MUMBAI: A couple of years ago, when Vaibhav Chapke, a 38-year old IT professional, was looking to buy a house, he zeroed in on one at Kandivli, Mumbai. "The property agent had shown me a few houses, but I liked this one because it was in an ideal location, was well-maintained and, more importantly, fit my budget." However, Chapke became suspicious and reluctant when the owner said he preferred the entire sale proceeds in cash, at one go. He decided to research and roped in a lawyer to help him out.
Soon, they realised that the owner did not have the original documents related to the property. "The broker told me that the seller had lost the documents some months ago while travelling. He assured me that it was completely safe to buy the house as the owner had the relevant photocopies," says Chapke. While he was agreeable, all the banks that he approached for a loan refused to give him one.
So, Chapke cancelled the deal. Though house owners are careful while storing property documents, they may still lose them. Misplacing original documents doesn't mean that you cannot sell or buy a property. While you can settle the deal in such a case, it will require additional paperwork and result in higher costs.
How to get duplicate documents
When you lose such important documents, the first step is to file a police complaint. Says Vinod Sampat, Mumbaibased real estate lawyer and president of the Cooperative Housing Societies Residents and Users Association: "The owner should file an FIR stating that the documents have been lost, misplaced or stolen, and get a copy of the complaint. If the house is mortgaged and the documents have been misplaced by the bank, the FIR will still have to be filed by you." Buyers should ask for a copy of the FIR from the seller.
Why buying suhc a house is risky
The owner will also have to place an advertisement, stating the loss of the documents, in an English daily newspaper, as well as a regional/vernacular one. "Even the buyer can place such an advertisement and, through it, call for any claimant to the property within 15 days of the advertisement being printed," says Ravi Goenka, a high court advocate at Goenka Law Associates.
Based on the police complaint, the owner can apply for a duplicate share certificate from the housing society, which can put up the application at its society meeting. If the application is approved, the housing society will issue a copy of the share certificate after charging a fee. Another document that owners and buyers need from the housing society is the no-objection certificate, without which no lender will be willing to provide a loan. So, ensure you get this too.
After this, the owner will need to get an undertaking on a stamp paper, stating that he has lost his original documents. "The undertaking should outline the details of the property, the text of advertisement published in the newspaper, and the police complaint number. It should also clearly state that all the details declared in the undertaking are true," adds Goenka. This document should then be attested, notarised and registered with a notary.
The next step is to get a duplicate of the original sale deed, which can be obtained from the registrar's office as it maintains the records of all transactions in its jurisdiction. "The owner will have to submit copies of the police complaint, share certificate from the housing society, the newspaper advertisement, and the undertaking, at the deputy registrar's office and pay the required charges. He will then be issued a copy of the sale deed," says Sampat.
Adds Goenka: "If it is an old property, it is also advisable to get a title report of the document to ascertain that the property is free of encumbrances. As the deputy registrar's office will have all the details of the property, you can easily get this document from there." He advises the hiring of a property surveyor or legal consultant to conduct due diligence for the property concerned.
If the buyer wants to take a loan
Though banks are typically wary of providing loans to buyers if the original property documents are missing, it isn't always true. Says Ram Sangapure, general manager, Central Bank of India: "The decision to lend money in such situations is decided on a case-to-case basis. Usually, the result will be more favourable if the borrower and seller have enjoyed a longterm relationship with the bank."
According to Sangapure, banks will conduct additional due diligence in the case of such properties. "The bank's legal team will first verify all the documents associated with the property, including the police complaint records. Then it will check whether all duplicate documents are genuine, not forgeries," he adds.
Of course, any charges that result due to additional paperwork or legwork will have to be borne by the borrower. The bank will also ask both the seller and buyer to give separate undertakings that if and when the original documents are found, they would be handed over to the bank. After this, it will offer the loan.