read more - sngpartners

advertisement
WELCOME TO PRESENTATION
ON
IMMOVABLE PROPERTIES AND CREATION OF
MORTGAGE
R-26, South Extension, Part-II,
New Delhi-110049
Phone: (Delhi) 011-46175500/41551533
(Mumbai) 022-43470005
Fax: 011-41551537
Email: [email protected]
WHAT IS A “PROPERTY”

The Transfer of Property Act 1882 (“TPA”) does not define the word
“Property”.

Many other statues define the word “Property” on the basis of their
objects, e.g:
 Sale of Goods Act, 1930: Property means the general property in
goods, and not merely a special property.
 Wealth Tax Act, 1957, Section 4, Expln. C: The expression
“Property” includes any interest in property, movable or
immovable, the proceeds of sale thereof and any money or
investment for the time being representing the proceeds of sale
thereof and where the property is converted into any other
property by any method, such other property.
 Gift Tax Act, 1958, Section 2(xxii): Property includes any interest
in property, movable or immovable.
WHAT IS A “PROPERTY”
….. continued…..

Income Tax Act, 1961, Section 64 (2), Expln I : The expression
“Property” includes any interest in property, movable or
immovable, the proceeds of sale thereof and any money or
investment for the time being representing the proceeds of sale
thereof and where the property is converted into any other
property by any method, such other property.

Section 2(t)
of
the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act 2002
(“Securitisation Act”) defined the word “Property” exhaustively as
follows:
Property means :- (a) Immovable property; (b) Movable property
(c) Any debt or any right to receive payment of money, whether
secured or secured, (d) Receivables, whether existing or future,
and (e) Intangible assets, being know-how, patent, copyright, trade
mark, licence, franchise or any other business or commercial right
of similar nature
IMMOVABLE AND MOVABLE PROPERTY

TPA defines the word “Immovable Property” as follows:
Immovable Property does not include standing crop, growing
crops or grass.

General Clauses Act 1897 defines the word “Immovable
Property” as follows:
Immovable Property shall include land, benefits to arise out of
land and things attached to earth, or permanently fastened to
anything attached to earth.

General Clauses Act 1897 defines the word “Movable Property”
as follows:
Movable Property shall mean any property of every description
except immovable property.
CLASSIFICATION OF IMMOVABLE PROPERTY
Immovable Property Can Be Classified On Various Basis Such As

Interest:
Freehold or Leasehold Property

Usage:
(a)
Residential,
(b)
Commercial,
(c)
Agricultural,
(d)
Industrial,
(e)
Special Economic Zone (SEZ) etc


Tangibility:
Ownership:
Tangible or Intangible Property
Private or Public or Joint or HUF property
FREEHOLD PROPERTIES

Freehold properties are the properties for transfer of which
no permission from any person is required. These
properties are the properties which are freehold in nature
since inception or were leasehold which have been
converted into freehold later on after payment of
conversion charges etc.
EXCEPTION:
However there are few Freehold properties for transfer of
which permission of government authorities is required in
some form. E.G. Properties allotted by HUDA.
HUDA
maintains its first charge on the properties allotted by it
towards various dues payable by the owner and thus for
transfer of these properties, permission from HUDA is
required to be obtained.
LEASEHOLD PROPERTIES

Leasehold properties are the properties which are owned by a
person (“Lessor”) and have been leased out by the Lessor to a
person (“Lessee”).

On execution of lease deed, the Lessor continues to be the owner
of the property but the Lessee acquires leasehold interest in the
property.

The Lessee, subject to the contract to the contrary, is permitted to
sub-let, lease out or transfer or part with possession of the
property to any third person. However in most of the cases, the
lease deed usually restrict such right of Lessee and stipulates that
except with the permission of the Lessor no third party interest
can be created.

Examples of such properties are the properties allotted by NOIDA,
L&DO, State Industrial Corporations etc.
LEASEHOLD PROPERTIES
….Continued……….

