A builder’s promise to pay EMIs and a borrower’s obligation to repay a bank loan may arise under separate agreements. Stopping instalments on the assumption that the buyer’s liability automatically ends if the builder defaults may be risky.
Understand the Law and Procedure
In a subvention or tripartite arrangement, it is important to read the loan agreement, builder-buyer agreement and payment mandate together. The documents should make clear who will pay the interest and for what period, at which stage the bank will disburse the loan, and how a default will be treated. A claim for relief under RERA or consumer law may be available if the builder delays, but that does not automatically stop the bank’s recovery action or credit reporting. The bank’s role, stage-linked disbursement and the facts relating to representations may affect the remedies available. Interim protection granted in another case does not automatically apply to all buyers.
In Detail: What Could Affect the Outcome?
Send written communications to both the bank and the builder before the arrears increase. Reconcile the reimbursements received from the builder against the EMIs actually credited to the bank. If legal proceedings are underway, separate interim relief may need to be sought in relation to the lender’s pending action and the impact on the buyer’s credit record. Do not disregard the signed loan terms merely because of what is stated in a marketing brochure.
What Should You Do?
- Review all three agreements and the disbursement schedule together.
- Prepare a reconciliation of paid and unpaid EMIs and builder reimbursements.
- Before the default worsens, decide on a strategy for the lender grievance and appropriate relief against the builder.
Which Documents Should You Keep?
Keep the loan agreement, tripartite agreement, the builder’s promise, bank statements and project status records.
Hypothetical Example
The builder paid interest for six months and then stopped paying. The buyer also stopped paying the bank, and the buyer’s credit record was affected. The builder’s breach and the bank obligation needed to be addressed separately.
Does Filing a RERA Complaint Automatically Stop the Bank’s Demand?
No. This should not be assumed to happen automatically without a specific order or applicable legal protection.
Sources and Related Rules
- Indian Contract Act, 1872 — Sections 27, 72–74, 126–128
- Real Estate (Regulation and Development) Act, 2016 — updated through 15 May 2026
- RBI — Commercial Banks: Responsible Business Conduct Directions, 2025, current consolidated source
Editorial review: 26 October 2026. This is general legal information. The outcome may vary depending on the facts of the case, applicable state law and subsequent amendments.