Equitable Mortgage of a residential plot commercially used
Sandeep nema
(Querist) 16 March 2018
This query is : Resolved
Sir,
I work in a bank, and recently I have been approached by a doctor for a loan, to establish his own hospital, he has already completed 80% construction work. My manager is excited to finance him.but the main issue with which I am.concerned is the plot over which the hospital is getting established is residentially diverted. The doctor is adamant that he is not ready to get the commercial diversion right now. In view of above in case we finance him and the loan turns bad I shall be held responsible . I need to know is there any clause or law exists which prevents the use of residential plot for commercial purpose. The state to which i belongs to is Madhya Pradesh.
Dr J C Vashista
(Expert) 18 March 2018
The borrower has to produce permission from municipal authorities for conversion of property from residential to commercial, consult a local lawyer to verify title and status of the plot.
Vijay Raj Mahajan
(Expert) 18 March 2018
I don't think there can be any law even in any State in India including MP that a residential property can be used for exclusive commercial purposes, rather the Rent Control Laws in most States in India prevent the practise of leasing out residential premises for commercial purposes although this is happening in many cases. The Property tax imposed by the Municipality too have different rates for residential and commercial properties. The approved map for any colony by the town planner specifically mark the land for residential, commercial, educational, religious etc. purposes. All these diversification between the uses of residential from commercial property are well marked in law and practise and interchanging of the use amounts to infringement of the legal provision which attract punishment.
As far the specific law that allow the use of residential for commercial purposes any property is concerned there may not be there but preventing its use or misuse must be there in the State of MP, that local advocate/lawyer can guide you.
Hemant Agarwal
(Expert) 20 March 2018
1. Ask the doctor to mortgage the PLOT of Land, for Loan, rather than the building. This would serve all purposes, on default.
Keep Smiling .... Hemant Agarwal
Guest
(Expert) 20 March 2018
Yours is purely a hypothetical academic query, as had you been working in a bank, you should also have known that the banks have their own panel of lawyers, as their legal advisers, to look in to the legality of the transaction before sanction of loan.
So, don't try to befool the experts community with such a false story.
Even if you are really working in a bank, let your bank's legal adviser discharge his own duties and responsibility. That is not your headache. That will be the headache of your Manager and the legal adviser, not yours
Sandeep nema
(Querist) 21 March 2018
Dear Sir Jigyasu,
I had been working in bank since last 3 years and have recently been assigned to Advances section, I had already given the Titles copy to our empanelled advocates, but i jus wanted to confirm it at my end, just in case the advocate did not comment upon the use of land subject to diversion norms, and regarding the headache issue since i have to recommend the loan in case of deafult the bank puts the recommending officer at enquiry thats why i m taking all this pain being new to this department