LEASEHOLD LAND WITH FREEHOLD SUPER STRUCTURE
CONSTRUCTED THEREON
The superstructure built of leasehold land can be freely transferred by the
Lessee to any person. However, transfer of the land underneath the super
structure can only be made only with the permission of the Lessor who
owns the land.
MORTGAGE

Section 58 of TPA:
Mortgage is transfer of interest in any specific immovable
property for the purpose of securing payment of money
advanced or to be advanced by way of a loan, any existing or
future debit, etc. The person who mortgages the property is
called as “Mortgagor” and the person in whose favour
property is being mortgaged is called the “Mortgagee” and the
instrument by which mortgage is created is called the
“Mortgage Deed”.
TYPES OF MORTGAGES

SIMPLE MORTGAGE
In simple mortgage the mortgager without delivering the possession
of the mortgaged property binds himself to pay the loan and agree
that in the event of his failure to repay the amount, the mortgagee
shall have the right to cause the mortgaged property to be sold and
apply the proceeds against the loan.

MORTGAGE BY CONDITIONAL SALE
In mortgage by conditional sale, the mortgagor ostensibly sells the
property with condition that on default of payment of loan, the sale
shall become absolute or in the event of repayment of loan, the sale
shall become void and thereafter the buyer (mortgagee) shall retransfer the property to the seller (mortgagor).

USUFRUCTUARY MORTGAGE
In Ususructuary Mortgage, the mortgagor delivers possession of the
mortgaged property to the mortgagee and authorizes him to retain
such possession until payment of loan. The Mortgagee is authorized
to receive the rent and profits accruing from the mortgaged property.
TYPES OF MORTGAGES
…..continued……….

ENGLISH MORTGAGE
Where the mortgagor binds himself to repay the loan on certain
date and transfers the mortgaged property absolutely to the
mortgagee but subject to a proviso that he re-transfers it to the
mortgagor upon payment of mortgaged money as agreed.

MORTGAGE BY DEPOSIT OF TITLE DOCUMENTS
As name itself indicates, to create a mortgage, a person delivers to
the creditor, the documents of title to immovable property with
intent to create security thereon.

ANOMALOUS MORTGAGE
An Anomalous Mortgage is a mortgage which does not fall in any
of the aforesaid category but is a mixture of any two or more
aforesaid mortgages.
MOST COMMON FORMS OF MORTGAGES
 Simple
Mortgage (which is also known
as Registered Mortgage) and
 Mortgage
Documents
By
Deposit
Of
Title
SIMPLE OR REGISTERED MORTGAGE

A property can be mortgaged by execution and registration of
mortgage deed after payment of requisite stamp duty etc.
thereon. Any property can be mortgaged in this manner.

The Delhi Land Reforms Act, 1954 bars creation of an equitable
mortgage by deposit of title deeds. Section 34 of The Delhi Land
Reforms Act, 1954 is relevant in this context. This Section permits
only a Simple Mortgage in case of agricultural land

While mortgage deed is registered with the concerned Sub
Registrar of Assurances, original title documents along with chain
of title documents are retained by the mortgagee so that the
mortgagor cannot create further interest or encumbrance in the
property by deposit of title documents.
MORTGAGE BY DEPOSIT OF TITLE
DOCUMENTS

Any person in any of the notified towns can deliver to the Bank
documents of title to the immovable property with intent to create
security thereon.

Before accepting the title documents, Bank needs to ensure that : That the title documents being deposited are necessarily evidencing
the title of the property.
 The title documents are being deposited in a town which is notified
by the State Government though the property may be situated
somewhere else, may be in a town not so notified.
 Original title documents are being deposited with intent to create
equitable mortgage and not for safe custody.
 The intention to create equitable mortgage is to secure payment for
a debt.
WHAT ARE TITLE DOCUMENTS

Title deeds or title documents are the documents which evidence
ownership, whether freehold or leasehold, of any property.
 Allotment Letter
 Receipts evidencing Payments made.
 Possession Letter, if applicable
 Share Certificate.
 Revenue records
 Lease Deed
 Conveyance Deed
 Sale deed / Gift deed / Exchange deed
 Relinquishment Deed
 Will

Existence of title deeds depends upon the nature of the property,
how and from whom the ownership has been acquired etc..
DOCUMENTS REQUIRED FOR THE CREATION OF
MORTGAGE OF PROPERTY IN DELHI
A.
ORIGINAL DOCUMENTS OF TITLE IN RESPECT OF FREEHOLD
DDA FLAT/PROPERTY:
DOCUMENTS TO BE OBTAINED:

Conveyance Deed executed by the President of India

Sale Deed in favour of Owner/Borrower – (If applicable)

Allotment letter issued by the DDA.

