• Registration of a property

I am starting a finance company. The safest way is to hold the borrower’s property documents and get a sale deed in my name. Same way the bank system works. But if he doesn’t repay the loan and does not agree to register the property in my name, can I still get it registered Without the owner? If not what steps can I take to register the property in my name. 
And also can I lend upto 30 lakhs in cash?
Asked 2 months ago in Property Law from Bangalore, Karnataka
Religion: Hindu

You cannot advance Rs 30 lakhs in cash 

 

2) Section 269SS of the Income Tax Act prohibits any person from taking or accepting from any other person any loan or deposit in any other way than by cheque or bank draft where the amount is more than Rs 20,000. Similarly, Section 269T prohibits the re-payment of any loan or deposit other than by cheque or bank draft, if the amount is more than Rs 20,000.

 

3)if borrower  refuses to register property in your name you have to file suit for specific performance to direct seller to execute registered sale deed in your favour 

Ajay Sethi
Advocate, Mumbai
74677 Answers
4465 Consultations

5.0 on 5.0

Dear Sir,

You have to learn more about this finance business. you have to take RBI permission to run such business. More over take sale agreements from parties so that you can approach the Court and get a decree of Specific Performance and if the borrower did not turn up court agency will come to the Sub Registrar office and get registration of sale deed in your name. Further easy to recover is to take signed undated blank cheques.

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Any person who intends to conduct Money Lending and Pawn Broking business shall obtain license as per the Section 6 & 4 of KARNATAKA MONEY LENDERS AND PAWN BROKERS ACT respectively, renewable every five years. He shall pay the license fee to Government to the extend of Rs. 5000/- for M.L.

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As of now, India is one of the largest emerging markets for Small Finance Companies or Micro-Finance Institutions (MFI). With a huge part of our population based in villages and rural areas, where the traditional banking assistance is out of reach. People in the lower income group take the informal channel of financial assistance like moneylenders and pawnbrokers. Generally, this means paying high-interest rates and be forever under debt. Such debtors are not able to benefit from the economic development of the country.


Kishan Dutt Kalaskar
Advocate, Bengaluru
5306 Answers
172 Consultations

5.0 on 5.0

It is better to mention that you have paid Rs 30 lakhs as advance for purchase of property 

 

2) suit for specific performance would take some years to be disposed of 

 

3) we do not advice you to make  any cash payments 

Ajay Sethi
Advocate, Mumbai
74677 Answers
4465 Consultations

5.0 on 5.0

1. Well, at the very first place without first getting Money Lending incense as an individual or permission from SEBI and RBI as a company can lend money.

2. Considering that you have got such licence then only on equitable mortgage you can lend money in default of which you can resort to previsions of law as enshrined under SARFAESI Act.

3. The method you have mentioned is not supported by law and only in those cases where money is lent and recovered on the basis of muscle power, such coercive method once exercised is unlawful. 

Devajyoti Barman
Advocate, Kolkata
19650 Answers
278 Consultations

5.0 on 5.0

1. See a mortgage over the property can be created and mortgage deed for same purpose can be registered. In case borrower fails to pay with order of court property can be registered .

Shubham Jhajharia
Advocate, Ahmedabad
24383 Answers
96 Consultations

5.0 on 5.0

See you are starting a finance company you cannot do agreement to sale with no. Of people, if it was personal transaction sale agreement is good option though for business mortgage is the way and same process is.followed by bank.

Shubham Jhajharia
Advocate, Ahmedabad
24383 Answers
96 Consultations

5.0 on 5.0

Hello

  1. The bank gets the mortgage registered in its favour for the loan advanced against the property. If you have the license to do the same, you can get the Mortgage Deed registered and if the borrower fails to pay you can sell/ auction the property. 
  2. If you are not purchasing, you can't draw up a sale agreement and get the borrower to sign as it would be treated as fraud as you are indeed not purchasing. If your finance company has permission to lend, you can make a proper Mortgage Deed and lend and avoid unwanted complications. 
  3. Case in court can take long depending on the response of the borrower. It can be 2 to 5 years or more. 

S J Mathew
Advocate, Mumbai
2685 Answers
110 Consultations

5.0 on 5.0

The best way is to go for mortgage by conditional sale.

It is safest and full proof.

Kallol Majumdar
Advocate, Kolkata
2571 Answers
4 Consultations

5.0 on 5.0

-  When a borrower takes money , the bank/finance company keeps his property as security against the taken loan amount , and no legal documentation takes place , except but both parties sign an agreement , that in the event of default by the borrower , the bank/finance company will will have full authority/right to recover the amount after selling that mortgaged property.

- Hence, legally you cannot issue loan after transfer the mortgaged property in your name, but you can entered into an agreement for the same with the borrower. 

- Further  under the  SARFAESI Act , you can recover your borrowed amount or transfer the said mortgaged property in your name as well. I dont think , it will take much time. 

Mohammed Shahzad
Advocate, Delhi
2637 Answers
35 Consultations

5.0 on 5.0

If you are opening NBFC - company than property documents will mortgage with company and in case of default, property will auction to recover amount.

Or if you are thinking to just start lending than without lending license, it is illegal. You cannot in any way lend the amount on interest. And executing agreement to sale will serve no purpose. As repayment of EMI will prove its lending and not ATS.

