CRN

UCO BANK 05 / 2011-12

(A Govt. of India Undertaking)
Head Office : HONOURS YOUR TRUST
Law Department Circular No.
10, B. T. M. Sarani (7th floor) CHO/Law/09/2010-11
Kolkata - 700 001 Dated : 26.03.2011

TO ALL BRANCHES AND OFFICES IN INDIAN UNION :

Sub : Examination of title deeds of immovable property for the

purposes of creation of mortgage/security in favour of the Bank.

Our Department has been issuing various guidelines as well as circulars on the
subject of taking necessary steps for keeping the banks interest safeguarded while
creating security over immovable property. The detailed guidelines have been
contained in the Manual of Instructions Volume-6, Part-B, Chapter-12.
With a view to consolidate the guidelines/check-points advised to the
branches from time to time by our Department with regard to the examination of title
deeds of immovable properties for the purposes of creation of mortgage/security,
the detailed guidelines/check-points are being enumerated in this circular. It is clarified
that the guidelines are in addition to the guidelines given in the Manual of Instructions
referred to above. However, wherever any amendment is made vide this circular,
the same would prevail.
For the purposes of creation of security over the immovable property by way of
mortgage, the ownership, marketable and clear title of the property is determined by
way of examination of title deeds, searches made by the advocate from the relevant
records so as to confirm ownership and to ascertain encumbrances, if any.

Letter to Advocate

The obtaining of property and authenticated report of the advocate is one of the
important factors for keeping the banks interest safe. It is to be ensured that while
requesting the advocate for conducting the necessary searches and submitting the
report, letter should be issued as per Annexure-A to this circular. It is to be ensured
that the said letter is to be delivered to the advocate by the bank directly and not
through borrower/guarantor/party in any case. Wherever required, the necessary
amendments may be made in the said Annexure-A with regard to the requisite
requirements of the bank. The name of advocate to whom the matter is entrusted,
should be kept confidential (especially from the customer concerned) so as to
obviate the chances of influencing the Advocate.
Further, the payment of fees to the Advocate for conducting the search should be
through Bank and not directly by the loan-applicant/owner of the property.

Lawyers Report on Title

After the examination of the title deeds in original, the report of the advocate should
be unambiguous and in clear terms. The specimen format of the advocates report
is enclosed as Annexure-B to the circular. It is pointed out that the advocate while
examining the matter and while submitting the report must keep in view the require-
ments as stated in the Manual of Instructions, referred to above.

Verification of Title Deeds by Bank

There have been instances of fraud wherever the fake title deeds have been
submitted to the bank thereby jeopardizing the banks interest for the purposes of
obviating the risk of such fraud being committed on the bank, the banks advocates
engaged for examining and searching the title deed of the mortgagor or the owner
must be required to obtain certified copy of the said title deeds from the Office
of Sub-Registrar and submit the same along with their title verification and non-
encumbrance report to the bank. Alternatively, the bank may, of its own, obtain the
aforesaid certified copies of title deeds for the purposes of verification. The concerned
branch officials will be required to compare and scrutinize both the original as well as
certified copy of title deeds before creating the equitable mortgage as per the
verification schedule enclosed as Annexure-C to this circular. It is pertinent that such
verification must be carried out for all loans/credit facilities of Rs. 5 lacs and above. In
other cases also, verification may be carried out, if required.

It is pointed out that the numbers and other particulars, as contained in the certified
copy, should tally with those appearing on the original title deed. It is advised that in
case any particulars in the above referred verification-schedule do not tally, then the
matter should be immediately taken up with the Advocate/Borrower and investigated
in detail. The certified copy of title deed, as well as original title deed, along with
comparison chart, duly signed by Credit in Charge as well as Branch Manager should
be kept with the loan documents and relative entry should be made in the security
ledger as well.

Affidavit of owners/Guarantor/Mortgagor

At the time of creation of mortgage, an affidavit should be obtained from the owners/
mortgagor of the property as per the format enclosed as Annexure-D.

