Category: Legal Scrutiny

Importance of Legal Scrutiny in Home Loan

All banks in the market which provide home loan to customer definitely do legal scrutiny of the property which they are mortgaging with the bank to avail the home loan. So what is legal scrutiny then? Legal scrutiny is a very simple process and important too which will be done by the property documents provided by the customer to the bank at the submission of home loan application. The legal documents comprise of Agreement of Sale, Past 15 Years registered link documents, Encumbrance certificate, Construction Approved Plan and Tax paid receipts. Banks gets all these documents scrutinized by a panel advocates and checks whether the seller has clear and marketable title over that property and cross check with the original documents and photocopies. Post satisfactory scrutiny of property documents bank will disburse the loan. It should not be taken as granted by customer if the bank clear the property legally and it is always suggested to cross check the legality of the property personally.

Is your property legally clear?

An investment in the real estate is a good idea as it gives great returns in coming future. Most of the people take properties or houses by availing the loans from the banks. Usually builders say that their property is approved from the banks and ask them to submit the documents in that bank. But one should verify the legality of the property before availing the loan from the bank.

We are giving here some simple steps to verify the legality of the property and the different types of cases and their solutions in the legal verification of the property, But before that please understand the type of documents.

Different types of documents in the property registration

Agreement of sale: This is the document which shows the details of the vendee or Executants the person who is selling the property and the vendee or Claimants the person who is buying the property and the details of the property completely.

Here both the parties will agree the laws of land and do the transaction of the sale of the property by entering into this agreement in the presence of witnesses.

Sale Deed: A document which gives the purchaser a complete power and possession of the property in all means. In this vendor is the person who sells the property and vendee is the person who purchases the property. The vendor will transfer all the rights and grants over the property to the vendee by receiving the sale consideration amount which they agreed upon. These documents should be registered in the sub registrar office by paying the stamp duty to the government.

General Power of Attorney (GPA): It’s a document in which a person transfers all the power and rights over a property to the other person. If the document is registered then the Vendee gets all rights to execute all the future transactions.

If the document is not registered then the vendee can’t execute the future transactions on his own, the vendor has to sign the document then only the document gets the validation, if the vendor won’t sign the document the registration or the transfer of property is not valid.

Agreement of Sale cum General Power of Attorney (AGPA): It’s a document in which the vendor agrees to sell the property to the vendee and transfers all his rights and powers over that property to the vendee. If the document is registered then the vendee gets all the rights to execute all the future transactions otherwise the vendor also should sign the documents of the future transactions.

Legal heir document: It’s a document which should be duly attested by the class I magistrate to get the validation. If the person on whom the property is registered gets expired with out writing any will then the document which shows the legal rights holders on that property is “Legal Heirs certificate”.

All the persons whose names are mentioned in the Legal heirs’ certificate should sign the documents then only that transaction is valid.

Encumbrance Certificate (EC): It’s a certificate which we get in the sub registrar over a property. It includes all the details of previous registrations and the details like date of registration, names of Executants and claimants, Document No.

All the above are the documents which we normally find in the property transaction.

Now if we look at the legality of the property please follow the below steps to verify.

  1. Please collect all the legal documents of the property for the last 20 years
  2. The first point of the legal verification of the property is “the present vendor should be the previous vendee”.


Document Registered In 2008           Document Registered in 2005

Vendor: P. Chandra Bose Ashok Kulkarni

Vendee: Anil Kumar                                             P. Chandra Bose

If you see the above example then the present vendor Anil Kumar has got the document registered from P.chandra Bose in 2008 , and P.chadra Bose has got it from Ashok Kulkarni in 2005 like so.

  1. Please read the sale deed completely to clarify your self that there are any mortgages created over that property by the vendor.
  2. Please cross check all the past registration details with the Encumbrance certificate.
  3. If any GPA’s or AGPA’s are there then please check they are registered or unregistered ones.
  4. Please check with the constructed area and the sanctioned area of the property by verifying them in the plan.
  5. Take Certified copies (CC) from the registration office and check whether all the documents are valid or not.
  6. Please cross check the plot no, house no and the boundaries in the document and the existing ones.
  7. Please collect property tax paid receipts and check whether they paid regularly or not.

And the last but not least is get a legal opinion from a legal advocate before going for a home loan to ensure a smooth loan processing.

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