Have you invested in a mortgaged property?

It may be of less relevance to you that residential projects are funded by housing finance companies or banks. But while buying a property, it is important to know who the real owner would be.

In fact, there have been instances where the customer has been asked to extend cheques on the bank’s name rather than the developer’s name for partial disbursements. The best way to do so is involving a lawyer and asking for title verification.

The lawyer can carry out a search from the office of the sub-registrar, society, corporation or other authorities concerned, and ascertain the legitimate ownership of the asset.

If you are buying an under-construction flat from a builder, check if it is already mortgaged with a lender. “If the property is already mortgaged thus, insist on a no-objection certificate from the lender, before entering into a purchase agreement,” advises Rajesh Narain Gupta, managing partner, SN Gupta & Company.

In the case of a default from the builder and lack of NOC from the lender, a buyer can be turned out of the house. It is essential to ask for original documents. Sanctioned plans of the property and completion certificates must be asked for to ensure compliance with law.

Mere registration of property does not make it an authorised or a compliant property. Absence of original documents of ownership is a good starting point for a fraud.

There are instances where the flat is mortgaged with a bank and the originals are with the bank. If that happens it is highly likely that the buyer will be ousted if the borrower defaults on the bank loan.