• Buying property mortgaged with bank

I am planning to buy a property in Gurugram, Haryana. The seller says he has a loan from bank against the property and original documents of title are with the bank.
How do we go about such a transaction, which should be fairly common ? I want to ensure that the property is free of any encumbrances other than the declared loan from bank ? A dealer has told me ( May be true or untrue) that the seller has CC limit from bank against multiple properties, one of which is the property in question. Is there a tripartite agreement executed between the proposed buyer, seller and the bank which confirms that the bank has X amount due against that particular property, has the listed original documents of title of that particular property and , on payment by the buyer to the bank of the due specified X amount, will have no lien or charge against that particular property and will hand over all the original title documents to the buyer? Will such sale deeds (when the previous original documents are with banks ) get registered easily by the Sub Registrar concerned?
Also, as part of due diligence by lawyer before the agreement to sell is executed, what certificate from the bank/ inspection of originals lying with the bank /other precautions should be taken ?
Any other steps or precautions I should take to ensure I get a clean property with original chain of documents?
Asked 12 months ago in Property Law
Religion: Sikh

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10 Answers

Seller should clear the dues of the bank and should take NOC in respect of property and closure of loan account be taken by seller to clear every encumbrances. Engage a competent lawyer to carry due diligence in respect of property. 

Siddharth Srivastava
Advocate, Delhi
1281 Answers

5.0 on 5.0

You can request seller to provide inspection of original documents of title 


2) seller will approach bank and you would be offered inspection 


3) seller has to obtain NOC from bank to sell the property 


4) bank will give NOC provided sale proceeds are used for repayment of loan 


5) you can  approach same bank for loan .so that loan from seller can be transferred to you 

Ajay Sethi
Advocate, Mumbai
95502 Answers
7653 Consultations

5.0 on 5.0

Hi, You can purchase the property which is mortgaged to the Bank. First you have to make payment to the Bank and cleared the loan and get discharge deed from the Bank and then you can purchase the same. There is no issue. However you can legal verification from the Advocate and proceed further. 

Pradeep Bharathipura
Advocate, Bangalore
5607 Answers
336 Consultations

4.5 on 5.0

- Since, the property is mortgaged with the bank , then the sale deed can be released only after the full and final settlement with the bank , and even the loan can be transferred in another persons name as well. 

- Further, as the property is mortgaged with the bank , then during the loan tenure the property papers cannot be used in other transaction. 

- You can check the documents with the bank after approval of the seller , and even the papers can be released to you once the seller deposit the amount with the bank 

- NOC from the bank is necessary before the execution of sale agreement and the payment of entire amount 

Mohammed Shahzad
Advocate, Delhi
13720 Answers
207 Consultations

5.0 on 5.0

First of all, obtain an undertaking from the bank that they will release all the original documents in their possession if the sale proceeds are deposited with them and that they will file the memorandum of discharge with the registry without delay. Request the bank to allow your lawyer to scrutinise the documents in their possession at a convenient time. Let your lawyer render his/her opinion on the title based on his/her scrutiny. If cleared, you can safely proceed to buy the property.

Swaminathan Neelakantan
Advocate, Coimbatore
2855 Answers
20 Consultations

4.9 on 5.0

The bank will allow your lawyer to scrutinise the title and chain documents on an application submitted by the seller in this regard other wise the bank's panel lawyer can also issue a legal opinion about the property  documents held in collateral for the loan advanced to the seller.

It is important that the bank gives NOC to the seller to sell ther property.

If you would like to avail loan from the same bank, the bank will arrange to transfer the loan to your name after complying with the necessary formalities.

Engage an experienced and  competent lawyer to carry due diligence in respect of property and proceed only when recommended.  

T Kalaiselvan
Advocate, Vellore
85705 Answers
2265 Consultations

5.0 on 5.0

Dear Client,

As part of the property purchasing process, you have the right to request the seller to provide an inspection of the original documents of title to ensure the property's legitimacy and ownership details. Once you express interest in the property, the seller will approach their bank to facilitate this inspection. Additionally, the seller must obtain a No Objection Certificate (NOC) from the bank, which confirms the bank's agreement to the property sale, on the condition that the proceeds from the sale will be used for the repayment of any outstanding loans on the property.

In case you require financial assistance for the purchase, you have the option to approach the same bank that holds the seller's loan. By doing so, you can potentially transfer the existing loan from the seller to yourself, streamlining the process and enabling you to take advantage of the terms already established with the bank. This approach ensures a smoother transaction and provides a clearer understanding of the property's financial aspects for all parties involved.


Anik Miu
Advocate, Bangalore
9408 Answers
112 Consultations

4.9 on 5.0

Bank will give you original documents and noc

Prashant Nayak
Advocate, Mumbai
32243 Answers
187 Consultations

4.1 on 5.0

Buying a property that is mortgaged with a bank requires careful due diligence to ensure a smooth and secure transaction. Here's a step-by-step explanation of how you can proceed with such a purchase and the precautions you should take:

  1. Verify the Seller's Claims: Request the seller to provide you with all relevant documents related to the property, including the sale deed, encumbrance certificate, and documents related to the bank loan. Cross-check the details in these documents with the physical property and with the relevant government authorities.
  2. Obtain Encumbrance Certificate: Obtain an encumbrance certificate from the appropriate authority to verify if there are any existing encumbrances on the property, such as mortgages, liens, or pending legal claims. This certificate will give you a clear picture of the property's current status.
  3. Tripartite Agreement: In some cases, there might be a tripartite agreement executed between the bank, the seller, and the buyer. This agreement confirms the amount due against the property, the bank's hold on the original title documents, and the process of releasing the documents once the payment is made.
  4. Obtain No Objection Certificate (NOC) from the Bank: Request the seller to obtain a No Objection Certificate (NOC) from the bank, stating that they have no objection to the property being sold and that they will release the original title documents upon payment of the outstanding loan amount.
  5. Inspect Original Documents: As part of your due diligence, you or your lawyer may inspect the original title documents that are with the bank to ensure their authenticity and that they correspond to the property you are planning to buy.
  6. Verify Outstanding Loan Amount: Ensure that you are aware of the exact outstanding loan amount against the property. This will help you determine the total cost of the property, including the repayment of the loan.
  7. Register the Sale Deed: Once you have verified all the necessary documents and completed the payment process, register the sale deed at the Sub Registrar's office. The sale deed will transfer ownership of the property from the seller to you. The bank will also provide a release deed, confirming that the property is free from the mortgage.
  8. Title Search: Conduct a thorough title search with the help of a lawyer to ensure there are no pending legal disputes or claims against the property.
  9. Title Insurance: Consider obtaining title insurance to protect yourself from any unforeseen claims or disputes related to the property's title in the future.

Muraleedharan R
Advocate, Trivandrum
373 Answers
2 Consultations

5.0 on 5.0

generally the bank does not allow release of its lien on any property given as security. However, the seller can get a particular property released by offering any other property of same value to the bank. Normally, the bank gets its lien  or mortgage recorded on revenue records and in that case it cannot be registered by the Sub Registrar. Even if it is anyhow registered, it will not be mutated in your name. So, it will be better to get the clearance from the bank.   

Dalbir Bharti
Advocate, Gurgaon
41 Answers

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