How to buy property in an auction

BL ;17 Oct 2013

Tight timelines in the auction process necessitate deep pockets.

Do you yearn to buy a house in the city but find realty rates prohibitive? You could try bidding for properties being auctioned by banks. The laws allow banks to recover dues from defaulting borrowers by auctioning the properties they pledged.

Banks may fix the reserve price (minimum price at which the property will be sold) for such properties 20-25 per cent lower than the going market rate. This could translate into a bargain buy for bidders. Also, since they are auctioned by banks, the title to these properties would likely be clear.

DEEP POCKETS NEEDED

The auction process, however, has tight timelines within which the buyer needs to arrange the money to close the deal. So, this requires that you have deep pockets. Banks issue a public notice in newspapers about the proposed auction and invite bids.

The notice includes the details of the property, date, time and venue of the auction, reserve price, and earnest money deposit.

It also mentions the date on which interested parties can inspect the property before submitting their bids. Bidders must submit their applications to the bank quoting their bid amount which should not be less than the reserve price. Along with this, they must pay earnest money deposit which may be around 10 per cent of the reserve price.

The auction usually takes place after 30 days from the date of the public notice. In this period, the borrower may still pay the money due to the bank.

If the borrower settles the dues, the auction will not happen and your earnest money deposit will be returned. If the auction takes place and you do not win the bid, your earnest money deposit is returned. If you win the bid, you will have to pay around 25 per cent of the bid price (less the earnest money deposit) on the day of the auction. You need to pay the balance amount within the next 15 days or an extended period agreed between you and the bank.

If you win the bid but do not pay the required amount within the specified periods, you will lose the money paid earlier. So, walk this path only if you have got the funds ready to go the whole way. Banks may offer loans to acquire such properties. But given the tight timelines, you will have to make arrangements for a loan before the auction date.

ONLINE OR OFFLINE?

Buying property through the auction route involves effort. You will need to scan newspapers for announcements by banks regarding such auctions, do the necessary due diligence, and organise the funds quickly. Else, you can contact real estate agents who may have this information. Also, Web sites such as www.foreclosureindia.com provide online listings of properties which banks advertise to auction.

In a normal (offline) property auction, bidders gather at the auction venue where their bids are considered. Banks may also allow competitive bidding among the bidders for improving their offers.

In online property auctions, the process is largely similar, but bidders place and revise their bids on a Web site. The online auction method has not yet been much successful in India. Observers attribute this to fears of online fraud, risk of manipulation by cartels, and lack of awareness among bidders.

WHAT TO WATCH OUT FOR

Despite the benefits, acquiring property through the auction route may not be everyone’s cup of tea. If the auction attracts aggressive bids, the price could go up and dilute the cost advantage. So, it is important that you make an assessment of the market value and bid prudently to get a good deal. Also, to be on the safer side, it is better to check the property documents before deciding to bid, or engage a lawyer to verify the title.

This apart, keep in mind that banks auction property on an ‘as-is-where is’, ‘as-is what-is’ basis.

This means that expenses on any repairs, renovation, unpaid property taxes, electricity dues and statutory liabilities will have to be borne by the buyer. The buyer also has to bear other expenses such as stamp duty and registration fees. So, do a proper inspection to assess the true cost of owning the property.

Besides, some people consider auctioned property unlucky, and have misgivings about buying something the owner does not willingly sell. This could be a reason why such properties may be priced at a discount to market rates.

காசோலை மோசடிக்கு அபராதம்: சுப்ரீம் கோர்ட் புதிய நிபந்தனை

தினமலர் :அக்டோபர் 17,2013,01:58 IST

புதுடில்லி: காசோலை மோசடி தொடர்பான வழக்கில், காசோலையில் குறிப்பிடப்பட்ட தொகைக்கு, இரு மடங்கை அதிகரிக்காத வகையில் அபராதம் விதிக்க வேண்டும்' என கோர்ட்டுகளுக்கு, சுப்ரீம் கோர்ட் அறிவுரை வழங்கியுள்ளது.

