A tripartite agreement between the buyer, bank and builder can permit a full refund of the amount paid in case projects are abandoned
Over 5,000 middleclass buyers who have invested in Noida Extension are facing a deadlock with the Supreme Court's verdict of returning land to farmers. Those who got huge loans from banks in partly disbursed stage are now being forced to default. What is the way out then for the buyers?
The bank's view Even though the banks failed to warn buyers that there could be problems with the projects, they may now be forced to categorise those who fail to repay the loans as `defaulters'.
Banks say they have the right to recover the amount that they have paid as loan. Legally, buyers are liable to pay the pre-EMI or EMI to the bank as per the agreements with the bank. So, interest and penal charges will keep getting added to unpaid loan accounts.
In this scenario, what bankers suggest is relocation to a new project of the same builder, which developers too have already proposed. This also ensures that the buyers don't lose the interest amount in that case. s Choice before b buyers b o If the buyers go by a what the banks sugw gest, they will be left b completely at the builder's mercy, who t may choose to charge i current rates and give no p discounts for the new projs ects. They will have to bear o the interest burden of the loan or agree to the terms T of the builders for transferB ring to a new project.
Transferring a loan to a new property of the same builder has no hassles, but the buyer needs to locate a property that matches the previous apartment's cost.
The legal and technical specifications of the new property needs the bank's approval. In that case, the same loan can be transferred to the new project with no additional costs or charges. A no-objection certificate (NOC) or affidavit has to be obtained from the builder along with the documents of the new project and an undertaking /affidavit from the buyer.
Otherwise, the buyer can seek a refund from the builder. The tripartite agreement between the buyer, bank and the builder permits a full refund of the amount paid by the buyer in case the project is abandoned or called off.
However, the interest they have already paid to the bank will not be refunded. It will be a significant amount as the initial instalments just recover the interest alone.
Another option for the buyers is that they can jointly submit a petition to the higher authorities of the bank to get holiday periods for the repayment till a decision is taken. They can also go to the extent of seeking the mercy of the courts to negotiate the interest amount payable or filing cases against the developers for refund of the money invested.
Also, keep in mind that since there are a large number of people involved, the banks are obviously aware of the situation and some arrangement is likely to be worked out soon for the buyers.
Before any decision is taken in this situation, it is important to analyse the pros and cons of every decision, as well as consider all options available