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General Precautions
a) Strict adherence to KYC norms.
b) Keeping site inspection reports along with loan documents.
c) The empanelled lawyer has to examine original title deeds to give his opinion.
d) Bank should directly deal with the lawyer/valuer.
e) Physical verification of the mortgaged property is to be done before sanction/
disbursement of loan. The verification of property as well as its valuation
should be done as per the extant guidelines of the Bank.
f) Payment should be made to the builders/promoters i.e. vendors directly.
g) Genuineness of stamp papers have to be ascertained.
h) In states where equitable mortgages are to be registered branches
should ensure for such registration.
i) Where there are more than one housing loan applications for purchase of flats
from the same builder the Search Report/Lawyers Opinion as far as possible
should be obtained from different lawyers by rotation. Wherever projects are
already approved and financed by the Bank, this will not be required.
j) Branch should forward the documents to Banks empanelled lawyer for
non-encumbrance certificate and detailed report on title under cover of a letter
indicating the terms of reference, the specimen of which is enclosed as
Annexure-A.
k) The lawyer should enclose the non-encumbrance certificate obtained from Sub-
Registrar along with his Search Report. The receipt indicating payment of fees
for obtaining the non-encumbrance certificate should also be attached to the
report by the lawyer. Fees to the lawyer should be paid by the branch directly.
l) Banks structured format in which the Lawyer is required to furnish search
report has been suitably modified (enclosed as Annexure-B) requiring him to
certify that he has examined the original title deeds and verified the genuine-
ness of the same from the concerned office of the Sub-Registrar/Registration
Authority concerned. If any Advocate does not furnish such certificate his
name should be removed from the panel.
m) An affidavit (enclosed as Annexure-D) is to be obtained from the owner(s) of the
property. Exceptions should be referred to Regional Head for approval.
n) Due diligence should be carried out on builders of the property to be financed
through their bankers and other builders of repute in the neighborhood following
KYC guidelines. Due diligence to be carried out as per the Banks guidelines.

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o) All copies of documents other than Title Deeds submitted by the borrower and
guarantor must be scrutinized and compared with the original documents before
acceptance.
p) The valuer should indicate the date and time of his visit to the flat/plot/property
and enclose photographs of the property also mentioning landmarks nearby
in his valuation Report.
q) Branches should collect the list of names of stamp vendors from the Offices
of the concerned Sub-Registrars and keep such list on records and verify the
name appearing on the stamp papers relating to the title deeds and Power of
Attorney, if any. Regional Offices should help the branches in this.
r) Branches may, wherever considered necessary by them, insist upon opening of
bank accounts as per KYC norms [with the photograph/introduction, confirmation
of address through Registered Letter etc.] by owners of properties, who offered
the same as collateral security for loans given to third parties.
s) Zonal Offices should collect information from the branches of our bank about
names of builders and developers selling same properties to more than one buyer
and pass on the same to IBA Local Chapter for bringing it to the notice of other
banks.
t) Zonal Offices should also furnish the names of valuers who overvalue the
properties and lawyers who have belied our trust by furnishing wrong report on
title to IBA Local Chapter for taking appropriate action for their professional
misconduct. This is in addition to delisting the names of such valuers and
lawyers from Banks panel.

Preventive Measures
Keeping in view the various instances of frauds with respect to the ownership over
the property as well as fake documents it is necessary that due care should be taken
while accepting the immovable property as security and for this purpose the guidelines
are contained in the Manual of Instruction as well as the Banks guidelines issued
from time to time through loan policy document and circular should be closely followed.
It is utmost necessary and advisable that while examining the documents of title or
while accepting the documents of title in respect of the immovable property the bank
officer must examine them and must not rely upon advocates opinion only.
One of the modus operandi for duping the bank by way of fabricating the fake title
deeds and making them look like old and genuine documents, the coloured photo
copies or the fabricated sale deeds are applied with cow-dung mixed with water and

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then dried up so as to make them appear as old documents. In few cases, financial
consultants closely involved in the business of the branch recommend and arrange
these large credit facilities for various borrowers against the collateral securities of
properties and documents which are otherwise forged/fake.

At times the security offered is vacant plot and since there is no occupant thus it
becomes imperative on the part of the bank officials to enquire about the ownership
from the neighbors and other residents of the locality/area.

Branches should ensure that the banks advocate/solicitor have certified that the
title deeds are original and not duplicate or fake.

The report of the advocate as well as affidavit as submitted by the owner of the
property should also be examined by the branch official very minutely so that there is
no scope for the maker or executant of the said certificate or affidavit to wriggle out
from their responsibility on the basis of some ambiguity in language in the said
certificate or affidavit.

Branches may wherever considered necessary by them insist on opening of bank

account(s) (with photograph, introduction, confirmation of address with registered
letter, etc.) by owners of properties who offered the same as collateral securities
against the loan given to third parties.

It is advisable to communicate with the owners of the property through Registered

Letter to confirm the proof of residence and their freewill to offer the property as
primary/collateral security.

