I am planning to purchase a flat in Indirapuram on loan from HDFC Ltd, from an original Allottee who did not get his property registered by the builder. I have paid a token of Rs 50000 to block the booking but later have been informed of certain legal risks in the deal.
While technical verification of the property has been completed and also I have an in-principle approval from HDFC based on my profile, HDFC bank informs me that for legal verification of property, submission of full property documentation is required.
In absence of Sale Deed, bank says that legal verification and hence loan approval can only be given if Allottee has a certain sum of money outstanding out of the total consideration payable towards the builder, to prove that the builder is waiting to be paid this sum of money in order to proceed with registration. Such a statement of accounts showing an amount of Rs 42500 as outstanding has been submitted by seller to me / my bank along with Copies of all receipts, builder's NOC on builder's letterhead and copy of loan account statement of seller (different bank: SBI) have been submitted to HDFC bank.
My broker, the seller’s broker, the bank’s DSA and the bank manager are all confident that there is no legal hassle in this deal and is very common, They are calling this a case of endorsement, whereby the builder gives an NOC for transfer of property from name of original Allottee to me (which he has already given) and also endorses all payment receipts and Allottment letter to be transferred to my name.
All this is making me nervous about the legality of the deal and I am holding back from entering into an Agreement to Sell because then I have to pay a hefty sum of 9 lakh rupees.
Therefore while this process is on, I need to know from a legal experts the legal implications that still exist to my disadvantage. Hence it would be great to hear as follows:
1. I want to know if legally a property can be transferred by a builder from one allottee to another buyer by endorsement as above if the property is not registered.
2. What are the legal requirements / clause of Transfer of Property by Endorsement of Builder, from 1st Allotee to 2nd Allotee for an unregistered property?
3. Can the builder actually register the property in my name directly without registering the property in the name of original allotee under these circumstances of endorsement / transfer, when the property has not been registered earlier?
4. Even HDFC bank seems to be conducting legal verification of the property, is there a possibility that they can bypass legal requirements and pass the property legally, just to ensure that they don’t lose me as a client? My profile makes me eligible for a hefty loan amount.
An early help would be highly appreciated as the seller is in a hurry to close the deal within a week of the legal verification by bank.
Sumit Simlai