Purchasing a property through bank auction requires thorough verification of legal documents. Unlike regular property transactions, auction properties come with unique documentation requirements and potential legal complexities. This guide covers all essential documents you must verify before bidding on any bank auction property.
Why Document Verification is Critical
Bank auction properties are sold on an “as-is-where-is” basis, meaning the bank does not guarantee clear title or possession. The responsibility of verifying all legal aspects lies entirely with the buyer. Proper document verification can save you from:
- Title disputes and litigation
- Hidden encumbrances and liabilities
- Possession challenges
- Financial losses
Documents Provided by the Bank
1. Sale Notice / Auction Notice
The sale notice is the primary document containing:
- Property description and location
- Reserve price and EMD amount
- Auction date, time, and platform
- Inspection schedule
- Terms and conditions of sale
- Contact details of authorized officer
2. Demand Notice under SARFAESI Act
This document proves that the bank followed proper legal procedure:
- 60-day notice issued to borrower under Section 13(2)
- Possession notice under Section 13(4)
- Publication in newspapers
3. Valuation Report
Banks get properties valued by approved valuers. This report includes:
- Market value assessment
- Property measurement and specifications
- Construction details and condition
- Valuation methodology used
Documents to Verify Independently
1. Encumbrance Certificate (EC)
The most critical document that shows the property transaction history:
- Obtain EC for at least 13-30 years
- Available from Sub-Registrar office
- Shows all registered transactions, mortgages, and liens
- Verify no other claims exist on the property
Cost: Rs. 200-500 depending on the state
2. Title Documents Chain
Verify the complete chain of ownership:
- Original sale deed of current owner
- Previous sale deeds (at least 3 transactions back)
- Partition deed (if applicable)
- Gift deed or will (if property was inherited)
- Power of Attorney (if any transaction was through POA)
3. Property Tax Receipts
Verify from the local municipal corporation:
- Property tax payment history
- Any outstanding dues
- Property assessment details
- Khata certificate (in Karnataka) or equivalent
4. Approved Building Plan
For constructed properties, verify:
- Sanctioned building plan from local authority
- Completion certificate or Occupancy Certificate (OC)
- Check for any unauthorized construction
- Verify built-up area matches approved plan
5. Land Records
Obtain from Tehsildar or Revenue Department:
- 7/12 extract or Khata (varies by state)
- Mutation records
- Land use certificate (residential/commercial/agricultural)
- Non-agricultural (NA) permission if applicable
Additional Verifications Required
1. Court Records Search
Check for any pending litigation:
- Civil court records
- DRT (Debt Recovery Tribunal) cases
- NCLT proceedings
- Consumer forum complaints
2. CERSAI Registration
Central Registry of Securitisation Asset Reconstruction and Security Interest:
- Verify property is registered for the loan
- Check for multiple charges on the property
- Available online at cersai.org.in
3. Society/Association NOC
For apartments and gated communities:
- No Objection Certificate from housing society
- Outstanding maintenance dues
- Share certificate transfer requirements
4. Utility Connections
Verify status and outstanding dues for:
- Electricity connection and bills
- Water supply
- Gas connection (if piped)
Documents for Participation
KYC Documents Required
- PAN Card (mandatory)
- Aadhaar Card
- Address proof (passport, utility bill)
- Passport size photographs
- Bank account details for EMD refund
For Company/Firm Participation
- Certificate of Incorporation
- Board Resolution authorizing participation
- MOA and AOA
- PAN of company
- Authorized signatory documents
Post-Auction Documents
Documents Issued by Bank
- Auction confirmation letter
- Payment receipts
- Sale certificate under SARFAESI Act
- Possession letter
- Original title documents (released after full payment)
Registration Requirements
- Sale certificate to be registered at Sub-Registrar office
- Stamp duty payment (varies by state, typically 5-7%)
- Registration fee (usually 1%)
- Two witnesses with ID proof
Red Flags to Watch Out For
- Missing or incomplete chain of title documents
- Multiple mortgages on the same property
- Ongoing litigation mentioned in EC
- Mismatch in property measurements
- Unauthorized construction
- Agricultural land being sold as residential
- Property in dispute between family members
Professional Help Recommended
Consider engaging professionals for document verification:
- Property Lawyer: For title verification and legal opinion
- Chartered Accountant: For tax implications
- Property Valuer: For independent valuation
Conclusion
Thorough document verification is non-negotiable when buying bank auction properties. While the potential savings are significant, the risks of inadequate verification can lead to prolonged legal battles and financial losses. Always conduct comprehensive due diligence or hire professionals before participating in any bank auction.
Remember: The few thousand rupees spent on document verification can save you lakhs in potential disputes.