Re: Legal Opinion regarding validity of Power of Attorney to sell the mortgaged properties after death of borrower/ principal
We refer to your letter dated March 09, 2007 on the above subject.
On perusal of your letter it appears that Mr. X, proprietor of Revlon Group (the Borrower) is a client of Bank 1 (the Bank) and was availing different credit facilities from the Bank. The Bank has taken registered mortgage along with registered IGPA to sell the mortgaged properties owned by the borrower. The Borrower has expired on 18.01.08.
In these circumstances you have requested us to provide our legal opinion on whether the registered IGPA as executed by the Borrower is still valid after his death or what will be the status of IGPA and mortgaged properties I.e. how the Bank can proceed for selling the mortgaged properties to recover the facilities.
According to established case laws read with Section 3 of Power of Attorneys Act 1882, due to the demise of the person executing power of attorney, the power of attorney becomes null and void. Therefore, in the instant case the IGPA executed by the Borrower in favour of the Bank is at present void.
According to Section 59A of the Transfer of Property Act 1882, mortgagors shall be deemed to include persons deriving title from them. Therefore, after the death of the Mortgagor, the Mortgagee is entitled to recover the payment of the mortgage debt from the legal representatives of the deceased and enforce the mortgage in a court of law. Therefore, if the Bank recalls the whole outstanding amount of the Loan and the heirs of the Borrower fail to repay the outstanding amount, the Bank may enforce the mortgage in a court of law, notwithstanding the fact that the Mortgagor is deceased.
However please note that without any valid power of attorney at present the Bank is unable to sell the mortgaged land without the intervention of the court.
If you have any further inquiries please do not hesitate to contact us.
For: “The Lawyers & Jurists”