கோல்கட்டாவில், சோம்நாத் சர்கார் என்பவர், 69,500 ரூபாய்க்கு காசோலை வழங்கினார். அதை வாங்கியவர், வங்கியில் செலுத்திய போது, சோம்நாத் சர்கார் கணக்கில் பணம் இல்லாததால், காசோலை திரும்பி வந்தது. 

இதையடுத்து, பாதிக்கப்பட்ட நபர், உள்ளூர் கோர்ட்டில் வழக்கு தொடர்ந்தார். இதில், கோர்ட் சோம்நாத் சர்காருக்கு, ஆறு மாதம் சிறை தண்டனை விதித்து, பாதிக்கப்பட்டவருக்கு, இழப்பீடாக, 80 ஆயிரம் ரூபாய் வழங்க உத்தரவிட்டது. 

இதை எதிர்த்து, சோம்நாத், கோல்கட்டா ஐகோர்ட்டில் அப்பீல் மனு செய்தார். இதை விசாரித்த ஐகோர்ட், சிறை தண்டனையை ரத்து செய்து, 80 ஆயிரம் இழப்பீடுடன், 69,500 ரூபாயையும் அளிக்கும்படி உத்தரவிட்டது. "ஐகோர்ட் குறிப்பிட்ட தொகையை தன்னால் வழங்க முடியாத நிலையில் உள்ளேன். கருணை காட்ட வேண்டும்' என, சர்கார், சுப்ரீம் கோர்ட்டில் மனு செய்தார். 

இதை விசாரித்த நீதிபதிகள், டி.எஸ்.தாக்குர் மற்றும் விக்ரம்ஜித் சென் பிறப்பித்த உத்தரவில் கூறியதாவது: காசோலையில் உள்ள தொகையின் இரு மடங்கிற்கு மிகாமல் அபராதம் இருக்க வேண்டும்.

 இதற்கெனவுள்ள கட்டாய வரம்பை மீறாத வகையில் அபராதம் விதிக்க வேண்டும்.எனவே ஐகோர்ட் பிறப்பித்த உத்தரவை ரத்து செய்து, கூடுதலாக, 69,500 ரூபாய்க்கு பதில், 20 ஆயிரம் ரூபாயாக குறைக்கப்படுகிறது. இவ்வாறு, நீதிபதிகள் தங்கள் உத்தரவில் கூறினர்.

Bounced Cheques :

Story first published on:  NDTV :October 16, 2013 20:13 (IST)

New Delhi: Courts cannot impose a fine of more than twice the amount in bounced cheques, the SupremeCourt has held, stressing that the limit is inviolable and should be respected.

"First and foremost is the fact that the power to levy fine is circumscribed under the statute to twice the cheque amount.

"Even in a case where the court may be taking a lenient view in favour of the accused by not sending him to prison, it cannot impose a fine more than twice the cheque amount. That statutory limit is inviolable and must be respected," a bench of justices T S Thakur and Vikramajit Sen said.

It set aside the Calcutta High Court order which had directed a person to pay Rs. 1,49,500 against the cheque amount of Rs. 69,500.

In this case a trial court had sentenced a person to six months imprisonment and directed him to pay compensation amounting to Rs.80,000 in a cheque bounce case.

The accused, Somnath Sarkar, then approached the High Court which directed him to pay an additional Rs. 69,500 to the complainant and his jail term was waived.

Mr Sarkar then moved a mercy plea before the Supreme Court saying that he was not capable of paying the amount.

The court after hearing his plea set aside the High Court order and reduced the amount of Rs. 69,500 to Rs. 20,000.

"The High Court has, in the case at hand, obviously overlooked the statutory limitation on its power to levy a fine," the bench said.
Posted by Bank Finance India at 3:55 PM