Yogendra Singh Rajawat
Advocate, Jaipur
18625 Answers
22 Consultations

4.6 on 5.0

Hi

Time duration of a case cannot be predicted. 

You can give the money in cash by making the agreement. 

Thanks

Rahul Jatain
Advocate, Rohtak
2523 Answers
4 Consultations

4.9 on 5.0

Dear Sir/Madam,

The best thing would be to register your company as NBFC as per the guidelines of RBI and then you will be able to do all the activities as done by these non banking financial companies like extending loan facilities, having a loan agreement, holding sale deed or RC of vehicle etc. 

Ganesh Singh
Advocate, NEW DELHI
4489 Answers
9 Consultations

4.5 on 5.0

1. IF you only lending amount (as a registered financier), THEN your name CANNOT appear in the Sale Agreement, in anyway whatsoever. At the most you can have it stamped as "Mortgaged to XYZ". PERIOD.

2. Cash Financing is barred and is a prosecutable offence under the PML Act and the Income Tax Act.

Hemant Agarwal
Advocate, Mumbai
4370 Answers
23 Consultations

5.0 on 5.0

If you are opening a finance company then get RBI certificate and NOC to run such business, and further any undue payment can be recovered from borrower as per DRT and SARFAESI Act.

The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 were enacted by the Government to be exclusively used for the recovery of debts of Banks and Financial Institutions.

Ganesh Kadam
Advocate, Pune
9737 Answers
80 Consultations

4.9 on 5.0

First you have to register the finance business company. They can be registered in various forms, such as Microfinance companies, Nidhi companies, Non-banking finance companies (NBFC), Local Finance License etc.

Make good lender borrower agreement before lending the money. Take application forms from the borrower and execute agreements properly. Also execute a promissory note and execute a deposit of title deed agreement and hold the title deed and other documents realted to the property of the borrower.. If the borrower is making default, you may file case for getting realisation of money and attach the property of the debtor. Even after getting the decree, the borrowers is not settled the debt amount the file execution petition and sale the property through court procedure and realize the same.

If you are not start a finance business company you are unable to realse the same easily.

Who wish to take benefit of Indian laws and legal system they must act as per Indian laws .Normally you have no right to lend the huge amounts. You can lend money to relatives, close friends etc, but it should not be your business. One or two lending in a year and over years they have become 20-30 lending’s its fine, but you should not do them in too much frequencies and should not lend on to unknown or through brokers. Otherwise you could be in deep trouble.

 

According to the Indian Contract Act 1872, an agreement between two people which is accepted by both the parties and enforceable in the court is valid. The bank keeps the property as collateral security against the loan amount. And bank has power to collect the debt from the debtor by sale the property with the help of various laws.

Ajay N S
Advocate, Ernakulam
3442 Answers
67 Consultations

5.0 on 5.0

You can follow either of the options given below:

1. You can get the sale agreement registered to your name for the sum equal to the loan, which can be filed before court in  a suit for specific performance of contract in case the borrower is not replaying the loan amount and not willing to register the property to your name at a later stage.

or

2. You can get a  registered mortgage deed having this property as collateral security.

or

3. You can retain the original documents and file a money recovery suit in which you can seek attachment before judgment on the basis of this property title document besides obtaining promissory note or a loan agreement. \

You can file a summary proceedings also for recovery of money on the basis of the said documents.

 

 

 

 

T Kalaiselvan
Advocate, Vellore
64643 Answers
839 Consultations

5.0 on 5.0

 That is the first option suggested to you.

In the sale agreement you cannot write the wordings as per your whims, you have to mention as sale agreement of the property only.

The suit for specific performance of contract may take  at least two years to get disposed.

T Kalaiselvan
Advocate, Vellore
64643 Answers
839 Consultations

5.0 on 5.0

1. If you want to proceed in such a manner where you want to proceed against borrower by register his property on your name then you should make registered sales agreement with borrower.

2. The loan amount should be mentioned as advance given to buyer for purchase of his property.

3. Second option is to make mortgage deed with borrower in your favour.

4. In both cases you have to file suit against borrower for getting the property in sales agreement you have to file suit for specific performance and in mortgage loan you have to file recovery suit.

Mohit Kapoor
Advocate, Rohtak
8035 Answers
2 Consultations

5.0 on 5.0

You need to take court order under specific relief Act for the same

Prashant Nayak
Advocate, Mumbai
18758 Answers
34 Consultations

4.6 on 5.0

Agreement is valid for three years from the date mentioned to execute. So after issuing legal notice you can file a suit to get the deed registered through court. it may be takes 6 to 12 months. 

Mohammed Mujeeb
Advocate, Hyderabad
15648 Answers
8 Consultations

4.5 on 5.0

Hello,

You will be the confirming party here.

Regards

Swarupananda Neogi
Advocate, Kolkata
1636 Answers
4 Consultations

4.7 on 5.0

1. If the sale deed itself is executed in your favour by you at the time of disbursement of loan then no further claim survives. This is impracticable.

2. You can get the agreement to sell in your name, but do remember that an agreement to sell does not translate into an automatic sale deed if the borrower defaults. It is the seller who executes the sale  deed in favour of buyer. An agreement to sell will only give you the remedy to file a suit for specific performance against the seller.

Ashish Davessar
Advocate, Jaipur
28752 Answers
836 Consultations

5.0 on 5.0

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