Centuries back the Romans used the technique of auction to liquidate the assets of the debtors whose property has been seized. Similarly in the present scenario, the banks and the other financial institutions are authorized to confiscate the mortgaged properties of the debtors and that too without the intercession of the court. Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) have delegated the power to the banks and other financial lenders. The properties which are recovered are consequently sold in the auction for the recovery of the liabilities. The surplus amount recovered is handed over to the original owner of the property. Auction has a long history which still finds its existence in realty property markets.Methodology of auction:Auction is a popular method of buying a property without much hurdle. Usually the bank adopts this method to dispose-off the properties. The auction is conducted by an authorized officer appointed by the bank. A prior notice of the auction will be declared in the newspaper and on the bank’s website for public notification.The notice will hold information like property details, the preliminary price of the bidding, location and the timing of the auction, Earnest Money Deposit (EMD), date of inspection, place and time for collecting the tender form, last date of submitting the tender form etc.Generally the auction is conducted at the bank’s premises. However online auctions are also available now-a-days.Process of participating in an auction:
- Any person who is interested in buying a property can participate in the auction.
- Before participating in the auction acquire detail information about the properties for sale from the different public notifications.
- Scrutinize the notice of the targeted property for bidding.
- Submit the bid form before the last date of submission along with the EMD. Usually the EMD is 10% of the preliminary bidding amount of the property which is also known as the reserve price.
- As per the general auction rules, the highest bidder gets the allotted property.
- After endearing the bid, instantaneously you have to deposit 25% of the property price excluding the EMD. According to the terms and the conditions the balance amount should be deposited within a month. Once the full amount is paid, the property can be registered in your name.
- In case you fall short to pay the full amount within the time limit then the property will not be permitted to you and the 25% which you had deposited before will be relinquished.
- The EMD will be refunded to the participants who are not the highest bidders. Usually the amount is repaid immediately after the auction.
This is one of the feasible methods of owing a property. The only and prime requirement of buying the property through auction is to carry a detail study and have necessary information of the property in which you are interested.