Mortgage By Deposit of Title Deeds


Dear All,
Please advice me on the following query.
Mr. A wants to give loan to Mr. B and for securing the said loan Mr. B has agreed to create a mortgage by deposit of title deeds of his immovable property.
Whether a separate Mortgagee Deed for Deposit of Title Deeds is to be executed between the parties
A clause shall be inserted in the Loan Agreement between the parties that –   
Mr. B for securing the Loan has created a mortgage by Deposit of Title Deeds of his immovable property.

Not required to execute any deed or document for creation of mortgage by deposit of title deeds. The Bank generally ask for declaration of director for the creation of the mortgage. In loan agreement it is not required to mention that how the mortgage will be created. If you mention in loan agreement that the mortgage will be created on immoveable property to secure the laon amount than it is sufficient.

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I have gone through your query.with your limited facts. I am of the opinion that, B has to execute a mortgage deed in favour of A and the same has to be get registered by A at  Sub-registrart office.This would be a better and viable and legally well secured loan transaction.I hope that I have ansewered your query. 

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The creation of mortgage by deposit of title deed is mainly with intent to avoid the procedures of transfer of ownership the prpoerty to the lender and re-transfer of the same from lender on payment of all debt. When you need to create the mortgage in favor of more than one lender on the same property it is very convenient method. For creation of the mortgage it is required to deposit the titel deeds of the property with the the lender or the agent of the lender. For creation of mortgage it is well settled that there is no legal need for execution of mortgage deed or any other document. The bank or institute who will accept the documents of title deeds will create the memorandum of entry in their records and the same is sufficient.  I would like if you provide the details course of action taken by you.  Trust the above is sufficient at this seage to explain your queary. thanks.

B.Sc, B.L

Mr Hiren

  If the equitable mortgage(ie mortgage by deposit of title deeds) is an integral part of the main loan agreement then the same is liable to stamp duty at 3% and is to registered without fail as good as a Simple mortgage.  

Instead of that take the memorandum of deposit to title deeds letter seperately and this is liable for stamp duty at 0.5% subject to a maximum of Rs. 50,000/- in A.P., and is not compulsorily registrable.  In some states the same is registrable. The only difference is registration charges. It is universially advised to get the Memorandum of Deposit of title deed registered, so that even if the property is dealt with by the owner, the rights of the 1st mortgagor are always secured and it will be reflected in the Encumbrances Certificate, and any body who deals with the property, will be notified of the mortgage by Deposit of title deed. If you need I wll send you one such Memorandum which we naturally used in these places.

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Dear Deeksh*tulu sir,

Could u please send me the draft which you have mentioned above 




I am having one doubt.


Who has to pay the deposit of titile deeds(.5% on Loan value)registration/stamp duty cost?


the debtor can pay the deposit of title deeds registration stamp costs in custum


 Between Mr.A and Mr B, any equitable mortgage under deposit of title deeds, cannot be created; since the said facility is only available to banks for granting loans and not to individuals Mr.A and Mr.B. 


would like to refer the explanation given by Mr. Karthik in this subject where he has clarified well that it is sufficient to execute an agreement with the bank while depositing the title deed. He has also clarified that such agreement should be reigstered to have legality. I have a query on this:

Will this registered agreement between the party and the bank create any encumbrance on the property whose title deed is pledged? In other wards, will it create an entry in the records of registration? If so, will it appear part of EC?

Thanking you in anticipation of a reply for my query...

T Saravanan.




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