Possession Slip/Certificate

In case the property has changed hands by way of Agreement to
Sell, General Power of Attorney, etc., all the intervening documents
– whether registered or not, in original upto the stage of last
purchaser’s name appears, in whose name the conveyance has
been executed and registered.

Proof of mutation of the said property in the name of the borrower
in the municipal records.
DOCUMENTS REQUIRED FOR THE CREATION
OF MORTGAGE OF PROPERTY IN DELHI
…….Continued……….
B. ORIGINAL DOCUMENTS IN RESPECT OF FREEHOLD L & DO
PROPERTY:
 Lease Deed in favour of original lessee/owner.
 Conveyance Deed executed by the President of India
 In case the property has changed hands by way of Agreement to
Sell, General Power of Attorney, etc., all the intervening documents
– whether registered or not, in original upto the stage of last
purchaser’s name appears, in whose name the conveyance has
been executed and registered.
C. ORIGINAL TITLE DOCUMENTS IN RESPECT OF OTHER FREEHOLD
PROPERTY.
 Conveyance /Sale Deed/chain of title documents
 Latest house-tax payment receipt and bill.
 Proof of mutation of the said property in the name of the borrower
in the municipal records.
DOCUMENTS REQUIRED FOR THE CREATION
OF MORTGAGE OF PROPERTY IN DELHI
…….Continued……….
D. ORIGINAL TITLE DOCUMENTS IN RESPECT OF OTHER FREEHOLD
PROPERTY.
 Conveyance /Sale Deed/chain of title documents
 Latest house-tax payment receipt and bill.
 Proof of mutation of the said property in the name of the borrower
in the municipal records.
E. ORIGINAL DOCUMENTS IN RESPECT OF CO-OPERATIVE SOCIETY
 Share certificate
 Letter of allotment of concerned flat.
 Letter of possession of flat to be mortgaged.
 Completion certificate issued by competent authority.
 Letter submitted to DDA to record charge / mortgage created in
favour of bank acknowledged by DDA.
 Copy of letter of allotment of land by concerned Government
authorities in favour of society
 Original house-tax bill and receipt
DOCUMENTS REQUIRED FOR THE CREATION
OF MORTGAGE OF PROPERTY IN DELHI
…….Continued……….
E. ORIGINAL DOCUMENTS IN RESPECT OF CO-OPERATIVE SOCIETY
….continued….
 Copy of lease deed executed by Authority in favour of society or the
letter from the society confirming that the lease deed in favour of the
society has not been executed.
 Certified copy of bye-laws of the society.
 Original sub-lease executed by society in favour of a member.
 Certificate from Society regarding the following :
 No loan outstanding towards society or any other agency /lender
 Permission to Mortgage the flat and
 Noting / charge by way of mortgage in favour of bank