Creation of Equitable Mortgage by deposit of Title Deeds (EMTD)

For the purposes of creating a charge over immovable property the borrower/guarantor
is to create mortgage over the property in banks favour. Amongst other types of
mortgages the creation of equitable mortgage by the deposit of title deeds is the
most popular way of mortgage in the banking environment as the same requires
minimum or no expenditure. The detailed guidelines for creation of valid equitable
mortgage i.e. the mortgage by deposit of title deeds are given in detail in banks Manual
of Instructions Volume-VI, Part-B, Chapter-12. The said guidelines are to be strictly
followed and complied with. The procedure for extending the charge in case of increase
in limits or by taking additional title deeds with or without increase in limits is fully
described in the aforesaid Manual of Instructions.

The title deeds comprising the immovable property must be deposited personally by
the owner(s) or by his/their duly authorised agent. The authority should be in writing, as

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per format given in Annexure-II to Chapter-12 of Part-B of Volume-VI of Banks
Manual of Instructions.

A plan of the property signed by the mortgagor should also be obtained.

It is pertinent to note that an equitable mortgage can be created only at those

branches which are situated in a place which have been notified either under the Transfer
of Property Act or by the State Governments for the purpose under section 58(f) of
the said Act.

Zonal Offices should maintain a list of the places notified from time to time and
branches should collect the same from their respective Zonal Offices.

The branches situated at places which are not covered by notification under Section
58(f) should arrange for deposit of title deeds by mortgagors at those branches
which are situated within the notified places and advances should be made only after
obtaining a certificate from branch concerned about the deposit of title deeds.

Entries to be made by the Branch

When the title deeds have been deposited with and received by the branch, proper
entry relating to the deposit as per Anneuxre-III, IV, V (whichever is applicable in the
case) of Chapter-12 of Part-B of Volume-VI of Banks Manual of Instructions should
be made in the Equitable Mortgage Register to be maintained by the branch for the
purpose.

In no case the mortgagor should not be made to sign the endorsement in the
Equitable Mortgage Register.

The Branch should ensure that a letter from the person(s) creating the mortgage is
obtained a day or two after the deposit of title deeds merely stating the facts of the
deposit for the purpose of creating a security. For this purpose, the draft as per
Annexure-VI Chapter-12 of Part-B of Volume-VI of Banks Manual of Instructions should
be used. In no case letter of any sort should be taken on the day when the title deeds
are deposited.

It is clarified that any writing taken from the mortgagor while creating the mortgage
will require registration as well as stamp duty. Accordingly, it is to be ensured that
mortgagor is not made to sign in the equitable mortgage register. No letter is to be
taken on the date of creation of mortgage. Further it is necessary to obtain letter from
one or two days after the deposit of title deeds merely confirming the deposit of title
deeds on a previous date for the purposes of creating the security by way of equitable
mortgage as per the draft provided in the Manual of Instructions stated above.

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 Branches/offices are advised to note the above carefully for compliance as a
means to protect Banks interest against fraudulent documents of title of immovable
properties which are offered as security to the bank and also to note to follow the
proper procedure for creation of valid equitable mortgage over the property.

For the purposes of creation of simple mortgage, also known as Registered

Mortgage, the guidelines as contained in the Manual of Instructions should be
followed.

Deputy General Manager

( Law )

Enclosures : Annexures A to D

WE SHALL MAKE UCO A TOP CLASS BANK

CLARION PRINTING
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 ANNEXURE - A

To

Shri .........................................................
Advocate
...............................................................

...............................................................

Dear Sir,

Sub : Non-Encumbrance Certificate & detailed report on title

Shri H/W/S/o
presently residing at
under P.S. in the district of
has approached our Bank for credit facility. He has offered the following property(ies) as
security against the credit facility sought :

Schedule of Property

Area Premises No. & Address

situated in Dag No.
Khatian No. J.L. No. P.S.
within Sub-Registrar Office of Dist
.
The following documents in original are enclosed.
1.
2.
3.
4.

You are requested to let us have your considered opinion as to the valid and
marketable titles to the property and non-encumbrance certificate as per the enclosed
format on you letter-head. The fees as prescribed by the Bank shall be paid by us to you.

We trust you will make search in the relevant records of the following offices :
1. Office of the Registrar of Assurance/District Registrar/Sub-registrar
2. Municipal Office/Panchayat Office
3. Revenue Office
4. Court having jurisdiction over the locality where the property is situated
5. Registrar of Companies (in case the property belongs to a limited company)
Contd.
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 ANNEXURE - A (Contd.)

Please enclose evidence for having visited such offices for making searches in their
records with regard to this said property along with certified copy of Index-II.
You are requested to confirm the genuineness of the title deed.

