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nishad (Asst.Manager Legal)     08 February 2010

collateral Security

A bank has extended a home loan of Rs.40.5 lacs to purchase "C" property to "A".

"B",mother of "A" was the guarantor and created colletral security on the property"C" in favour of bank [to be purchased from "B"]

After the disbursement of the loan,"B" gifted the property to her son "A" for nil consideration.

I would like to now apart from further round of stamp duty to be paid for creating EM[karnataka] by "A",what will be other legal implications? is the bank safe from any legal contentions? can bank enforce the security now in the name of the son?


please advise ..




 1 Replies

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     08 February 2010

definitely bank has first lien over the property and subsequent transaction cannot take away the right of the bank to take its possession and make auction, if case of NPA.

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