Dev Singhraha
Relocation Expert
There have been several cases where the buyers have paid a huge amount for a property only to find out later that the property has outstanding loans and thus are not able to resell it.

We discuss the ways with which you can save yourself from falling in such a situation.

1.Obtain a no objection and no encumbrance certificate
If the property is in a society than a share certificate is issued to the owner of the property. While issuing a loan against the property the lender has to take the share certificate along with all the other important documents from the developer to the document through which the seller became the owner of the property. It also contains all the details of the loan. So the request for a no objection certificate from the society will help the buyer to cross check for any standing loan against the property.
 
2.Inspect the documents registered with the office of assurance
According to the Indian Registration Act 1908, every transaction of the immovable property needs to be registered. These documents are available to the public inspection. If there is any question about a particular property, its details can be recovered from the office of the registrar by paying required money.

The loans against the property are taken under the equitable mortgage, under which only the original papers of the property are deposited with the lender. Since 1st April 2013, all the equitable mortgages are required to be registered and are available for the inspection. If in case any document regarding the same ha to be executed, then the same has to be registered to the office of registrar within four months. However, if no document is executed, the borrower is supposed to give notice to the registrar within 30 days about the equitable mortgage created else, he is liable to pay the fine or face the jail imprisonment for 1 to 3 years.
 
3.Insist on the original document
If the seller has obtained the loan from a personal lender and not the public banks etc, then this information will not be recorded and the buyer should make the absolute necessary inspection for the same.

Always insist on seeing the original document related to the property and go through them thoroughly before finalizing anything.
 
4.Go through the CERSAI website
The government along with public banks formed CERSAI in March 2011. It has a huge database of the properties and the amount of loan borrowed from them. Just by paying a small amount, one can have access to the loan details of the desired property. The search result will show only the details of the properties for which the loans were taken from public sector banks. If in case the loan amount were borrowed from non financial institutions, then it won’t show up in the result. 
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