We also wish to point out that any wrong reporting or suppression of facts from the
Bank may lead to such action as deemed appropriate by the Bank.

Thanking you,

Yours faithfully,

Manager/Senior Manager/Chief Manager

(Branch should obtain acknowledgement from the lawyer and keep it on record)

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 ANNEXURE - B

Non Encumbrances Certificate & Detailed Report on Title

Ref : An area of land admeasuring Cottahs

Chattaks sq. ft. dec. etc.
approx. Situated in Dag No. Khatian No. J.L.
No. At P.O.
P.S. within Sub-Registrars Office of
Dist or Premises No. & Address
..
Present owner of the said plot :

Shri/Smt.
I have caused necessary searches in the Sub-Registry Office at
for the period from to and
in the Dist. Registry Office at for the period
from to from Records, JLRO/
MUNICIPAL Mutation and all other relevant documents in respect of the aforesaid
property. My report is as follows.

[ NOTE FOR THE ADVOCATE (Not to be typed) ]

(The Advocate should state here after examining all prior title deeds relating to the
property as to how the ownership devolved from time to time on the present owners.
Changes of ownership which might have taken place during the period by way of transfer/
inheritance should be mentioned along with the relevant names, references of the
registered deed)

The said Shri/Smt. after

purchasing the aforesaid property from on
vide Deed No. at a
consideration value of Rs. became the absolute owner of the
aforesaid mentioned area of cottahs chattaks
sq. ft dec. etc.
and got his/her/their name/duly mutated in the local JLRO office and Municipal Office
and paid the relevant taxes upto date. I hereby certify that the above mentioned land of
Shri/Smt. is free from all sorts of
encumbrances, charges, liabilities, liens, lispendens and attachment of any kind what-
soever and the said property is absolutely clear, free and marketable.

It is also hereby certified that the above mentioned land is not affected by any restriction
of Urban Land (Ceiling & Regulation) Act, 1976 and the same is not under any claim of
CMDA and CIT and it is fit for equitable mortgage. The receipts for the relevant searches

10 Contd.
 ANNEXURE - B (Contd.)

are enclosed hereto.

It is further certified that I have verified from the Sub-Registrars Office about
the genuineness of the title deed(s) examined by me and that the same is (are)
original and not duplicate or fake.

Signature of the Advocate

Note : To be submitted on advocates letter-head

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 ANNEXURE - C

Sl. Particulars Document Original Certified copy

No. submitted obtained from Sub-
to the bank by Registrars Office
client by the Bank

1. Document No.
2. Document Date
3 Type of Document
A) Book No.
B) Volume
C) Pages
4 Vendor(s)
A) Name
B) Language of signature
5 Purchaser
A) Name
B) Language of signature
6 Witness Particular (last page)

7 Witness particular identifying

the vendors/purchasers
(1st page reverse)
8 Consideration
9 Schedule of the property
10 Registration date and time
11 Registration fees paid
12 No. of stamp papers
13 Stamp details
A) Stamp value
B) Stamp paper purchaser name
C) Serial numbers
D) Stamp vendor
14 Signature Comparison of
Sub-registrars

Contd.
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 ANNEXURE - C (Contd.)
Sl. Particulars Document Original Certified copy
No. submitted obtained from Sub-
to the bank by Registrars Office
client by the Bank

15 Form 1A details

16 Document writers name

Note : It is pointed out that the numbers and other particulars, as contained in the certified
copy, should tally with those appearing on the original title deed. It is advised that in case
any particulars in the above chart do not tally, then the matter should be immediately taken
up with the Advocate/Borrower and investigated in detail. The certified copy of title
deed, as well as original title deed, along with comparison chart, duly signed by Credit in
Charge as well as Branch Manager should be kept with the loan documents and relative
entry should be made to the security ledger as well.

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 ANNEXURE - D

[ TO BE STAMPED AS AN AFFIDAVIT ]

Declaration by the Borrower/Mortgagor as an Affidavit

I/We all of Indian

inhabitant/s residing at do each
of us hereby solemnly and sincerely declare and say as follows :
1. I am the sole Proprietor of any carry on business in the name and form of
M/s. .......................................................................... at ..................................................
OR
We are the partners of any carry on business in the firm name and style of
M/s. .......................................................................... at ...................................................
OR
I along with my co-partners Shri ....................................................................................
carry on business in partnership in the firm name and style of M/s. ..........................
.................................................................................. at ...................................................
We are the partners of any carry on business in the firm name and style of
M/s. .......................................................................... at ...................................................
OR
I along with my co-partners Shri ....................................................................................
carry on business in partnership in the firm name and style of M/s. ..........................
.................................................................................. at ...................................................
Or

I am one of the Directors of M/s. ...................................................................................

having its Registered Office at .......................................................................................

