• Flat loan complication

Sir/Madam, 

My flat seller has taken two loans from Shriram City Union: one in his name and another in his wife's name. He had mortgaged two properties a flat, and a plot of land separately. The agreement numbers are different, they are taken on different dates their maturity dates are different.  I am going to buy the flat and already paid Rs. 10 lakhs without the knowledge of the loan. Shriram City people are saying that documents of the flat will be released only when he clears the flat loan and pays the pending instalments on the wife's loan. My question is. Can they do like that since two loans are separate and are backed by solid mortgages?

Pl. revert.

Thanking you,

Sincerely yours,

D.Karunakar
Teacher
Paramount Academy
Khargone Road
Kasrawad - MP - 451228
Asked 2 years ago in Property Law from Warangal, Andhra Pradesh
1) before purchase of flat did you not ask seller to produce original documents ? 

2) you ought to have exercised due diligence before parting with Rs 10 lakhs . 

3) the financier should on repayment of flat loan return the original documents of the flat . 

4) the loan in respect of land has been taken by wife and separate agreement has been entered into by the wife . 

5) the terms of loan agreement signed by seller with the financier has to be seen . 

6) in the vent financier refuses to release flat original documents inspite of repayment of loan seller can drag him to consumer forum for deficiency in service and  seek release of its documents 

7) please cross check whether seller has acted as guarantor of the loan taken by wife . 

8) ask financier to give in writing reasons for refusal to return flat documents inspite of repayment of loan . 

9) you can with seller consent pay off the financier directly for release of flat documents
Ajay Sethi
Advocate, Mumbai
23090 Answers
1212 Consultations
5.0 on 5.0
When once the entire loan on the flat is cleared, the financier has to return the original documents of the property.  However if the seller is a guarantor for the loan availed by his wife, then the question is different. If the two loans are separate and not interlinked by any agreement, the financier can not take recourse unilaterally by not returning the documents inspite of clearing the entire loan on the flat. Had you taken little precaution by having a look at the original documents then you would have come to know that there exists a charge on the property. What has been done can not be undone now. If the financier refuses to handover the original documents inspite of clearing the loan, then insist for a letter from the financier for the same and knock the door of consumer forum for deficient service of financier company and seek release of documents.  Take the seller with you to pay off the financier directly in seller's name for release of the Flat documents.
Shashidhar S. Sastry
Advocate, Bangalore
1232 Answers
59 Consultations
5.0 on 5.0
1. You should have availed the professional services of a lawyer to carry out the due diligence test before purchasing the property. The primary reason why property disputes constitute a large chunk of the litigation pending in the country is the absence of due diligence test by the prospective purchasers at the time of purchase of the property in question. Examples like Campa Cola Society case illustrate to the optimum this supreme negligence of the prospective purchasers. 

2. If you had carried out due diligence test it would have revealed that the property you intend to purchase is under mortgage. A mortgage is created by depositing the original title deed of the property with the financier. The deed is to be returned only on the repayment of the principal amount along with interest at the agreed rate of interest.

3. If the loan in respect of land has been taken by his wife and a separate mortgage agreement has been executed in respect thereof then her husband cannot be made liable for her liability, meaning thereby that the title deed deposited in respect of the flat loan which has been taken by the husband in his name cannot be withheld against the non payment of loan in respect of land. 

4. The moment the flat loan is repaid by the seller the financier is legally obligated to return the original title deed of the flat. If it refuses to return the deed even after repayment of loan the seller can issue a lawyer's notice to the financier and hen follow it up moving to court to recover the documents of title.

5. You have the right to enter into an arrangement with the seller to clear the pending loan of the flat. 

6. Get the mortgage agreement vetted by your lawyer at the earliest.
Ashish Davessar
Advocate, Jaipur
18055 Answers
445 Consultations
5.0 on 5.0
1. Strange that before paying him the money you deed not check the original title deed which has been kept with the mortgagee,

2. If the seller and his wife has availed two loans seperately mortgaging two properties and received the loan amounts in their seperate ndividual accounts, then the Bank should release the mortgage of the property if the loan amount against which the said property was morgaged is settled. Otherwise the Bank can club the properties for both the loans,

3. The flat seller should sent  legal notice to the mortgagee,

4. My doubt is that the flat seller and the mortgagee's officials are in cahoots to deprive you possession of the flat for which you have paid so much of money,

5. You can file a complaint case against the seller before your local District Consumer Dispute Redressal Forum alleging deficiency in service and unfair business practice making the Mortgagee also a party claiming possession and registration of the property against receipt of full payment, damage and cost. .
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
227 Consultations
5.0 on 5.0
1.In your case, Equitable Mortgage ( Mortgage by Deposit of Title Deed ) may be executed by the Seller.

2. Once a loan obtained under a mortgage that unless the loan cleared, the bank has right to create charge on that property.  Hence the  loan must be clear.

3. Basically, you had to  scrutiny of the Encumbrance Certificate with respect to the flat. If you did this, you can easily trace out the loan over the property.

4. Shriram City cannot connect one loan to another loan unless legal burden agreement executed by the Seller in favour of the bank with respect to the same and unless verified the bank agreements and title documents we can't come to conclusion properly. 

4. In case loan has been cleared by the seller, you can't issue notice to the bank due to not a owner and third party to this contract of the flat towards the bank agreement and that your seller can do this for your interest and you can approach bank and seller to execute arrangement agreement by clear the loan towards the consideration amount and subsequently, you can enter a process of sale.
B.T. Ravi
Advocate, Bangalore
733 Answers
29 Consultations
5.0 on 5.0

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