Short answer: You are taking over the seller's allotment, not buying a finished flat. Get the builder's written consent to the transfer, a foreclosure letter from the seller's bank, and your own lender's sanction before you pay anything big. Your bank should pay the seller's bank first. The RERA Act treats you as the allottee once the allotment moves to you.
Bengaluru has a lot of these deals. Someone booked a flat in Whitefield or on Sarjapur Road a few years ago, took a construction-linked loan, and now wants out before possession. Maybe they're moving cities, or the EMI plus rent got heavy. For you, the flat may be closer to completion than a fresh booking, and the seller may want a quick close. The catch is that the paperwork has more moving parts than a ready resale.
What exactly are you buying?
Until the sale deed is registered, the seller doesn't own the flat. They hold an allotment and an agreement for sale with the builder. What you buy is their place in that agreement.
The RERA Act covers this. Its definition of "allottee" includes "the person who subsequently acquires the said allotment through sale, transfer or otherwise". So once the allotment is properly transferred, the builder owes you what it owed the seller: the possession date, the specifications and the rest of the agreement.
That "properly" matters. A transfer the builder hasn't recorded leaves you with a private paper and no direct claim against the builder.
Why does the seller's home loan complicate things?
When the seller took a loan on an under-construction flat, the lender usually kept the original agreement for sale and recorded its interest with the builder. In many subvention or construction-linked loans there is also a tripartite agreement between the bank, the builder and the buyer. The RBI's housing finance master circular mentions such tripartite agreements in schemes where builders service interest during construction.
So the seller can't hand you a clean agreement until their bank lets go. You need, in this order:
- A foreclosure or outstanding-balance letter from the seller's bank, valid on the date you'll pay.
- Your bank paying that amount directly to the seller's bank, with the rest going to the seller.
- A loan closure letter and the original documents back from the seller's bank.
- The seller's bank writing to the builder that its interest is released.
RBI directions from September 2023 say lenders must release original property documents and remove registered charges within 30 days of full repayment, and compensate the borrower for delays they cause. That helps with the timeline, but plan for the gap between payment and getting the papers back.
What does the builder need to sign?
Builders in Bengaluru almost always want a say in an under-construction transfer. Expect:
- A no-objection or consent letter for the transfer, naming you.
- A transfer or assignment process: forms, KYC, and sometimes a fee set out in the original agreement. Read that clause before you agree a figure with the seller.
- An endorsement on the agreement, or a fresh agreement for sale in your name. Ask your lawyer which one your builder uses and whether it needs fresh registration and stamp duty.
- A statement of account: what the seller has paid, what is still due, and against which construction stages.
Also check whether the builder has paused transfers until a milestone. Some agreements restrict transfers during the early stages.
What should you check on the project itself?
The same things you'd check for a fresh booking, plus a few more:
- Karnataka RERA page. Registration number, promoter, completion date, quarterly progress updates and any extension. Compare the stage shown with what you see on site.
- The seller's payment receipts. Every rupee the seller claims to have paid should appear on the builder's statement.
- Complaints and orders. Search the RERA portal and court records for the project.
- Unit details. Carpet area, parking and the floor plan in the agreement should match what the seller describes.
If you're new to reading a RERA page, start with our step-by-step guide linked below.
How does your own loan work here?
Your lender will look at the project, the builder's consent and the seller's loan closure before it pays. Many banks will only fund projects they have approved. Ask early, in writing, whether your lender:
- funds a transfer of allotment in this project,
- will pay the seller's bank directly, and
- needs a fresh tripartite agreement with the builder.
The amount your bank lends is its decision against its own valuation and rules, so don't agree a timeline with the seller until you have a sanction letter.
How should the money move?
Keep every payment traceable.
| Step | Who pays whom | Paper you keep |
|---|---|---|
| Token | You to seller | Receipt and a short agreement to transfer, refundable if the builder or bank says no |
| Loan closure | Your bank to seller's bank | Foreclosure letter, payment advice |
| Balance to seller | You or your bank to seller | Receipt, bank transfer record |
| Transfer charges, if any | You or seller to builder | Builder receipt naming the unit |
| Future stage payments | You to builder | Demand letters and receipts in your name |
Ask a CA about TDS on the payment to the seller and about any capital gains on their side. The rules depend on the amounts and on the seller's residency.
What are the red flags?
- The seller wants the full amount before the builder's consent letter is issued.
- The seller's bank won't give a foreclosure letter, or the figure keeps changing.
- The builder's statement of account doesn't match the seller's receipts.
- The project's RERA completion date has been extended more than once with little progress on site.
- The seller offers a "power of attorney deal" instead of a builder-recorded transfer.
Any one of these is a reason to pause and get a lawyer to read the papers.
Buyer checklist: under-construction resale with a seller loan
- [ ] Original agreement for sale and allotment letter seen (copy from the seller, original with the bank)
- [ ] Builder's consent letter naming you
- [ ] Builder's statement of account, matched with the seller's receipts
- [ ] Seller's bank foreclosure letter, dated
- [ ] Your lender's sanction letter covering this transfer
- [ ] Payment to the seller's bank made directly by your bank
- [ ] Loan closure letter and originals returned
- [ ] Agreement endorsed or re-executed in your name, registered if your lawyer says so
- [ ] RERA page checked for completion date and progress
- [ ] Lawyer has read the agreement, consent and closure papers together
Related reading
Frequently asked questions
Yes. The seller transfers their allotment to you, with the builder's consent. The RERA Act counts a person who later acquires an allotment through sale or transfer as an allottee, so the builder's duties carry over to you.
The loan has to be closed for you to get a clean transfer. Usually your bank pays the seller's bank directly using a foreclosure letter, and the rest goes to the seller. Get the closure letter and the original documents back.
Some agreements allow one. Read the transfer clause in the seller's agreement for sale and ask the builder for its process in writing before you settle terms with the seller.
It depends on the builder and the transfer route. Some endorse the existing agreement; others execute a fresh one in your name. Your lawyer can tell you whether it needs registration and stamp duty.
RBI directions from September 2023 require lenders to release original property documents within 30 days of full repayment, with compensation for delays they cause.
Lawyer note: Transfer of allotment, assignment and loan closure on this page are general information, not legal advice. A property lawyer should read the agreement for sale, the builder's consent and the bank papers before you pay. Ask a CA about TDS and tax.
Sources
Checked 29 Oct 2026.
- Real Estate (Regulation and Development) Act, 2016, section 2(d), definition of allottee: https://rera.karnataka.gov.in/resources/staticpage/Real_Estate_Act.pdf
- Karnataka RERA, project search: https://rera.karnataka.gov.in/viewAllProjects?language=en
- RBI, Responsible Lending Conduct: Release of Movable / Immovable Property Documents, 13 Sep 2023 (RBI/2023-24/60): https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12534&Mode=0
- RBI, Master Circular on Housing Finance (tripartite agreements in builder-linked schemes): https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx
