Has your house been mortgaged without your knowledge?

Lessons from the Noida case that left many shaken

NEW DELHI: A few weeks back, over 200 families living in a prominent Noida housing society got eviction notices from a bank asking them to vacate their homes.

The developer had mortgaged the project for the loan, the notice said, adding that the bank was well within its rights to attach the property to recover the debt.

The homebuyers had reportedly paid the entire amount (cost of houses) to the builder before moving in and there were no dues.

Stung by the severe backlash that followed, Union Bank withdrew the eviction notices immediately. But despite the seemingly happy ending, the questions that the incident raised still linger.

ET Online delves into the issue to find out how homebuyers can protect their interests in the event of such untoward developments.

Can a builder mortgage already sold units?
No, the builder cannot mortgage units already sold to homebuyers. By the rule of law, the builder’s authority over a unit within the project is relinquished as soon as the buyer gets the property registered under his name at the sub-registrar’s office. After paying the registration and stamp duty charges to the government authorities and clearing all earlier dues, the homebuyer is the legal owner of the property.
Thus, the builder cannot mortgage such sold units to homebuyers. He can only mortgage unsold units within the project. Most importantly, after he executes an agreement for sale and any such mortgage or charge is made, then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment. How can you ensure that the builder does not take you for a ride?
Before buying a house, a homebuyers needs to do a background check on the builder. On the Registrar of Companies website, you can easily find out if the builder has taken a loan and what s/he has mortgaged against it.

There is a way out even if the project where you want to buy a house has been mortgaged against a loan by the builder.

In such cases, a buyer can ask the builder for the account details of the bank from where the builder has taken a loan and pay the EMI in that account. Besides, it is highly recommended that buyers ask the builder for a NOC from the bank where he has taken a loan from. This will help homebuyers avoid any prospective risk to their ownership rights.

About the author


A graduate, a real estate professional and social activist helping the local ALM in engaging authorities and political leadership for resolving civic issues, helping out as a part-time teacher in the local missionary school for underprivileged children and as a liaison with government bodies, head a large society as a chairman and spearheading its redevelopment process and founder of India Housing Hub - a property consultancy in the western suburbs of Mumbai.

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