Indian property buyers get safe thanks to RBI

This was expected for long and now, thanks to the recent initiative of Reserve Bank of
India (RBI), it will happen in the sphere of India. What are we talking about? Well, it is RBI’s initiative that will make commoners especially prospective home buyers know if the land on which their building stands is free of outside claims. Don’t you consider this as an epochal decision? All credits go to RBI’s flier or diktat mandating builders mortgaging the land to raise money to disclose it in all advertisements and brochures.

RBI has asked lenders to make sure that all publicity material relating to the sale of real estate make a mention of the bank’s lien on the property so that home buyers are not kept in the dark about this legal claim or ‘hold’. The main intention of RBI aims is to prevent prospective buyers from being lulled into the belief that the flats they own are on ‘free-hold’ land through this move.

When contacted, Anuj Puri, country head of real estate consultant Jones Lang LaSalle Meghraj, “The RBI circular will bring transparency and accountability on the part of developers. It would also give a chance to buyers to see the viability of projects especially when the loan amount is very high.”

In accordance with senior advocate R N Shetty, highly esteemed specialist in real estate matters, property where a bank has a charge does not have a clear title and therefore cannot be transferred to the society through a conveyance. He added that the bank could also attach and auction the property in the event of a default by the builder.

RBI has also said that banks must as a prerequisite to lending take a firm stand that builders reveal complete details of the charge on the property. This should consist of the name of the bank that has a lien on the property which a builder is seeking to develop and for which it has sought a loan from the lender.

The builder or developer will have to add as an appendix information relating to the mortgage while advertising a particular scheme. As well, it will have to provide a No Objection Certificate of the mortgagee bank for sale of flats/property, if required.