[hereinafter referred as the company] and I am authorized by a resolution of the

Board of Directors dated the
day of to make this Declaration.
2. I/We/The Company am/are/is the sole and absolute owner/s of the pieces or
parcels of land or ground together with the building/s hired tenements and
premises standing thereon in the Registration, Sub-District of
and more particularly described in the First Schedule hereunder written
[herein-after referred to as the said property] and no other person has any
share, right, title or interest of any kind or nature whatsoever in the said property.

3. I/We say that I/We/the Company am/are/is entitled to deal with the said property
as I/We/the Company like/s, all encumbrances, claims or demands of any kind or
nature whatsoever. I/We further declare that no adverse claim of any kind exists
Contd.
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 ANNEXURE - D (Contd.)
against the said property. I/We say that I/We/the Company have/has not received
any notice of any intended or compulsory acquisition of the said property or any
notice and the said property is reserved for any particular purpose.

4. I/We further say that the only title deeds documents or writing to the said property
which are in my/our the companys possession are those specified and mentioned
in the Second Schedules hereunder, written and that I/We do not have to my/our/
the companys possession any other title deeds, documents or writings in respect
of the said property. I/We further declare and say that I/We/the Company have/has
not at any time deposited any of the title deeds relating to the said property with
any person or persons whomsoever as and by way of security, equitable mortgage
by deposit of title deeds, charge, lien or trust or in any manner whatsoever and
that the said property is free from all encumbrances, claims and demands.
No claim has ever been made against me/us/the company or against the said
property on the ground of any deposit of all or any of the title deeds, documents
or writings or any one or more of them as security or on any other ground
whatsoever.

5. I/We say that I/We/the Company am/are/is the absolute owner/s of the plants,
engine, boilers Machinery etc. which are affixed to and/or installed in/or the said
property [hereinafter referred to as the said Plant and Machinery] and that the said
Plant is free from any mortgage, charge or encumbrance of any kind or nature
whatsoever and I/We/the Company am/are/is entitled to deal with and/or to
dispose of the said plant in any manner I/We/the Company like/s.

6. I/We hereby declare that I/We/the Company have/has not executed any Power of
Attorney in favour of any person(s) or not authorized any person(s) in any manner
to deal with the properties mentioned hereinbelow. I/We declare that no such
Power of Attorney or authority shall be executed/given in future till the property
is held as security by Bank.

7. I/We say that there are no land revenue assessment, income tax, wealth tax,
expenditure tax or any other taxes, cesses, dues, assessments due and payable by
me/us/the Company for which the property and/or the said Plant and Machinery
is/are liable to be attached nor have I/We/the Company received any notice
under the payment of taxes Act, The Gift Tax Act or any other Act issued or pending
against me/us/the Company over the said property and/or the said plant.

8. I/We say that the property and/or the said plant is/are not subject matter of any
suit or legal proceedings nor any attachment before or after judgement nor has any
trust secret or otherwise, has been created or will be created in respect of the
said property and/or the said Plant and Machinery.

9. I/We further say that Bank has

given and has agreed to continue to give me/us/the Company various banking
Contd.
15
 ANNEXURE - D (Contd.)

and financial facilities to enable me/us/the Company to carry on my/our/the

Company business on the faith of the assurances which are hereby given viz., that
I/We/the Company will not sell, exchange, partition, mortgage, charge, encumber
lease, dispose of or deal with any of our properties and the said Plant and
Machinery in any manner whatsoever until such time all the liabilities under the
various facilities granted to me/us/the Company have been paid in full by me/us/
the Company and I/We/the Company have got the discharge confirmation in writing
by the Bank.

10. I/We hereby further declare and say that I/We/the Company have/has agreed
and undertake to indemnify and keep indemnified the Bank full and effectually
against all claim demands, charges and expenses whatsoever in respect of our
properties and the said Plant and Machinery.

11. I/We make this declaration solemnly, sincerely and conscientiously knowing the
same to be true and knowing that on the faith of the said declaration the Bank
has given and agreed to continue to give to us the said banking and financial
facilities.

Deponent

The First Schedule

[Description of the said property]

The Second Schedule

[List of title deeds, documents and writings]

Deponent

Solemnly affirmed and sworn by the aforesaid Shri/Smt.

This day of 200
before me.

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