Make sure that the bank gets all the papers

That beautiful, old house, palatial by current realty standards, was something Sanjeev Desai had been eyeing for a while. Everything was just about perfect. The house looked great and fit his budget. After paying the token amount, he started scouting for the lender. He approached a bank, which sanctioned him a loan within the next 15-20 days.

With everything just about right with the property papers, with the loan documents, one would expect a smooth sail. Far from it. The bank insisted on registering the sale agreement before making the home loan disbursement. And, the seller flatly refused to sign the agreement till he received the amount towards the property.

Well, of course, losing a particular property may not be the end of the world. There are several solutions to this problem.

Convince seller
You can show the seller the sanction letter from the bank and pay your portion of the cost fully. The sale agreement, then, acknowledges the part-payment already received and mentions that the balance amount will be paid to the seller within a pre-set time limit (usually 30 days) and contains a clause that the agreement would be null and void in case of a failure of payment within the stipulated time. And allows the seller to retain fully/partly the amount already paid as a penalty.

Based on such a registered agreement, the bank will disburse the balance loan amount in the name of the seller. If this option is acceptable to the seller, you should exercise some caution. First, you should submit photocopies of all the documents you will be giving them after the agreement is signed and registered. Ensure you get at least an e-mail from the bank/DSA, acknowledging the documents submitted by you and providing the complete list needed to make the disbursement. Go through the list and make sure you will be in a position to provide those documents. Frequently in such cases, the lender may raise last-minute requests in terms of documents that it had not apprised you about earlier. Remember, delays in disbursements will cost you dearly in terms of losing the property, as well as penalties.

Why reputed builders
It may not be strange if the seller refuses to agree to such an arrangement. In such cases, some banks may agree to send its representative with a pay order for the loan amount to the registrar's office, so that the registration and handing over of the payment can be done simultaneously.

Find the arrangement clumsy? Yes, especially if you are going to buy the house of an individual. Usually, builders have no problems, particularly the reputed ones, with entering into and registering a partly-paid agreement. This is why we always insist on dealing with reputed builders.

Now Desai need not lose sleep over forgoing the property he had cherished.

The author is CEO, www.apnapaisa.com