The bank selling an asset under the Sarfaesi Act legally does so only as a mortgagee. If it cancels the MoD before such sale, it means it has lost its mortgage charge over the asset sold. However, when it executes the sale and registers the sale certificate in favour of the new purchaser, it legally implies that the previous charge is satisfied automatically. The bank B can very well register its MoD subsequently after the new purchaser creating an equitable mortgage in its favour by deposit of title-deeds.
MODT cancellation and sale certificate
I have purchased a property from Bank A via public auction and have got the sale certificate. However when I go for registration I am being requested to cancel the MODT by Bank A before proceeding with registration on my name. However Bank A states that it's not the correct process as per Sarfaesi act. But Bank B where I have applied for loan on this purchase need to get the subsequent MODT. Could someone point to a reference or guidance around this - whether cancellation of MODT is mandatory for Bank A and if there are any legal implications on me if this MODT exists during my registration. Registration is done in the state of Tamilnadu.
Asked 6 years ago in Property Law
Religion: Hindu
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6 Answers
1. EC would still continue to show TMB's charge right. Would it be deemed invalid as per law once the registration is done in favour the auction buyer. 2. Or should we consider cancelling the MOD by Bank A after the registration is done in favour of the buyer.
Asked 6 years ago
1. Yes, the mortgage charge automatically lapses after registration of the sale certificate. The subsequent EC would reflect the registration of the sale certificate.
2. Cancellation of MoD may be done afterwards.
You can file a writ petition in high court for appropriate direction to the bank
Revocation of mortgage should be proved by bank A. It is not mandatory document since you have purchased through public auction conducted by mortgagee bank.
At least registration cannot be refused in absence of MODT .After registration EC will transfer in your name.
Registration should be done within 4 months, otherwise penalty.
Typically, it’s the duty of the bank or Housing Finance Company to cancel the MODT (Memorandum of Deposit of Title Deed) after the closure of the Home Loan. But most banks (mortgagee) in India thrust the duty onto the borrowers (mortgagor). So, when collecting documents from the bank after the settlement of your loan, do not take the MODT. Instead, insist on the bank cancelling the MODT and giving you a “Deed of Receipt” executed by the mortgagee in favour of the mortgagor.
If you have only the simple requirement of MODT cancellation, you can easily do it yourself in half a day if you have all the documents handy.
The documents required are:
- Original MODT
- NOC certificate
- Bank representative (Mortgagee – Executant) Office ID
- Aadhaar Card
- Authorisation Letter from the bank that bank representative is the authorised person for executing the cancellation of MODT (if applicable)
-
PAN & Aadhar of Borrowers (Mortgagors – Claimant) - ID (preferably Aadhaar) for 2 Witnesses
To create a MODT Cancellation document you need to select the document type – “Deed of Receipt” and link the previous document i.e. Original MODT using its RegistrationOffice/ DocumentID/ Booklet/ Year/ RegularDoc. Once you select your MODT from the search result, all details from the previous document will be made available as selectable values in the new form i.e. Deed of Receipt.
Mere registration of MODT will not show the bank's name in the EC, once you get the property registered to your name, your name will automatically appear in the EC.
Yes, it is pertinent to cancel the MODT.