Property classification residential or commercial
anji
(Querist) 15 December 2016
This query is : Resolved
Hi,
I am buying a 3BHK flat, which is being rented out to ladies hostel. I might or not continue with the current tenant. I had already paid advance to the owner and applied for bank loan. Bank says they can't treat it as residential property since its been rented out to ladies hostel. I amn't aware if it rented out to ladies hostel they consider it as commercial though I don't have any alliance with current tenant as I don't have ownership rights yet. Property located in residential society and families living out there along with couple of ladies hostels in the same society.
Is it justifiable that bank consider it as commercial property since it being rented out to hostel?
What if, currently family rented out and I got an offer from hostel to rent it out?
It's strange. I would appreciate appropriate response
adv.bharat @ PUNE
(Expert) 15 December 2016
Anji ji
Yes rent to hostel amount to commercial activity.
If family reside in society then it does not amount to commercial activity.
Will u appreciate this answer by giving like on my LCI profile?
Rajendra K Goyal
(Expert) 16 December 2016
You said:
Is it justifiable that bank consider it as commercial property since it being rented out to hostel?
Reply:
Bank is lender, it has own guidelines. However, how and why using a premises as girls hostel is not a commercial activity according to you?
You said:
What if, currently family rented out and I got an offer from hostel to rent it out?
Reply:
Hypothetical question, presently not such situation.
You said:
It's strange. I would appreciate appropriate response
Reply:
May approach another Banker, if they prefer to proceed.
P. Venu
(Expert) 16 December 2016
The best person to offer meaningful suggestion as to the present status of the property is the owner himself.
Dr J C Vashista
(Expert) 16 December 2016
I agree with expert advise of Mr. Bharat, Mr. Rajendra K Goyal and Sh. P Venu.
Present status of the flat is commercial.
How the status of property is co-related to advancing a loan by mortgaging documents of the property? How the banker is taking the plea qua status of the property being mortgaged? Does the banker not advance loan to against a commercial property having its marketable title?
Discuss with a local prudent lawyer or change the banker.
Hemant Agarwal
(Expert) 19 December 2016
1. The Civic Body sanctioned plans of the building will determine whether the building is classified as "residential" or "commercial". Running of a "hostel" work is "commercial activity" and an offence under the BMC Act, IF proper permission and change of usage is not made.
2. Check the Building plans, Property Tax bills, Electricity bills, Water bills, NA Tax bills, to determine whether the unit (Flat) is "residential" or "commercial".
Keep Smiling .... Hemant Agarwal
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