Can Banks Auction Your Property While OTS Negotiations Are Pending in India?
Suppose you receive a bank auction letter while your case is going on for One Time Settlement. You may have already shared your offer with the branch manager. You have informed him that your situation is tough and you might have made arrangements for One Time Settlement also. But what happens if your bank decides to auction your property?
Can a Bank Auction Your Property While One Time Settlement Is Going On?
They can. If your case falls under SARFAESI 2002 Act and bank feels it is right to continue with the process then they will go ahead with auction proceedings even if you have sent OTS request.
Sometimes understanding this can save you from losing your property.
Say a man in Noida took loan against his home to invest in his family business. Due to poor returns from business he stopped repaying loan and defaulted. He received a notice from bank. He applied for One Time Settlement.
He went back and forth with them for few weeks. He thought everything would be fine. They told him some numbers and he thought the problem was sorted out. Then he received an auction letter.
What you need to know here is that there are two different questions that arise. One is that will the bank accept your One Time Settlement? Second, will banks refrain from conducting an auction?
You may have the answer to the first question but not the second one.
If you want to know how you can contact Advocate BK Singh who has helped many clients via Loan Settlement Agency for their borrower needs.
How Important Is This For India And Delhi NCR Region?
Your property could mean a lot to you. There are millions of people who own residential properties in Delhi NCR region. It can be their only house in cities like Delhi, Ghaziabad, Noida, Gurgaon, Faridabad and Greater Noida. Similarly if you own commercial property like a shop or factory then you might have a business loan against it in cities like Mumbai, Pune, Bangalore, Ahmedabad etc.
When a bank wants to recover from you they will start taking legal steps. You might need money to pay for One Time Settlement. Maybe you have to sell off some asset to generate that cash. All of these things can take time.
When people receive a default notice from bank they tend to think their property won't get auctioned soon since they are interacting with their loan recovery team regularly.
If you need some help regarding legal assistance for One Time Settlement then you can talk to Advocate BK Singh.
Remember OTS is just an agreement between you and bank. It doesn't necessarily mean that auction is stopped.
Quick Facts
- When you apply for One Time Settlement your SARFAESI proceedings will not halt automatically.
- Make sure to read any approval that you receive for One Time Settlement. Check if any conditions have been mentioned.
- When bank sends you section 13(2) notice they will give you a period of 60 days to pay the amount due to them. Only then they can move forward with actions as per section 13(4).
- If you send your grievance to bank they can respond to you under section 13(3A) of the Act.
- If you tender the amount mentioned under section 13(8) then your case is considered closed and you can't be charged after you have made the payment.
- As per section 17 you have 45 days to file a complaint at DRT court against the bank's action.
Yes, bank can proceed with their SARFAESI proceedings if you apply for One Time Settlement. It depends on various factors and conditions that will decide if they will continue with the auction.
When You Receive Section 13(2) Notice
As discussed above a bank can send you a legal notice if you haven't paid the amount that is due. This legal notice can be referred to as section 13(2) notice of SARFAESI act. You can raise your concern and represent your side as well.
Now what about One Time Settlement? If you send a OTS request with this notice can you expect the bank to halt their legal action? No they don't have to stop if you apply for One Time Settlement.
When Bank Sends You Section 13(4) Notice
Bank will give you time to pay. Once that time expires they can move forward with recovery. This can be done as per section 13(4) of the SARFAESI act. If you believe that the steps that have been taken by bank are wrong you can file a complaint at DRT.
When Bank Wants To Auction Your Property You Can Approach DRT
When bank moves to auction your property they need to follow certain procedures. If they don't adhere to these rules then you can file a case at Debt Recovery Tribunal. You have a period of 45 days to file your complaint. Talk to Advocate BK Singh if you need help.
Who Can Seek Help If They Receive Auction Notice?
Not just home owners but anyone who has taken a bank loan can seek help. You could have a bank loan against a piece of land or any other property. Here are some examples –
You may have pledged your property as a collateral to ensure that bank can recover money if your son stops paying on a loan. If you run a small manufacturing unit in Ghaziabad and have taken a bank loan you might have put up factory space as security.
Perhaps you live in Jaipur and someone has taken loan with your signature on their papers. In either case your property could get sold if you don't repay the bank.
We suggest you seek legal guidance in all scenarios where your property has been used to recover money.
What Should I Do When a Bank Wants To Auction My House?
Firstly find out when the auction date is. Figure out where you stand legally with the bank. Ask them to confirm this to you in writing. After that seek legal help if necessary.
Find Out Where You Stand
Just because bank sent you an OTS letter doesn't mean that your loan is going to be settled. They can send you a SARFAESI legal notice anytime they want to. Make sure that you know your options and read our blog post about SARFAESI notice when your loan goes bad.
Ask The Bank To Confirm If They Have Stopped Their Process
Maybe they approved your settlement but auction cell is still going ahead. Try to get a confirmation from bank in writing. If someone tells you they will hold off then ask them to state that clearly in a letter. If you receive One Time Settlement approval from bank check if it talks about your upcoming auction and payments you have to make.
