• Mortgage loan on Nazul property beyond lease period

What type of indemnity or undertaking should be given for taking a mortgage loan beyond lease period of my NAZUL property in Hoshangabad MP ? Currently property is under lease period and I have already sought NOC to mortgage from NAZUL. Is NAZUL property and property with development authority which is also leased different? How to proceed ?
Asked 1 year ago in Property Law from Hoshangabad, Madhya Pradesh
Religion: Hindu
The mortgage of any property beyond the period of lease is not binding upon the lessor unless in the mortgage deed or anywhere else the lessor by contract binds himself of the mortgage beyond lease period.
Yes Nazul property and property mortgaged with development authority is different.
Devajyoti Barman
Advocate, Kolkata
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1) nazul land  is  land owned by the local development authority for development purposes, according to the masterplan of the city

2) The development authority either acquires or gets the land from the government. 

3) The authority can either lease it or auction it in the open market to any institution or individual with the government’s consent. 

4) you cannot mortgage the land without consent from development authority 
Ajay Sethi
Advocate, Mumbai
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1) bank mortgage team will not discriminate if you have  nazul leasehold land . you have already permission for mortgage of the land from development authority 

2) we dont provide formats . for that you have to engage a local lawyer who will draft the indemnity bond 
Ajay Sethi
Advocate, Mumbai
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The term Nazul is used for land owned by the local development authority for development purposes, according to the masterplan of the city. The authority either acquires or gets the land from the government. Therefore, Nazul land is situated within the municipal limits of the authority. The authority can either lease it or auction it in the open market to any institution or individual with the government’s consent. The government can also auction the property for developing a residential colony or educational institution. Every city has a land allotment committee that undertakes the work of auction and leasing of Nazul land.

In case your lease term is getting over, you can approach the authority to renew the lease by giving an application to the revenue department of the local development authority.  However you cannot mortgage the nazul property if your lease period already expired, hence you may indemnify that you will undertake to repay in case the lease is not renewed provided the mortgagor agrees to it.

If you have obtained NOC for mortgage, then you should be able to proceed with the aid of this NOC.  Nazul property is different from other property of the development authority, the meaning of the nazul property has been explained above. 
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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If you have received NOC from the authority to mortgage the nazul property, the bank mortgage team shall not have any problem with the grant of mortgage loan.  
If an indemnity is required to produced, they may be having a format too on the lines of the indemnification to be given satisfying their conditions, you can get the format from the bank itself.
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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Nazul property is that property which has escheated or lapsed to the State; commonly applied to any land or house property belonging to Government either as an escheat or as having belonged to former Governments. Lease of Nazul property, in pith and essence, does not differ from the lease of ordinary property. The rights of the lessor and lessee are to originate from the lease deed to be executed between them. The indemnity is to be separately executed. A clause to indemnify can be incorporated in the lease deed itself.
Ashish Davessar
Advocate, Jaipur
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449 Consultations
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