Banks can take legal action if they feel any information given by the applicant is wrong and it was a trial of misleading the bank.

The second step of home loan processing is legal and technical evaluation of the property. Banks usually have panel advocates and technical valuers for the processing. The value given by the technical valuer is final and report given by the advocates gives the opinion on the legal status of the property. Customer should give the appropriate documents for this processing as it is important to get done for both people.

Last but not least is the processing of disbursement where customer should sign the documents of the bank and request for the disbursal of the loan applied for. Here the customer will be given with the details of the loan amount, EMI and tenure etc. Each and every customer is suggested to read the Home loan agreement which he need to sign to get the loan disbursal done in which bank narrates all the terms and conditions which a customer need to satisfy before and after taking the loan. Home loan is called as a life time contract so take wise decisions before going for it by reading all the documents and by asking the bankers to provide all the information about the loan which you are going to take.

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