In case a member has got his flat converted into a freehold, conveyance
deed executed by DDA becomes the main Title Document and the
mortgage can be created in such a case by deposit of Original
Conveyance Deed itself. No permission for mortgage from the society,
copies of lease deed etc. as above are not required to be deposited.
DOCUMENTS REQUIRED FOR THE CREATION OF
MORTGAGE OF PROPERTY IN GURGAON AND
FARIDABAD
A. ORIGINAL TITLE DOCUMENTS IN RESPECT OF HUDA PROPERTY :
 Deed of Conveyance of Building Site Sold by Allotment
 Allotment letter/Memo, along with Terms & Conditions/Reallotment letter, if any.
 Possession Slip
 Payment receipts of installments / payments made to HUDA.
 Non-encumbrance Certificate by HUDA
 Permission to mortgage from HUDA.
B. ORIGINAL TITLE DOCUMENTS IN RESPECT OF FREEHOLD
PROPERTY DEVELOPED BY BUILDER / PROMOTER / DEVELOPER:
 Original Allotment Letter/Flat Buyer’s Agreement
 No Dues Certificate from Builder/Developer.
 Original latest house tax bills and receipts.
 Original Sale Deed in favour of Borrower
DOCUMENTS REQUIRED FOR THE CREATION
OF MORTGAGE OF PROPERTY IN NOIDA
A. ORIGINAL TITLE DOCUMENTS IN RESPECT OF LEASEHOLD
PROPERTY IN NOIDA
 Lease Deed executed by NOIDA in favour of Borrower
 Original house tax bills and receipts, if applicable.
 Mutation Certificate issued by the NOIDA Authority, mutating
the property in the name of the Borrower, if applicable.
 Allotment letter
 Possession letter along with site plan
 Challans – lessee’s copies, towards payments/installments
made/paid to NOIDA
 Permission to mortgage the property from NOIDA Authority.
DOCUMENTS REQUIRED FOR THE CREATION
OF MORTGAGE OF PROPERTY IN NOIDA
…….continued……….
B. ORIGINAL TITLE DOCUMENTS IN RESPECT OF LEASEHOLD
PROPERTY,
WHICH
IS
DEVELOPED/CONSTRUCTED
BY
AWHO/AFNHB/DSHS

Allotment letter/Agreement with AWHO/AFNHB/DSHS
 Possession letter
 Payment receipts made to the AWHO/AFNHB/DSHS
 Sale Deed in respect of construction only.
 Proof of mutation of the said land in the name of the borrower
in the municipal records.
 Original house tax bills and receipts.
 Permission to mortgage from Noida/AFNHB/DSHS
 True copy of Lease Deed in favour of AWHO/AFNHB/DSHS
DOCUMENTS REQUIRED FOR THE CREATION
OF MORTGAGE OF PROPERTY IN GHAZIABAD
ORIGINAL TITLE DOCUMENTS IN RESPECT OF LEASEHOLD
PROPERTY
 Lease Deed
 Proof of mutation of the said land in the name of the borrower
in the municipal records.
 Original house tax bills and receipts.
 Allotment letter
 Possession letter/slip
 Challans – lessee’s copies, towards payments/installments
made/paid to GDA/U.P. Awas Vikas Parishad Limited.
 Permission
Authority.
to
mortgage
from
Ghaziabad
Development
INHERENT RISK IN THE MORTGAGE

Non-availability of chain documents in original.

Impossible to detect legal disputes which are pending the
Court with respect to the property which disclosure is
concealed by the borrower.

Non-disclosure of outstanding under the Income-Tax Act or
House-Tax Act.

Mortgage in favour of more than one bank by forging various
copies of title documents.

Title arising out of

transaction within a family.

Share of a minor in the property

Mortgage of HUF property for purpose other than the
permitted one.

Construction of property without sanctioned building plan or
in violation thereof.
CENTRAL REGISTRY

To avoid fraudulent transactions by a borrower, the Government
has established a Central Registry under Section 20 of the
Securitization Act.

All charges created on immovable property – whether by
individual or HUF or partnership firm or trust or a company is to
be registered with such Central Registry within 30 days of creation
of charge.

Any person can inspect the records of Central Registry to check if
the property proposed to be mortgaged has been previously
mortgaged with any other bank or not.
IN CASE THE PROPERTY IS OWNED BY A
COMPANY

The company should have power to borrow – any object clause as
contained in the Memorandum of Association of the company.

The Board of Directors should pass a resolution for borrowing and
to mortgage the property.

Only authorized Director/person should execute the mortgage
documents.

Charge on the immovable property of the company is registered
with the Registrar of Companies by filing E Form No.8 with the
Registrar of Companies within 30 days of creation of charge.

Charge should also be filed with Central Registry.
THANK YOU
Download