Builder Loan Default? Your ₹50L Flat May Be Seized

If your builder borrowed money from a bank and defaulted, that bank can seize and sell your flat under SARFAESI — even if you've been paying your home loan EMIs perfectly. Here's what protects you and what doesn't.

Here's what happened: Banks enforcing SARFAESI on builder-defaulted projects can legally auction flats even when individual homebuyers have paid their own EMIs in full.. Section 26D of SARFAESI requires security interests to be registered on CERSAI — unregistered tripartite agreements may not protect a buyer's priority claim against a construction lender.. Courts are increasingly being asked to balance SARFAESI lender rights against homebuyer claims, with outcomes varying sharply based on whether buyer interests were registered..

What you should do: Check CERSAI (cersai.org.in) using your property address or builder name to see if any charge exists on your under-construction flat before or after purchase.. Ask your home-loan bank in writing whether it has registered its charge under Section 26D on CERSAI — this registration protects your priority as a buyer-backed borrower.. Verify your project is RERA-registered on your state's RERA portal — RERA-registered projects give homebuyers financial creditor status, adding a legal layer against SARFAESI seizure..

A property free from CERSAI charges at the time of your purchase is a strong signal — check it before you pay the booking amount, not after registration.