They work, save and even use FGTS resources. However, still, they are faced with the denial of the request for housing financing, by the financial institution.
So, they look for an alternative to get around the problem: they decide to buy a property already financed by someone else, formalizing the deal through a private contract, popularly known as a drawer contract.
This option, although used on a daily basis, can become a real headache, due to the risks it offers.
www.skymarketing.com.pk strives to be Pakistan's biggest real estate developer ever, guaranteeing the highest international standards, prompt execution, and lifetime customer loyalty. With projects like blue world city Islamabad
What are the risks of buying a property only with a drawer contract, but which is already financed?
The buyer does not own the property.
Taking on the financing of a property, via a private purchase and sale contract, does not make you the owner of the property, only the owner of that property. That is, you will only have ownership of the property. It means, therefore, that your name will not appear in the financing and fiduciary sale agreement that is registered in the property's registration. Thus, after the loan is paid off, you will need to ask the seller to withdraw the payment letter from the bank and then “pass” the deed. The problem is that, due to the long term of the loan, you run the risk of not finding the seller and not being able to transfer ownership of the property in your name.
Sell to someone else and pledge.
At this point, attention needs to be doubled. Remember that you took the risk of purchasing a property financed by someone else.
And therefore, you do not own the property, even if you are correctly paying off the loan installments.
The purchase and sale contract does not guarantee ownership of the property.
In addition, it is the seller's details that appear in the financing and fiduciary sale agreement.
In other words, the seller is responsible for the property. And then he can act as he pleases.
He can sell the property to you and someone else at the same time. The existence of your purchase and sale agreement, even if notarized, is not a public document and does not guarantee you the right to ownership.
The seller will also be able to incur debts and, precisely because he has "passed on the property", not worry about paying off. That is, he will be indebted to someone who can request the attachment of rights to the property you bought, to pay off the seller's debts.
And, even though you can defend your possession (understanding of Precedent 84 of the STJ), you will have to face a legal process that will certainly last for years.
Seller missing or deceased
Other risks you should consider, especially after the loan is paid off, are: What if the seller cannot be found? What if the seller dies?
Well, when a financed property is acquired through a simple contract, most people forget to draw up a public power of attorney or a power of attorney in their own cause.
In the instrument of power of attorney, the seller (the person holding the financing) empowers the buyer or someone they trust to request the term of discharge and release of the chattel mortgage with the bank and then proceed with the drawing up of the public deed to transfer of ownership.
The power of attorney for its own sake, on the other hand, works in a similar way to a public power of attorney, however it allows the business to take place after the death of the grantor (in this case, the seller).
Without this document, if the seller dies, the property you acquired, precisely because it is not registered in your name, will be part of the seller's inheritance and, therefore, the "new owners" will be the heirs, who may ignore the sale of the property and require the sharing of the asset in the inventory procedure.
In both cases, without those documents, you will need to solve the problem in the Judiciary Branch.
For this, it will have to file the so-called compulsory adjudication action against the person listed in the property registration as owner (seller or his heirs), presenting the purchase and sale agreement and the proof of payment of the financing, to request the granting of the definitive deed and transfer of ownership of the property.
So, before making the decision to purchase a property already financed by a drawer contract, seek legal advice so that the risks of your business are carefully analyzed and, above all, to find out what are the possibilities of acquiring the property in a safe way.