A large number of property buyers have started knocking doors of local administration, requesting for the refund of advances they paid to the realty dealers, after they failed to complete the deal amid banks´ refusing to issue fresh loans to them. The volume of such requests has suddenly soared in Pokhara after the banks tightened loans in the wake of the imposition of cap on realty lending, said Ram Prasad Adhikari, legal officer at district administration office (DAO) Kaski. “Many of them lament that they failed to complete the deals in the absence of bank finances and in the process are about to lose their advances as well,” he told myrepublica.com. With the number of such petitioners rising day by day, the DAO is finding it tough to counsel them. “Good thing though is, we have so far managed to convince them to work out amicable solution with the dealers,” said Adhikari, adding, “If the dealers refused to come into amicable solution, then only we will suggest them to lodge a formal petition,” said Adhikari. Despite its attempt to avoid taking such cases, the DAO has already received a dozen of petition, in which buyers have requested the administration to help them get their advances back. The biggest petition for refund lodged at the DAO stands at Rs 5.7 million. Rising complaints, meanwhile, has started troubling the DAO, mainly because of the strict terms the buyers and sellers have been provisioning on the contract document. In most of the cases, the contract provisions that the seller will not refund the advance in case the buyer backed out of the deal. In case the seller wished to withdraw from the deal, contracts say he would have to pay double the advance amount to the buyer. “This is a very common format followed by the dealers and this has created problem for us,” said Adhikari. The main problem for the DAO is that it cannot force either party to come into the amicable solution. “In case the document is favorable, buyers can file a case in a court under a provision of Civil Code. Otherwise we too can do nothing for them,” he said. With the realty market booming and prices rising sharply over the past few years, a large number of people had jumped into the property business hoping to reap handsome returns. As easy bank financing and unnatural price rise eventually spurred real estate bubble, the central bank that was wary over its adverse impact on the banking system had imposed a cap in realty lending some two months ago. The ceiling forced the banks to alter their practice and limit loans in the sector, turning the market jittery.
source: myrepublica