How to check whether a property is mortgaged or not?

Today there have been more instances of fraudulent real estate than ever before. Many cases have been registered where multiple loans have been sanctioned against the same property. How can you check whether the property you are going to buy has been mortgaged before?

 

Can a builder take a loan on already sold units of flats?

 No, the builder cannot mortgage flats already sold to homebuyers. According to law, the builder’s authority over a unit within the project is given up as soon as the buyer gets the property registered under his name at the sub-registrar’s office. After paying the registration and stamp duty charges to the government authorities and clearing all earlier dues, the homebuyer is the legal owner of the apartment .

When you are looking to buy a flats   anywhere in India it is easy now to find out whether the property is mortgaged with any bank or a housing finance company. The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) will help you do so. It is a new company incorporated by the department of financial services under the aegis of the ministry of finance.

What is the registry?

The CERSAI will act as a central registry and maintain records of all properties against which loans have been sanctioned. The registry will also maintain the records of all properties auctioned by asset reconstruction companies. CERSAI acts as a risk mitigation tool for the Banks / Housing Finance companies, FIs and public at large to prevent multiple financing against the same property.

How can you access

Online search is possible on the website of the registry to enable them to inspect the property records maintained by the Registry. The search can be made on the basis of both Asset Details like property registration number, address and Debtor’s details to get you information on its loan status by paying a small fee.

The limitations

In CERSAI, it has not become compulsory for lending institutions to provide details of the property against which there is already a loan running. This means the registry will showcase the status of properties on which loans have been taken recently. However, the government may make it mandatory for lending institutions to provide details of properties on loan for which a repayment tenor of at least one year is left.

Another problem is that CERSAI will not account for properties on which loan has been taken from a non-banking finance company. This will again limit the registry’s jurisdiction. Buyers of flats in India are often expected to give a lump sum even before the loan is sanctioned. In such cases, buyers can themselves run a check before settling for a deal.