RE: LEGAL OPINION ON SECURITY ARRANGEMENT THROUGH PLEDGE OF SHARES ON ACCOUNT OF MRS. A.
We acknowledge your letter No………………dated 11.01.2003 on the above subject. We have perused the letter and you sought opinion on the following queries:
i) How the Bank will make an agreement among the purchaser, seller and Bank
ii) How mortgage formalities will be completed
iii) What relevant papers are required for protecting interest of the Bank
Our opinion is as follows:
Query # 1
i) The Tripartite Agreement between the purchaser, seller and Bank is required the following situation:
a) when the building/apartment is under construction;
b) if permission is required to be obtained till registration of the deed of sale for selling the flat/aparment along with undivided and undemarcated proportion of land in connection with the leasehold property.
The papers/documents referred to us do not make it clear that whether the building/apartment to be purchased is under construction or not.
Query # 2
The following mortgage can be created:
Equitable Mortgage; and
Equitable Mortgage can be created by depositing original title deed with the intent to create a security, which does not require registration. As such it does not constitutes public notice. It requires Memorandum of deposit of title deeds to be executed by the mortgagor. To constitute public notice a registered power of attorney to sell the mortgaged property is required. But without legal mortgage concerned Sub-Registration decline to register the such power of attorney.
The legal mortgage must be registered. The mortgagor binds himself personally to pay the mortgage money, and agrees, expressly or impliedly, that in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, by creating legal mortgage. Legal mortgage constitutes public notice. Deed of Legal Mortgage is required to be executed by the mortgagor of the property.
Querty # 3
The following dcouments/papers are required to protect the Bank’s interest:
1. Title Deeds i.e. Deed of Sale in original. If the original is not yet delivered by the Office of the Sub-Registrar, then certified copy of the Deed of Sale along with the delivery receipt duly discharged by the Seller.
2. Bia Deed (i.e. Title Deed of the Seller).
3. Mutation Certificate certified by the Assistant Commissioner of Land.
4. C.S., S.A. and R.S. Parcha and Math Parcha, where applicable.
5. Up to date ground rent payment receipt issued by the Tahshil Office.
6. Municipal Mutation and Municipal Tax Payment Receipt.
7. Non Encumbrance Certificate countersigned by the concerned Sub-Registrar.
In case of leasehold land, the owner cannot produce documents under Serial No. 4. But as additional document, the owner will produce permission of the Lessor to transfer the land in the name of the owner and also permission to mortgage the leasehold land in favour of the Bank. This is also applicable even when the property offered as security is a flat with undivided and undemarcated portion of land.
Bank should also obtain usual charge documents as per Banking practice.
Should you require any further information please feel free to contact us.
For: “The Lawyers & Jurists”