Legal opinion regarding change of ownership of properties mortgaged against credit facilities extended to M/s. Company 1.

Mr. Z

Address….

Dear Sir

Re: Legal opinion regarding change of ownership of properties mortgaged against credit facilities extended to M/s. Company 1.

We refer to your letter no…………. dated 20 May 2007.

From the perusal of the enclosed letter and other documents it is apparent that Mr. X, proprietor of Company 1 had been banking with the Bank 1 (“BANK 1”) since 10.11.2004. He availed the cash credit (Hypo) and other credit facilities with a validity until 28.02.2008. These credit facilities were secured by (1) hypo of stock of hardware items and (2) registered mortgage of total 20.36 decimal landed property valuing Taka 360.69 lac assessed by the branch official. Among the mortgaged properties 3.56 decimals land with 2 ½ storied building owned by (1) Mr. Y, (2) Md. X, proprietor of the firm (3) Md. A (brother) (4) Mrs. A (mother) and registered mortgage of 16.80 decimals land and 2 storied building owned by (1) Mr. Y (father) and (2) Mrs. A (mother). Mr. Md. X has the outstanding liability as on 19.05.2007 is taka 3,00,000/= in CC(H), taka 20,45,000/= in LC account & taka nil in LTR account. Now Md. Y and Mrs. A wants to transfer the property in the name of their two sons keeping the liability as it is.

In these circumstances, you require our legal opinion regarding whether and how the transfer of ownership of the said properties can be done.

OUR OPINION:

Section 53D of the Transfer of Property Act, 1882 as included by Act No. 26 of 2004 provides that no immovable property under registered mortgage shall be re-mortgaged or sold without the consent of the mortgagee, any re-mortgage or sale made otherwise shall be void.

Therefore, as per the above provision, if the BANK 1 consents in writing, then Mr. Y (father) and Mrs. B (mother) can transfer the said mortgaged properties to their sons Mr. Md. X and Mr. Y. But any such consent letter to transfer the property would include the condition that the property shall be re-mortgaged with the Bank. Then on the date of transfer of the property the Bank must obtain the mortgage deed executed by the sons followed by redemption of the earlier mortgage. Bank should also take personal guarantees from the sons.

If you have any further query please do not hesitate to contact us.

Thanking you.

Yours Sincerely,

………………….

For: “The Lawyers & Jurists”

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