Kani 04 June 2022

How to create 2nd mortgage

My sister has taken a housing loan from her company and charge created over land by deposit of title deeds. Since additional funds are required, we have approached a bank for loan.

My company has issued an NOC permitting bank to create 2nd charge over the land but is not releasing the title documents. Bank is asking for original title deeds. They have said that since originals are not lost or destroyed, cannot use certified copies.

Whether registered mortgage is possible with certified copies. Please advise a solution.

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3 Replies

SHIRISH PAWAR, 7738990900 (Advocate) 04 June 2022

Hello,

As per my opinion, for 2nd charge title document is not required. It is for the bank to create the documents and create 2nd charge.

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G.L.N. Prasad (Retired employee.) 04 June 2022

Parri pasu charge is generally created only between financial institutions. Bank may not permit such a second charge.

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Dr J C Vashista (Advocate) 05 June 2022

Second charge can be created by NOC qua deposit of title of the immovable property (under mortgage) with the financer under the provisions of Section 48 of Transfer of Property Act, 1882, which reads as:

Section 48 in The Transfer of Property Act, 1882

48. Priority of rights created by transfer.—Where a person purports to create by transfer at different times rights in or over the same immoveable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created.

The concept of pari passu is inapplicable in instant case since it applies to having equivalent charge/ rights or say charge-holders have equal rights over the asset on which pari pasu charge is created, whereas, it would be a second and subsequent charge on already mortgaged property.

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