Solution should be worked out for large number of buyers hit.
If buyers decide to withdraw, will they get their money back?
The essential issue is the title of the builder. Legally, the customer is liable to pay his pre-EMI interest or EMI to the bank. That is the legal requirement. However, since there are a large number of people involved in this case and banks are aware of the situation, some arrangement may be worked out.
An overall solution needs to be found since it impacts a large number of people.
If buyers decide to shift to an alternate project offered by the same developer, can their home loan be transferred or will they have to apply for a fresh loan?
Will that cost more money?
The loan given earlier was for a specific property. The new alternative property has to be acceptable to the bank. A buyer will have to go in for a fresh loan. However in an overall arrangement the shift to the new loan may not cost anything.
Ofcourse the new property itself will entail additional costs such as stamp duty/registeration charges, service tax, VAT etc.
Will banks repay the EMIs already paid or will they first try and recover the loan amount from the customer?
(Since the buyer has not committed any fraud, will banks be forced to recall the loan).
Banks have the legal right to recover the money from the customer first. The customer's recourse is to the builder and not to the bank as his liability towards the bank is absolute. However, in this case since a large number of people are involved, some arrangement will probably be worked out. What those arrangements will be is difficult to state as they may differ from case to case. What kind of losses can a buyer incur in such a situation?
A buyer's money is sunk if no alternative arrangement is worked out.
What should buyers who have invested in these projects keep in mind? They need to get together and take action as a group.
