Builder Sold Your Flat? Court Says Stop EMIs Legally

A Karnataka High Court ruling says a homebuyer who stopped paying EMIs after his builder sold his flat to someone else cannot face criminal charges. The court blamed SBI for mishandling the case instead of addressing the builder's fraud.

Here's what happened: Karnataka HC dismissed SBI's criminal case against homebuyer Bari, who had stopped paying EMIs after his builder sold his booked flat to another buyer.. SBI accused Bari of misusing the ₹39.92 lakh loan, but the court ruled the bank mishandled the dispute by going criminal instead of civil.. The court found that a borrower stopping EMIs due to builder fraud is not a criminal act — the bank should have pursued the builder, not the homebuyer..

What you should do: Document everything: if your builder has sold your flat to another buyer or abandoned the project, collect all allotment letters, payment receipts, and RERA complaint records before your bank demands EMIs.. Write formally to your lender: if you're stopping EMIs due to builder default, send a registered letter explaining the builder's fraud — this creates a paper trail that protects you from criminal misuse-of-loan charges.. File a RERA complaint immediately: builder fraud is actionable under RERA; a pending RERA case strengthens your defence if the bank tries to take legal action against you for missed EMIs..

Under RBI guidelines, banks are supposed to conduct due diligence on builders before disbursing home loans. If your bank disbursed funds to a fraudulent builder, they share accountability — cite this in any legal response.