 "When lender misplaces property agreement")
The final installment on your home loan has just been deducted from your account. The following week you go to your bank to collect the property agreement which is with the bank. But, what if your agreement is not traceable? What can you do if your bank or housing finance company misplaces your property title deed?
"Losing the original documents affects the marketability of the property. Without them the owner may not be able to sell or mortgage the property ever. For instance, the buyer could suspect that the property is mortgaged and the seller is trying to cheat him," says the law officer of a public sector bank.
In such a case the customer should first file a police complaint. The bank or HFC has to issue a public notice (place an advertisement in a newspaper), give an indemnity bond to the customer and obtain a certified copy for the customer.
If the property value plus compensation demanded by the borrower is up to Rs 20 lakh, the complaint can be filed at the District Forum. If it is more than Rs 20 lakh and up to Rs 1 crore, the State Forum and if it is more than Rs 1 crore the borrower can approach the National Forum. The borrower can even ask for double value of the property as compensation.
In one such case the court had ordered a public sector bank to pay 85 per cent of the market value of the property as compensation to the borrower for misplacing the papers. In another case, the National Forum of the consumer court had asked the bank to certify by letter that it had misplaced the property papers and that this letter should be preserved as a valid document. This is significant, because a certified copy of the document cannot be treated on par with the original.
The cost of obtaining the certified copy of the property agreement should be borne by the bank or HFC. The certified copy will be issued by the Sub-Registrar of the particular area.
The borrower should also approach the Registrar of Co-operative Societies and submit in writing that the property documents have been misplaced by the bank. This will ensure that there will be no forgery in future. The borrower can also issue a public notice mentioning all the facts so that nobody can make a claim for the property.
The Banking Ombudsman (BO) Scheme 2006 also mentions banks misplacing property papers as a serious issue. According to the BO Scheme, "The title deeds should be returned to the customers within a period of 15 days after the loan closure and the Boards of banks should put in place a suitable compensatory policy to compensate the customer for delayed return of title deeds or where there is a loss of title deeds in the custody of the banks." The BO too, can award compensation to be paid by the bank for deficiency in service, in such cases.
V N Kulkarni, counsellor with Abhay, a debt counselling center, says often the bank may just keep delaying handing over the documents and not admit that they are missing. "Even if the home owner does not want to sell the property, passing on the property to the heirs can also be difficult without original documents," he adds.
"Losing the original documents affects the marketability of the property. Without them the owner may not be able to sell or mortgage the property ever. For instance, the buyer could suspect that the property is mortgaged and the seller is trying to cheat him," says the law officer of a public sector bank.
In such a case the customer should first file a police complaint. The bank or HFC has to issue a public notice (place an advertisement in a newspaper), give an indemnity bond to the customer and obtain a certified copy for the customer.
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The customer, in turn, can file a complaint with the consumer court since it is a deficiency of service on the part of the bank, the bank official says.
If the property value plus compensation demanded by the borrower is up to Rs 20 lakh, the complaint can be filed at the District Forum. If it is more than Rs 20 lakh and up to Rs 1 crore, the State Forum and if it is more than Rs 1 crore the borrower can approach the National Forum. The borrower can even ask for double value of the property as compensation.
In one such case the court had ordered a public sector bank to pay 85 per cent of the market value of the property as compensation to the borrower for misplacing the papers. In another case, the National Forum of the consumer court had asked the bank to certify by letter that it had misplaced the property papers and that this letter should be preserved as a valid document. This is significant, because a certified copy of the document cannot be treated on par with the original.
The cost of obtaining the certified copy of the property agreement should be borne by the bank or HFC. The certified copy will be issued by the Sub-Registrar of the particular area.
The borrower should also approach the Registrar of Co-operative Societies and submit in writing that the property documents have been misplaced by the bank. This will ensure that there will be no forgery in future. The borrower can also issue a public notice mentioning all the facts so that nobody can make a claim for the property.
The Banking Ombudsman (BO) Scheme 2006 also mentions banks misplacing property papers as a serious issue. According to the BO Scheme, "The title deeds should be returned to the customers within a period of 15 days after the loan closure and the Boards of banks should put in place a suitable compensatory policy to compensate the customer for delayed return of title deeds or where there is a loss of title deeds in the custody of the banks." The BO too, can award compensation to be paid by the bank for deficiency in service, in such cases.
V N Kulkarni, counsellor with Abhay, a debt counselling center, says often the bank may just keep delaying handing over the documents and not admit that they are missing. "Even if the home owner does not want to sell the property, passing on the property to the heirs can also be difficult without original documents," he adds.