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Hiren (Student)     13 May 2009

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
 
Or
 
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.
 


Learning

 17 Replies

KARTIK (SERVICE)     13 May 2009

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.

1 Like

Saifullah.C (Advocate,Chennai)     14 May 2009

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. 

2 Like

KARTIK (SERVICE)     15 May 2009

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.

V.S.R.Deekshitulu (B.Sc, B.L)     17 May 2009

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.

2 Like

Rohit Anand Das (Professional)     16 February 2011

Dear Deeksh*tulu sir,

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

SURESH (XX)     30 December 2011

Hi

 

I am having one doubt.

 

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

N.S.Udaya Kumar (lawer)     03 January 2012

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

RAJU O.F., (Advocate)     04 January 2012

 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. 

T Saravanan (SR MANAGER - IT)     06 January 2012

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.

RAJU O.F., (Advocate)     12 January 2012

Any mortgage/charge/encumbrnce registered with the Sub-registry will be reflected in subsequent EC issued on tht property.

ravi dhadve (propritor)     04 May 2012

I am totally agree with Mr.deeksh*thtulu. In the case of deposit of title deed bank passes an order to lawyer of bank panel to search about title of mortgage property, a valuation report from notified valuer of bank panel, then after examining the title report and valuation report, bank officer-manager decide the loan disbursement amount and makes the equitable mortgage deed mortgage by deposit of title deed and registers by that at city sub register. this procedure are mostly followed in nationalised bank and in co-operative banks. the stamp duty required on the deed as per state rules and should be paid by who is taking the bank loan.

Abhishek Kumar (ITA)     16 February 2013

 

T Saravanan

Hello Sir,

In which Legal document, or state act can I get the Percentage mentioned , for me, My bank says 0.29% in Jharkhand , how can i verify same from any Govt record ?

karan meghani (ceo)     05 December 2013

Registration & Stamp Duty Consultant

Email justhelpservices@gmail.com Mobile 9975964405

We Provide Services for

1) Adjudication

2) Convenes

3) Development Agreement

4) Mortgage

5) Reconvenes

6) Property Card Transfer

 

7) Property Search Report

Rutumbhara Nayak (lawyer)     16 January 2014

Dear Hiren- No, a separate Mortgagee Deed for Deposit of Title Deeds is to be executed between the parties is 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.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. Rutumbhara www.lawkonect.com 09555 507 507


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