Clear Title Needed For Mortgage Too

Clear Title Needed For Mortgage Too!
By Gajanan Khergamker

Just like buyers take tremendous care before buying a property, financial institutions such as banks too take the same amount of care, when investigating the title of the property they are considering for mortgage. In the course of their appraisal, they are not likely to accept copies of title deeds believing rightly that they may not actually be the document of title. The only exception being situations in which the original has been destroyed or irretrievably lost and is no longer in existence.

Even in these extreme situations, they are likely to accept only certified copies of the title deeds issued by the Registrar of Assurances where there is conclusive proof that the originals have been destroyed or irreversibly lost. Keeping in mind the government’s rights over the mortgage in the bank’s favour in the event of the borrower keeping the land revenue or other public dues in arrears, bank officials ensure that everything is free of any irregularities. They will make sure that the land revenue and municipal taxes due on the immovable property have been paid until date and also future dues are paid promptly.

To avoid any claim of priority under section 295 of the Income Tax Act, they will also make sure that there are no outstanding tax dues. Advocates and solicitors may also be asked to make sure that the documents of title are complete in all respects and that documents convey a clear, absolute and marketable title to the property. Bank officials will make sure that the property offered as security to the bank is unencumbered and unattached. They will make sure that the persons seeking to secure the property to the bank have a clear and marketable title to it and are legally capable of creating a charge on it in favour of the bank.

If the said property is subject to tenancy laws, it will affect the bank’s right eventually to take possession or to be sold or any other rights that they can exercise in the future, so checks on this scenario will also be carried out.

Besides this, financial institutions are also likely to carry out searches among records with the Sub-registrar of Assurances, Collector and / or other revenue authorities to ascertain whether there is any outstanding mortgage or charge on the property to be mortgaged to the bank. There are a number of fraudsters that are constantly doing the rounds and banks routinely examine documents to verify their authenticity to make sure that they have not been provided with forged title deeds.

There are a number of additional checks that financial institutions carry out such as verifying the schedule of the property, where it is situated and its registration with the sub-registrar’s office. Next they may also verify the consideration paid in the document, authenticate the stamp duty affixed on the said document plus examine the security marks on the paper which are visible only on a close examination. If the stamp paper is mutilated in any manner, they are quite likely to get suspicious.