Kumari Palany & Co

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Is it possible to sell a house which is under debt?

Posted on: 05/Oct/2017 12:14:09 PM
In the current trend, it is impossible to think of buying a house without availing housing loans. A house bought with housing loan will require repayment of EMIs for a period of, maybe, 10-20 years. A natural question arises whether it is possible to sell this house when repayment the EMI is still in progress. There may be many reasons for selling like a transfer in the job. 

The answer Yes! It is possible. However, there is a special procedure for this.

Bank loans are basically loans taken by mortgaging or pledging the house by submitting all original documents. It is very likely that even the prospective buyer of this house (Under loans still to be repaid) may also be interested in availing loan for buying. There are avenues even for this requirement.

As per this avenue, the seller will have to approach the bank which has provided the loan and inform the full details about the plan to sell the house. He has to obtain a clearance letter from the bank with the statements giving details of the balance principal amount and the balance interest amount.

The person should also obtain an authorized letter giving a clear detail of all the documents of the house. The concerned bank should issue a letter that it will have no objections if all the pending loan is repaid and they are ready to hand over all the house-related documents.

Now, the seller should hand over all the letters obtained from the above bank and a copy of the house sale-deed. These are the 3 essential steps to be taken by the proposed seller.

The steps to be taken by the buyer:

In turn, the buyer should hand over all the important documents obtained from the seller to his bank offering the housing loan. Along with these documents, the buyer should attach an Identity Proof with photo, Residential proof with photo, and income proof or salary certificate to the bank. He has to fill up the housing loan application and submit the same. The bank would scrutinize all these documents and give approval for the loan on a policy basis.

As the loan procedure had already been thoroughly carried out by the other bank earlier, there may not be any unnecessary delay in sanctioning the loan. This bank will then pay the amount required to the 1st bank and settle the payment. The 1st bank will then hand over all the important associated document to this bank. The bank will hand over the balance amount after the above settlement to the seller.

In the final stage, the buyer has to complete the formalities of registering the ownership in the Registrar Office.

In this procedure, an important suggestion is that if the buyer takes the loan from the same bank which had earlier given the loan to the present seller.

In case the buyer is in a position to pay the entire amount, there are some special procedures for this as well. The seller will have to approach the 1st bank and inform his readiness to settle the pending balance principal and interest. He has to obtain a letter from this bank regarding this. He has also to obtain the list of all documents in the custody of the bank.

The seller also has to obtain a no objection certificate from the bank once the full settlement is carryout. Now the seller has to hand over all the documents collected as above along with the copy of the sale-deed and copies of the other related documents to the buyer.

The buyer, on his part, has to show his lawyer, all the documents as above, get verified, and then pay the advance to the seller.

Subsequently, a contract agreement regarding the sale should be prepared on which both the parties (buyer and seller) and the ownership registration must be completed at the Registrar Office.

The seller should receive all the pending payment as per the date mentioned in the contract and then proceed to pay the bank, the specified settlement amount. After this, the seller has to obtain a letter from the bank about the complete settlement.

Then, he should hand over the house-related documents obtained from the bank after the settlement to the buyer and get a receipt for the same.At the same time, the seller has to hand over kiraya pathram to the seller and get it registered in the Registrar Office.