Seek Legal Help As Soon As Possible
If your bank has moved ahead with section 13(4) you should consult an advocate. Maybe you want to know if you have any objections that you can raise before DRT. You may also need to ask the tribunal for injunction.
One thing to remember is that filing case won't ensure that your auction gets stopped. You need to seek help from advocate to see if your case is valid.
Stay Realistic During OTS Process
If bank is not ready to go for your offer don't force them to. They might ask you to pay a certain amount on a fixed date. Be prepared to meet these demands. Otherwise you'll end up in more trouble. Learn more about bank notice replies from us.
Make Sure Your Mortgage Gets Released
After you have paid One Time Settlement get confirmation from bank that your loan has been cleared. Also make sure your mortgage gets released from your property.
What Papers Should You Keep Track Of?
Always keep your documentation updated if you are going to object to anything. Here is a list that can come in handy.
- Sanction letter/ mortgage papers
- Latest bank statement
- Copy of 13(2) legal notice if any and any representation sent by you
- Section 13(4) notice if any along with any media publications
- Letter notifying you of your auction and date of sale
- Correspondence between you and bank for OTS
- Approval from bank if any and any suspension letters from bank
- Bank receipts that show payments being made
- Your salary certificate or business proof that can show how difficult your situation is
- Orders passed by DRT if you have already filed a case
If you think your bank has given you One Time Settlement try finding it. Sometimes banks mention some caveats when they agree to accept your settlement. If you want to speak to Advocate BK Singh he can look into it and help you out.
How Much Do You Have Before Bank Auction Takes Place?
If you are under SARFAESI and you have sent OTS to bank they don't have to wait forever for you. Section 13(2) allows them to send you notice for 60 days. From that date you will have 45 days to appeal at DRT court.
Depending on the type of auction bank will have to notify you 30 days prior as stated in rule. However this may vary depending on your situation. Don't count your day from when you found out about OTS. It will always depend on when your SARFAESI case started.
When Should You Talk To An Advocate About Bank Auction?
You should contact an advocate as soon as you know about your bank auction. Maybe you want to understand if the agreement they have with you can be enforced. Perhaps you want to see if there were any errors committed while they issued legal action against you.
Contacting Advocate BK Singh will help you better understand the situation. Whether your case falls under SARFAESI or you have received a legal notice you can seek help from him. He can help you sort through all of your questions.
Frequently Asked Questions
1. Is the bank able to conduct an auction if the OTS process is going on?
Yes Bank can auction your property legally if One Time Settlement (OTS) process is in progress. The OTS will not halt the recovery process as per SARFAESI Act 2002.
2. Will bank auction be halted if you file for OTS?
Filing for OTS will not stop a bank auction automatically. It is recommended that you ask your bank to confirm that your auction will be halted and receive this in writing.
3. Can you stop a bank auction after receiving a SARFAESI notice?
If the bank did not follow the proper channels and procedure to auction your property you can take steps to stop the auction. You would need to contact the DRT (Debts Recovery Tribunal) to resolve this matter.
4. If the bank rejects my OTS can they still auction my property?
Most banks have the option to accept or decline your OTS as per there guidelines. Once you have rejected an OTS offer they can begin their recovery process which can include auctioning your property.
5. What if bank auctions my property and didn't notify me?
Bank Auctions need to follow procedure set by law. There is a certain protocol banks need to adhere to when selling off secured assets. If these aren't followed you may be able to take steps to have the auction cancelled at your local court.
6. Can I file for OTS if I received an auction notice?
You have the ability to file for OTS after receiving an auction notice from your bank. Each bank handles their settlement differently so you would need to reach out to the bank who notified you of the auction. This will not stop the bank auction that is already planned.
7. Can you get a stay on your bank property auction with DRT?
You can get an interim relief from DRT if you can show there is merit to your case. Filing a DRT application will not stop the auction from happening.
8. How long do I have to contest a SARFAESI auction?
According to section 17 of SARFAESI act you have 45 days from date of section 13(4). You would need to determine what the timeline is on your specific circumstances.
9. If I pay a portion of the OTS can bank still auction my property?
As long as the bank has allowed you to make payments on the agreed settlement. If you fail to make those payments the bank may still be able to auction your property.
10. How can a Loan Settlement Lawyer help stop a bank auction?
They can take a look at your situation and advise you on next steps you can take. Contact our advocate BK Singh for all your concerns regarding OTS and how to stop bank auction from happening.
Final Thoughts
A Bank can continue to take action against you if you are trying to settle your account through OTS.
Make sure you have proper documentation on hand that can help prove that your loan has been settled. Also make sure you take time to read any notices you receive from the bank. These can be beneficial for you in court.
Take steps to protect yourself before it is too late. Loan Settlement Agency can help you with all your borrower related questions. Contact our Advocate BK Singh if your matter requires Legal Help.