Clear Identification Of Properties
From time to time the Bank provides financial facilities that are secured either on some piece of land or a house. The Bank is concerned with the possibility that the house or plot actually shown to the Bank for purposes of security, or whose acquisition is otherwise being financed through home finance scheme etc, might not be the same house or plot relating to which the title documents are actually supplied to the Bank or on which a formal mortgage may be created.
The bank needs legal opinion as to how to deal with property identification Issues. It is possible to identify a property by the following means:
i) By reference to the previous title documents that are the source of the rights being transferred through the new title document.
ii) By reference to the site of the land as borne out by a Khasra No. (field number) in areas where reference is made to the Khasras.
iii) By reference to the property No. allocated by the Property Tax Department for its revenue collection purposes.
iv) By reference to such number or identification that might be allocated to a property by developers of some housing scheme.
v) Identification by “metes and bounds” i.e. specifying the boundaries of the property on the bases of its distance (“metes”) from some reference point and by setting out the length of each boundary (“bounds”) as well as giving the name of the adjoining owner or giving other particulars, such as roads, streets etc.
Before the matter of identification is addressed it might be useful to suggest certain practices as far as development schemes by cooperative societies or private developers are concerned.
1. All development schemes have to be approved by the controlling regulatory agencies, such as LDA, FDA, CDA etc. or by the local government in whose jurisdiction the scheme falls.
2. The approval of the scheme involves:
A. Proof of ownership of the land on which development shall take place
B. Approved plotting of the residential, commercial or other units on the land where the development shall take place.
C. Formal sanction of the scheme
3. Therefore, as far as housing schemes are concerned, the Bank should adopt a policy that whenever it is proposed that security be taken on a plot or on a house in a particular scheme, the Bank obtains complete information and copies regarding the matters stated at 2(b) above. This would ensure that the properties are exactly identified and proof of ownership of the developer is also established.
4. Furthermore, from a commercial angle (in the sense of the salability of the property if the security were to be enforced), the Bank should also ensure that the society should have achieved a fairly advanced stage of development, in the sense that the basic infrastructure of amenities, electricity, sewerage etc. should have been completed. The society should have a regular governing body.
5. Having dealt with the matters relating to properties developed by societies and other developers one may address, the basic issue of identification.
i) Wherever, the relevant property is situated in a colony developed by a society or some other entity, identity of the property should be established on the basis discussed at 2 (b) above.
ii) In properties situated in Urban areas, that are also assessed to property tax or liable for the same, and which comprise a house or commercial construction, the Bank should always demand (in addition to other documents discussed below)
A) A copy of the approved building plan
B) A copy of completion certificate
C) A copy of PT-I form
An approved building plan always sets out the site of a property along with its boundaries. PT-1 form also gives details regarding the number of rooms & stories, as well as unit No. according to property tax records. The approved plan also gives name of the owner at the time when the plan was approved.
iii) In case of properties where the record is maintained by the revenue authorities, copies of mutation in favour of the owner, as well as the latest Jamabandi should be obtained. These documents should be attested by senior revenue officials, and should disclose the names of the relevant owners.
iv) In addition to the information relating to constructed properties mentioned above, in all cases, whether involving property with construction or without construction, the Bank should always demand the original sale deeds (or satisfactory explanation relating thereto, when the original sellers might have sold only a small portion of the total Property) of all owners of the property for at least 15 years to establish a clear chain of title. Sometime, the risk is that a previous sale deed might have been deposited with some institution by way of security. The description of the property being offered should be consistent with the chain of title documents. A person not occupying a premises as an owner (e.g. a tenant, licensee etc.) would not be able to produce any title deeds.
v) Where the property is described in the chain of documents by “metes and bounds” also, the Bank must establish that the property being offered actually meets the given description.
vi) At the time when valuation is being carried out, the Bank should demand that the Valuator must draw up a rough sketch of the site and identify the length and breadth of each site as well as particulars of the adjoining owners/properties/land-marks. In case of lands for which land Revenue Department maintains records, copy of Aks Shajra (site plan) should be obtained. If possible, demarcation of the land, through revenue authorities should also be obtained, unless the identity of the land being claimed by the “owner”, is otherwise clearly established.
vii) Wherever information in the relevant sale deed of property being acquired is only as to the Khasra number (without particulars of boundaries having been given) the Bank must demand a clear “Aks Shajra” (site plan) prepared by the revenue authorities. This plan should set out the length and breadth of the property and give particulars of the adjoining properties etc.
viii) Where properties allotted (and not disposed of under a final sale deed) by agencies such as LDA etc. are sold by one allotment holder to another under a sale deed, the Bank must ensure that necessary change has also been incorporated regarding the allotment rights in favour of the latest property holder.
ix) In all mortgage instruments of the Bank whether by a registered mortgage deed or by deposit of title deeds, the Bank should make a policy of identifying the property by metes and bounds, in addition to any other particulars required.
x) Those cases where there might be serious doubt regarding the location of the property, services of a professional surveyor can also be hired to establish exact location and identity of the property. Where revenue record is being maintained for a property, the Bank, in addition to obtaining an Aks Shajra, may also demand that the exact structures be confirmed as being located on that particular Aks Shajra by having demarcation of the property carried out through the Revenue Authorities. Section 117 of the Land Revenue Act, 1967 (chapter 10: Surveys and Boundaries) empowers the Revenue Officers, on the application of any person interested, to define the limits of any land holding or field.
6. The Bank may also demand copies of bills for utility connections such as telephone, etc. electricity, gas etc. If they do not bear the name of the person claiming to be the owner, then a clarification should be sought.
7. In light of what has been discussed above, in order to ensure that the Bank has exact information regarding the property being financed or being accepted by way of security, the Bank should endeavour at obtaining positive information on the maximum number of identification modes, discussed above.
We hope that this discussion proves helpful in understanding the matter generally. However, if any action is to be taken, relating to this Article, please consult your professional advisors.