Sale certificate is issued by banks or financial institutions when the property is sold in public auction to recover the outstanding loan amount under the SARFAESI Act.

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The abbreviation of SARFAESI is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest

The SARFAESI Act empowers financial institutions to recover outstanding loan due from borrowers by selling their assets.

For your better understanding, let me explain the SARFAESI Act with a real-life example, we changed the names in example to conceal the identity:

Mr.Abdul Ahmed and Ms.Jennifer were working for a multinational company in Bangalore.

This couple fall in love and got married against family wishes in a small gathering.

After marriage, Ms.Jennifer changed her name to Mrs.Jennifer Ahmed.

Within 6 months of the marriage, this couple purchased a 3BHK flat in Bangalore, the flat measuring 1355 square feet super build-up area. Below is the image of sale deed

The sale consideration is Rs. 32,34,200/-, we encircled the sale consideration in below sale deed

Both the husband and wife were working for an MNC with hefty salaries in hand, State Bank of India had sanctioned a loan value of Rs. 32,94,000/- which is more than the sale consideration of Rs. 32,34,200/-. This means, 100% funded through loan without down-payment.

Below is the image of MODT, we encircled the loan value

In June 2019 (after a year of flat purchase): for some reason, Mr.Abdul Ahmed and Mrs.Jennifer Ahmed opened the fresh loan of Rs. 31,00,000 from Bajaj Housing Finance Limited (BHFL)

As on July 2019, the SBI loan outstanding was Rs.25 lakh, Mr.Abdul Ahmed & Mrs.Jennifer Ahmed rolled Rs. 25 lakh from BHFL to SBI to close the existing loan in SBI. The balance Rs.6 Lakh kept for personal expenses.

Below is the image of discharge deed from SBI

Mr.Abdul Ahmed and Mrs.Jennifer Ahmed collected the title documents from SBI and deposited the same in BHFL

In Jan 2021, the marriage was in bad shape due to disagreement in relationship. So the couple obtained a divorce and separated.

Mr.Abdul Ahmed moved out of the flat and he disconnected communication with his ex-wife Ms.Jennifer and BHFL as well

Ms.Jennifer continued to stay in the flat with her child, she stopped paying the EMIs. (Ms. Jennifer can afford to pay the EMI but she thinks that if she pays the EMI, down the line 10 years later, her Ex-husband Mr.Abdul may claim the co-ownership so she intentionally stopped paying the EMI)

Since the borrowers defaulted EMI payments for 90 days, the BHFL marked their loan account as non-performing asset

In July 2021, BHFL sent the demand notice to borrowers via speed post for recovery of loan assert of Rs. 34,66,330/-. Below is the image of demand notice

As per the above demand notice, BHFL gave 60 days to clear the outstanding loan, Since the borrowers not responded even after 60 days of notice, BHFL proceeded to obtain court order to take physical possession of the property

In 1st week of Feb 2022, BHFL obtained the court order to take physical possession of the property, below is a copy of order

Mid of March 2022, the BHFL submitted letter to Jurisdictional police station to give protection while executing court commission.

Below is the image of letter:

On the same day of submitting above letter at police station, the advocate, police and representatives from BHFL arrived at property to execute the court commission

Below is the image of PANCHANAMAs under SARFAESI Act. It means that 5 people witnessed the eviction in the property

Below is the image of Inventory under SARFAESI Act, It means that officials took the inventory check in the property.

Below is the picture that shows BHFL taken physical possession of the property

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BHFL published the auction notice in newspapers. Below is the image

Mr. Navin was searching for property for purchase, he saw the above publication and contacted BHFL for property visit. He visited the property along with his family. They liked the property

Mr. Navin collected copy of title documents from BHFL for verification:

• Sale deed
• Tax receipt
• Khata
• Mortgage documents

Up on the verification and satisfaction of above documents. Mr. Navin submitted the request letter and KYC details to BHFL to participate bidding

On 29th March 2023, Mr.Navinn Paid Rs. 48,0120 as 10% EMD in the form DD (the abbreviation of EMD is Earnest Money deposit, this money deposit is to show your sincere faith to buy a property. If you are unsuccessful in bidding, you can claim this deposit refund after the 7 days of bidding)

On 11th April 2023, Three bidders participated at the reserve price of Rs. 47,00,000, Mr.Naveen won the bidding at the price of Rs. 48,01,200/-

Mr.Navin paid the remaining payment on the following terms

• Rs. 7,20,180 as 15% on the Auction day of 11th April 2023
• Rs. 36,00,900 as 75% on 21st April 2023

On the very next day of completing the payment, Mr.Navin received sale certificate from BHFL. Mr.Nain purchased this property along with his 2 brothers so it’s a joint purchase. Below is the image of sale certificate

Along with the above sale certificate, Mr.Navin received the original title documents and property keys. The title documents include:

• Sale deed (of Mr.Abdul Ahmed & Mrs.Jennifer Ahmed)
• Khata
• Tax receipt

To register the sale certificate in sub-registrar office, Mr.Navin paid below government fee. The percentage (%) is based on the consideration of Rs. 48,01,200/-

• Stamp Duty: 5.15% (property comes in panchayat limit)
• Registration: 1%
• Cess on Stamps: 0.5%
• Scanning: Rs. 500

Paid the government fee on Khajana-II website and generate below challan

On 27th April 2023, Mr.Navin carried the following documents to Sarjapura sub-registrar office to register the sale certificate

• Sale certificate (Shared the image above)
• Sale deed (of Mr.Abdul Ahmed & Mrs.Jennifer Ahmed)
• Khata
• Property Tax receipt (BHFL handed over the old property tax receipt, which the tax was not cleared for last 4 years. Mr.Navin cleared the outstanding tax including penalty and interest till current year, which came to around Rs. 23,000)
• A pen to sign the sale certificate

Mr. Navin and his two brothers who are joint purchased, BHFL representative and two witnesses were present in sub-registrar office

Below is the image of registered sale certificate

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We provide assistance to register Sale Certificate, please write to us pgnproperties@gmail.com or WhatsApp to + 9 1 – 9 7 4 2 4 7 9 0 2 0.

Thank you for reading!