Precautions Before Buying Bank-Auction Property

Purchasing a bank-auction property can yield bargains, but it carries unique legal and financial risks that demand rigorous due diligence.

• Inspect Title Documents: Verify the original title deeds through an advocate to ensure the bank has clear legal authority to auction the asset under the SARFAESI Act.

• Check for Encumbrances: Conduct a thorough Encumbrance Certificate (EC) check to identify any hidden dues, statutory liabilities, or third-party litigations.

• Account for Dues: Confirm whether previous electricity bills, water charges, or property taxes are cleared, as the buyer often absorbs unpaid utility arrears.

• Physical Inspection: Assess the structural condition and occupancy status. If the property is occupied, eviction proceedings can become protracted.

• Financial Readiness: Ensure ready liquidity, as auction terms typically require depositing 25% of the bid amount immediately upon winning, with the balance due within 15 days.