The law gives first preference to secured creditors over buyers who only have an allotment letter. The agreement that lenders sign with the developer gives the former superior rights over allottees. If buyers don’t have an NoC from the lender or a document that shows that the bank has released the charge on the house, the solution can be complicated.
Those buyers who have taken a loan to buy the property would have received an NoC from the developer’s bank. Typically, lenders don’t sanction a home loan unless the buyer submits the NoC .
There’s little precedence in case of buyers who have paid the stamp duty and registered the house but did so without the developer’s lender releasing the charge of their home. It’s a grey area as the property is now in the buyers’ name while being mortgaged. Buyers who have not registered the flats and don’t have an NoC would be considered as mere allottees.
Try to get a stay order: To prevent a lender from taking over their properties, homeowners need to approach the debt recovery tribunal from where the bank has obtained the eviction notice. Lawyers say that the buyers should try to get a stay order preventing the lender from taking possession of their properties. Homeowners need to convince the court that their rights would be jeopardised if the lender goes ahead with the possession.
According to lawyers, the buyers should form an association to implead in the court. There are times when developers provide personal guarantees to the lender when taking a loan. The personal guarantee can be land parcels or properties belonging to the developer or directors of the company. If there’s a personal guarantee, the buyers can request the court to direct the lender to use the personal guarantee to recover the due.