Builders have to disclose the status of mortgage loans for apartmentsPropertyWala.com

Real estate developers must declare security interests created by them for projects registered with an authority. The decision will increase transparency and inform potential home buyers about any mortgages or loans that the developer has taken in relation to the apartments they intend to buy, or the project itself.

This information is now available with the Central Registry for Securitization and Asset Reconstruction and Securities of India (Cersai). Cersai is the central authority that processes and stores such data. Established under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi Act), Cersai aims to prevent credit fraud, such as loans from different banks on the same property.

Cersai has collateral data created from 22 January 2016 for registered commercial banks and, with effect July 1, 2016 for all other persons registered with it. It has started the process of registration of data on security interest in residential and commercial properties under construction from June 2017.

Home buyers should be aware of the loan status of apartment-

MahaRERA has clearly stated that home buyers and winning bidders must also be aware of the security interest on real estate projects and apartments they are interested in buying. Often home buyers buy a property without knowing its mortgage or loan status, which later leads to lawsuits and legal complications.

If the developer took out a loan by mortgaging inventory or some apartments, and can not return it. The banks will then acquire the property to get their contingent back and that this process can affect the home buyer. However with the new decision this situation can be avoided as Cersai keeps a record of all properties that have been sanctioned for loan.

Real estate developers must now submit a report to Cersai on the security interests created in the property project. Along with an encumbrance certificate when the project registered with the authority.

In the absence of security interest, the developer must provide a supporting commitment or provide an undertaking. The developer also expected to submit a report to Cersai on changes in property security interests. According to MahaRERA, submitted Cersai reports must be generated within 10 days of the submission date.