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: sng@snguptaco.com

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: Tangible or Intangible Property

Ownership:

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
purchasers 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
purchasers 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/Re-allotment
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 Buyers 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 lessees 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 lessees copies, towards payments/installments
made/paid to GDA/U.P. Awas Vikas Parishad Limited.
Permission to mortgage from Ghaziabad Development Authority.

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