K-REAT tells HDFC to recover homebuyer's loan from builder, not hit his credit score

The Karnataka Real Estate Appellate Tribunal (K-REAT) on 3 November 2026 directed Housing Development Finance Corporation Limited (HDFC) to recover a home loan from the builder, Cubatic Shimul Ventures Private Limited, instead of the homebuyer who took it. The tribunal also barred HDFC from making any adverse entry in the homebuyer's credit report for that loan.

What Happened

A homebuyer agreed on 11 April 2018 to buy two flats in the builder's 'Aloha' project in Bengaluru for Rs 1,70,59,584 and paid Rs 37,00,000 himself, according to the judgment. Under a tripartite agreement signed on 28 November 2018 between the buyer, the builder and HDFC, the lender paid Rs 1,13,80,672 directly to the builder. The sale deeds were due by 30 September 2018 but were never registered, and the tribunal noted that the builder sold both flats to other buyers through sale deeds dated 8 December 2021 and 19 February 2022.

The Karnataka Real Estate Regulatory Authority (K-RERA) had ordered the builder to refund Rs 63,42,993 with interest at SBI MCLR plus 2% and to close the buyer's outstanding loan. The buyer appealed, saying HDFC kept demanding repayment from him and reported him as a defaulter to CIBIL.

K-REAT confirmed the K-RERA order and allowed the appeal. It held that HDFC had disbursed the loan without the buyer's prior written consent, which the tripartite agreement required, and without checking the stage of construction. It directed HDFC to recover any outstanding loan amount from the builder, to stop all coercive recovery against the buyer, and not to cause any adverse entry in his credit report or credit score for that loan account. There was no order as to costs.

What It Means

The tribunal held that the buyer had received no benefit from the loan, which went to the builder, and that the lender's remedy lay against the builder and any security it holds. It also held that it can, in a suitable case, protect a homebuyer's credit score in a dispute arising from a property deal. The ruling is on the facts of this case. K-REAT judgments may be appealed to the High Court.

Source: K-REAT judgment