Everyone wants to purchase property below the market price, but sometimes it can be too risky. However, buying a property at a bank auction gives certain benefits that you generally may not get. Here are a few unknown points about the Bank auction properties.
Generally, banks auction the properties on as is where it is basis, and they have only symbolic possession. So, in this case, distressed properties can be a big headache for you, even if you have purchased them below 30-40% of the market price. In some cases, there are illegal occupants living on the property, and it would be solely your responsibility to get rid of them, bank will not do anything and the previous owner also.
This has been seen in some cases that property owners have taken banks and purchasers to the court after the bank auction on the basis that banks have sold/her property in penny without taking the owner in good faith. Some cases are pending in courts where bank managers have sold properties worth of thousand crores in a few crores. So be cautious about that also.
In some cases, after repeated failure of bank property auction you can approach the bank for the purchase of the property if the bank agrees to your terms and condition and after a legal check, they can sell you. So, you don’t need to be disheartened that you didn’t get a chance to participate in the auction. However, it would entirely be the bank’s discretion to sell the property.
Bank has published notices for bank auctions and if you don’t want to go into a property auction tedious process then you can directly purchase the property from the property owner before the auction. You can approach the owner and can negotiate and can finalize the deal and you can inform the bank that we have finalized the deal and you can deposit the debt amount in the bank or you can restructure the loan after discussing with the bank.
It is always advisable to have full money in advance with you if you are planning for a bank auction, and if you are planning for taking a loan then talk about it in advance with the auctioning bank because if you win the auction and you don’t submit the 25% deposit on the same day then your EMD can be forfeit.
There is doubt that if we are purchasing property through bank auction then can the bank reclaim it, the answer is NO because a bank has sold this property to you and recovered their dues from the borrower and they have transferred the property papers through a sale certificate. This will be applicable in both cases if borrowers’ debt is fully recovered or not because banks have sold it in a public forum.
If there are any utility bills, UD tax, any other kind of tax like GST, etc is due on the property and the property is auctioned by the bank and a new buyer has purchased it through the bank auction process then he/she will not be liable for any tax liabilities.
But the buyer has to follow the property buying tax laws which vary from state to state. If any tax implies property buying then he has to submit it.