Buying property from bank
2 Feb 2013, 12:32
Hi
We are looking to buy a bunglow which is seized by bank through an auction. We came to know that the owner had taken loan from 2 or 3 banks (from one of their neighbours) and now the bank has seized the property. We would be applying for the same property. However we want to be safe in this deal and after buying we do not expect to receive any notices from other banks.
Kindly adivse what precautions we should take.
Thanks
2 Replies
When a property is sold in an auction as a part of enforcement of the security for which the property was used, then the buyer gets a clear title.
Therefore if A, B and C banks lent Rs. 100 each on a property P to a person X then in case of default if A,B and C banks enforce their respective part of the security over the house and agree to an auction sale, then if another bank D (or even if one of the banks A, B or C) or any other person buys the property it gets a clear title which is what it passes on the the new buyer (i.e. you in this case).
If following the auction of the house there amounts which X owes to the banks A, B and/or C then it is X’s liability to the banks and that liability no longer passes with the property.
Thank you very much for the feedback.
This would help us.