If you are planning to buy a used resale property from a seller who has already taken a home loan on the property, then it is important for you to perform certain due diligence. Firstly, check whether the existing owner has any pending home loan, electricity and water charges or other dues on the property. You also need to check whether the property is owned by a single owner or is shared. One should also check whether the property is leasehold or freehold. If the property is leasehold, then the seller needs NOC from the government authority.
You can either choose to ask the existing buyer to clear the home loan or if you are also planning to take a loan to buy the property, then you can apply for a transfer of the seller's loan to your name. The bank will take your KYC and check your eligibility and then check the seller's file and transfer the loan to your name.
Deepak Chowdhury, partner, Induslaw, explains, "The buyer must insist on a copy of all, the title documents of the used property for conducting a title due diligence to identify the risks, if any, on the property. The buyer will also require the title documents if he intends to obtain a loan for financing the acquisition of the property. The buyer should also request the seller to obtain a statement of the loan outstanding (principal and interest (including penalty interest, if any)) due from the bank wherein the home loan is pending, and a confirmation of the property documents mortgaged with the bank."