Hi,

I am wanting to buy a flat (resale) in Bangalore for an existing owner. The registration is still not done but the flat is fully constructed and ready for possession. What is the process of buying such a property?
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  • You have to enter a tripartite agreement with both builder and seller. If you are availing loan, your loan agent will be able to help you with the process. This is a fairly common practice for investors wanting to cash in.
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  • Yes, pretty common practice for people who invest for resale. Paying registration charges & registering in your name does not make sense if you plan sell it after completion. Some additional fee may need to be paid to builder in case of resale. Please check the agreement document and/or talk to the builder.
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  • While this may be common practice for "investors", this is a new experience for you. Here are some real life tips for you

    1) Negotiate like crazy. Find out the launch price and get as close to it as possible. Don't be desperate, there will be lot of such "investors" in this market. Remember every 1 lakh you save now, you save another 1 lakh in interest costs which you would paid the bank over 15-20 years.

    2) The "investor" will ask for Cash. Lets say he booked at Rs 3500 per sft and now wants to sell at Rs 4000 per sft. He will want the difference Rs 500 in cash as otherwise he will have to pay short term capital gains. Are you ready to pay cash since the bank you are taking loan from will not recognize the cash component which means your loan amount will be only on the declared amount.

    3) The builder will take 4% or Rs 200 per sft (average nos - may vary) as transfer fee. Ask the seller to pay this. This should not be paid by you.

    4) The builder would have factored in the registration cost for your seller. Ensure you also get it accounted for and not pay additional for registration.

    In short- act tough. Learn to say no and be ready to walk away. This forum is full of "investors" who will say go for any price since it improves their profitability and they are also similarly looking for buyers who will pay premium on their rates. Remember - you will bear the burden over 15-20 years.
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  • Originally Posted by 4cubeww
    You have to enter a tripartite agreement with both builder and seller. If you are availing loan, your loan agent will be able to help you with the process. This is a fairly common practice for investors wanting to cash in.


    Thanks for the response. Let me explain the situation is detail and probably you can help me through a step by step process.

    1. The seller has paid up the full amount and has still not registered the property.
    2. I need to take a loan from a bank to buy the property.

    How do I go about the process of first getting the loan? How do I get the property transferred in my name? I guess once I have the property transferred, registration can be done in my name.
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  • A tripartite (three party) agreement needs to be entered into. The agreement will state that against the payment consideration of X amount, the rights to the flat shall be transferred from previous owner to you. There will be transfer charges applicable payable to the builder (typically 100-200 psft). Insist that the builder issues a no dues certificate stating that neither the seller nor you owe any dues.

    The owner may insist on an advance to initiate the tripartite agreement. He will then give you copies of legal documents for loan processing.

    Approach your loan agent and appraise him of the situation. They will process your loan based on the documents received from the seller.

    On the day of the agreement, you will hand over the balance payment as well as a draft received against your bank loan to be handed over to the seller.

    You will then be the owner of the said property and free to register it in your name.
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  • Originally Posted by 4cubeww
    A tripartite (three party) agreement needs to be entered into. The agreement will state that against the payment consideration of X amount, the rights to the flat shall be transferred from previous owner to you. There will be transfer charges applicable payable to the builder (typically 100-200 psft). Insist that the builder issues a no dues certificate stating that neither the seller nor you owe any dues.

    The owner may insist on an advance to initiate the tripartite agreement. He will then give you copies of legal documents for loan processing.

    Approach your loan agent and appraise him of the situation. They will process your loan based on the documents received from the seller.

    On the day of the agreement, you will hand over the balance payment as well as a draft received against your bank loan to be handed over to the seller.

    You will then be the owner of the said property and free to register it in your name.


    Thanks a lot. This explains the process very clearly :-)
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  • thanks 4cubeww,
    But how about registration, if it is not registered. It should be between the builder and you...right
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  • Yes.
    The agreement transfers the right of ownership to the buyer. The seller will no longer be involved in the registration process.
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  • Originally Posted by sumitskj
    Thanks a lot. This explains the process very clearly :-)


    I checked with the bank today and they said that they would release the loan amount to the seller only post registration of the property. The process as told by them is

    1. I need to get into a assignment deed with the seller and builder
    2. Then I need to submit the document to the bank
    3. Bank will then process the application and would take between 6-8 weeks
    4. I will have to register the property once the approval is got from the bank
    5. Post registration, bank will release the loan amount to the original seller and it would be based on the registration value of the property and not the assignment deed value.

    I am little confused as to why bank want to get involved into registered value which is something between me and the builder as the apartment is still not registered.
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  • Originally Posted by sumitskj
    I checked with the bank today and they said that they would release the loan amount to the seller only post registration of the property. The process as told by them is

    1. I need to get into a assignment deed with the seller and builder
    2. Then I need to submit the document to the bank
    3. Bank will then process the application and would take between 6-8 weeks
    4. I will have to register the property once the approval is got from the bank
    5. Post registration, bank will release the loan amount to the original seller and it would be based on the registration value of the property and not the assignment deed value.

    I am little confused as to why bank want to get involved into registered value which is something between me and the builder as the apartment is still not registered.


    I was dealing with LICHFL and they were willing to pay either to builder or seller based on the assignment deed.

    If the seller has an existing loan, some banks find it easier to transfer the loan account to your name rather than processing a new request. This may expedite the process.
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  • Unregistered Flat under Loan

    Hello All,

    I have a fully constructed flat, unregistered and booked with Home Loan from LIC. I wish to sell the same before Registration. Could someone please throw some light on what I need to keep in mind and the general process.

    Thanks
    SP
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  • Resale of unregistered flat

    You need to clear your loan first before selling. The buyer needs a noc from LIC before he buys.
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  • Originally Posted by Somashekar
    While this may be common practice for "investors", this is a new experience for you. Here are some real life tips for you

    1) Negotiate like crazy. Find out the launch price and get as close to it as possible. Don't be desperate, there will be lot of such "investors" in this market. Remember every 1 lakh you save now, you save another 1 lakh in interest costs which you would paid the bank over 15-20 years.

    2) The "investor" will ask for Cash. Lets say he booked at Rs 3500 per sft and now wants to sell at Rs 4000 per sft. He will want the difference Rs 500 in cash as otherwise he will have to pay short term capital gains. Are you ready to pay cash since the bank you are taking loan from will not recognize the cash component which means your loan amount will be only on the declared amount.

    3) The builder will take 4% or Rs 200 per sft (average nos - may vary) as transfer fee. Ask the seller to pay this. This should not be paid by you.

    4) The builder would have factored in the registration cost for your seller. Ensure you also get it accounted for and not pay additional for registration.

    In short- act tough. Learn to say no and be ready to walk away. This forum is full of "investors" who will say go for any price since it improves their profitability and they are also similarly looking for buyers who will pay premium on their rates. Remember - you will bear the burden over 15-20 years.


    Hi Somsekhar i have some question : if the assignment agreement value is more thta includes the profit part of the seller .
    will it be still Ok to register the flat at circle value with the builder ?
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  • If the value of agreement between you and the seller is more than his purchase price, he needs to pay short term capital gains on his profit.
    The guidance value or sale value whichever is higher, registration will happen at that amount.
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