Bank Property auction is a common method adopted by banks to dispose of loan defaulter properties. Buying a property through a bank auction is a tedious process. For this purpose, the bank generally appoints an authorized officer who conducts the auction and public notice of that auction is given in the newspaper, notice usually constitutes information like details of the property, Earnest Money Deposit (EMD), Reserve price (minimum price at which the bidding starts), time and place of auction, date of inspection, last date for submission of tender form, place and time for collecting the tender form.
Normally bank auction process is initiated when the borrower defaults on 3-4 consecutive Loan EMIs. A notice is served to the customer to respond within 60 days that why he/she is not repaying the loan and why the bank should not initiate an auction of property due to default in payment. And if the borrower pays the installments then the notice is withdrawn. Otherwise, the borrower can submit his objection within 60 days with justification for non-payment of EMI. In case, no reply is received from the borrower or the bank is not satisfied with the reply then the bank can initiate the auction process. Once this notice expires after 60 days, a bank can auction the property after 30 days. Public notice of that auction is given in the newspaper as well as displayed on the bank’s website.
Step 1: Search for Bank Auction Property
Until some time back it was a tedious process to find bank auction properties. Now apart then publishing in leading newspapers, nowadays there are lots of websites that publish auction details on their sites. This information is normally available on a chargeable basis. These sites are not updated regularly. You can also check auction notices on the websites of Asset Reconstruction Companies like ARCIL. You can contact real estate agents also in that specific locality, and they can tell you about bank auction property.
Step 2: Check Property Details
Once you shortlist the suitable bank auction property, carry out a preliminary check on your own. Before moving out into the market check the reserve price, EMD, loan amount, and due amount. After that Check what is the market price of the property, check out if there is any legal dispute, bank auction-related details and how can you participate in a bank auction.
The sole objective of the bank is to dispose of the property and recover its dues. If you are seriously interested in buying the property then it is advisable to hire an expert for this process because generally, banks do not provide property papers before purchase for a title search.
Step 3: Physical Inspection of the Property
It is always advisable to physically inspect the property because without that you won’t be able to reach on conclusion about the status of the property and the actual price of the property. Nowadays banks have started mentioning the inspection date and time in the auction notice. You can visit the site at a designated time to inspect the property. Banks appoint auction managers, you can get in touch with them regarding the inspection time and any other basic details. It is always advisable to buy property where bank has physical possession because banks auction the property on as where It is basic. In the case of notional or symbolic possession, the winner of the bank auction process will struggle to get the possession. After the auction bank will be totally non-cooperative.
Step 4: Submit Tender Form
In this step, you can collect the Tender Form physically or you can submit it online and along with it, you have to deposit the EMD (Earnest Money Deposit). EMD is normally deposited in the form of a Banker’s Cheque or Demand Draft. Please check all details in the tender form and submit your tender before the Tender Closing Date. Along with the Tender form, the bank also demands KYC documents. Fill out the tender form carefully and submit all related documents.
Step 5: Bidding
Nowadays most bank property auctions are done through the e-auction process. So you can submit one bid at starting, generally, banks allowed competitive bidding, so you can submit multiple bids. In e-auction, you can bid multiple times during the window of e-auction. In some cases, you can submit your bid through the bidding form. In some cases, the Tender form is submitted physically and a bid is submitted online through a separate Bid form.
Step 6: Auction Date
If bids are submitted through a tender form then banks will open all the eligible bids in front of all bidders. The highest bidder is declared the winner of the bank auction property. If you win the auction then you need to deposit 25% of the bid amount within 24 hours including EMD deposited with the tender form. And the rest of the amount in the next 30-45 days decided by the bank. If a property auction is done online then on the auction date, visit the site and be prepared if there are multiple bidders, to increase your bid price.
Step 7: Sale Deed
After the balance, 75% payment is made. You will receive a Sale Certificate from Bank but the title transfer is incomplete till you register the sale certificate in the sub-registrar office. After receiving the sale deed, you can register it and you should insist on the inclusion of the defaulter as confirming party to avoid any future litigations. The sale certificate should be signed by the authorized bank executive at the time of property registration.