In the wake of the recent land acquisition controversy in Noida Extension area, some builders gave homebuyers the option to shift to another project it was developing. Buyers who agreed to shift had to sign the property agreement afresh and get a loan sanctioned all over again before getting into the new agreement. Usually, for flats taken on loan, there is a tripartite agreement involved.
What is a tripartite agreement?
It is an agreement signed by three parties—the buyer, the bank and the builder. The agreement contains all relevant information, such as the specifics of the property, carpet area (the actual living space that you get) and the amount of loan the bank has provided to the customer. It also mentions the possession date and specifies the penalty clause and its rate, if any. It lists out the obligations of all the parties involved.
Banks usually lend against a security, in this case the flat. However, since the flat is not in your name until possession, the builder gets involved in the agreement with the bank.
The need for signing a new agreement
Any property agreement mentions the specifics of a particular flat, apart from other details. When you shift to another project, you book a new flat with different specifics and details. The loan amount for the new apartment may also vary in keeping with the area specifics of the new unit. Hence, the earlier agreement needs to change even if the builder and the bank you approach are the same.
Dissolving the earlier agreement
There is no formal paperwork required to dissolve the existing agreement and it becomes null and void with the consent of all parties as soon as the new agreement is executed. The new agreement will include the specifics of the new flats and the details of the new loan, apart from other information.
Signing the new agreement
But before the new agreement is finalized, you would have to go through a flurry of paperwork. You would have to get the loan approved once again since the bank will do its due diligence on the title of the property and even re-evaluate the loan amount to be sanctioned in keeping with the size of the new flat. This would mean you collect all the documents, such as income-tax returns, bank statements for the last six months and income proof, you submitted to get the first loan sanctioned and also pay a processing fee afresh.