When homes are purchased with the help of housing finance institutions, the bank keeps the original property documents – the sale deed/title deed – as collateral. These papers are handed back to the customer when the credit is repaid. The loan repayment period may typically last between 10 to 30 years, considering that home loans have a long tenure.
These documents are sent to the bank’s central repository which is mostly located in the same location as their head office, but are mostly run by a third party. Since a great deal of human intervention is required to send these documents and keep them safe, there remains scope for error.
The local branch’s officials collect the paper and send it by post to the central repository. Most banks in India have their head offices and central repositories in Mumbai. Since central repositories are mostly run by third parties, their location may change during the housing loan tenure.
Consequently, a great number of cases have come to light where banks have conceded to either misplacing the document or losing it.
Kolkata-based Amitesh Mazumder took a home loan of Rs 13.5 lakh from SBI. Once he repaid the amount and claimed the original property documents from the bank, he was informed that the bank was unable to trace the papers.
After years, Mazumder got some relief when the National Consumer Disputes Redressal Commission (NCDRC), in January 2022, directed the bank to pay Rs 5 lakh as compensation for losing the title deed.
In February of that year, the apex consumer forum slapped a penalty of Rs 1 lakh on ICICI Bank as a ‘stern advice of caution’ for losing Alwar-resident, Rajesh Khandelwal’s sale deed and directed it to pay the aggrieved party Rs 1 lakh as compensation.
The question arises, what should the customer do when the lender misplaces the sale deed or is not able to trace the documents?
Before we understand the procedure to procure a copy of the original sale deed, we must know what ought to be done immediately to find the deed in a less harrowing manner.
See also: What to do if your property documents are lost?
Bank loses property papers: What are the borrower’s rights?
The Reserve Bank of India (RBI) on September 13, 2023, issued a notification, saying banks must return property documents to a borrower and remove charges registered with any registry in 30 days after full settlement of a loan account. Failure to do so will result in the bank paying a penalty of Rs 5,000 per day. If the bank loses your original movable/immovable property documents, it will help you get duplicate/certified copies of the documents. In addition to paying Rs 5,000 for each day of delay in this case as well, the bank will also bear the associated costs.
Read the full coverage here.
Property transaction records to your rescue
First of all, there is no need to panic and lose sleep. The sub-registrar’s office, where the deed was registered, has a record of the transaction and will issue another copy. As long as you follow the right procedure and have all the documents to substantiate your claims of losing the property documents, there would be no problem in getting another copy of the original sale deed. In the consumer court, the bank would be held accountable for causing you this trouble and made to compensate.
Responsibility to find the deed lies with the bank
If the bank is unable to hand over your original property documents, the entire responsibility to restore them, including monetary implications, lies with the bank.
What do you need to do?
Understand the wording
The bank may use different words to describe the same problem — they will not be able to return your documents. In your own interest, watch the words they use. Has the sale deed been misplaced? Is the sale deed lost? Are the documents non-traceable? All these words have varying connotations and the choice of words would have varied legal impact on the customer.
A misplaced sale deed means that there is a scope to trace it while a lost sale deed means that the pursuit to find the document has ended without a positive result.
Only when the bank concedes the point that the sale deed is ‘lost’ or has become ‘non-traceable’, you can move the consumer court. This is not possible if the document is merely ‘misplaced’ and may be found.
Give a written complaint and get a written acknowledgement
As soon as you are informed about the misplacement or loss of the document, ask for an acknowledgement letter about the same with the bank’s seal and signature. Request the acknowledgement letter in writing.
Verbal commitments to restore lost documents should not be considered. If you move the consumer court to seek relief, this written acknowledgement would strengthen your case. Hence, the bank would be reluctant to issue a written acknowledgement letter. But you must insist.
Lodge an FIR
Using this acknowledgement letter, lodge a first information report (FIR) in the police station under whose jurisdiction the area falls.
Remember that this FIR is a proof-building exercise. You are legally obliged to lodge an FIR upon loss of documents granted by the government.
Submit a copy of this FIR to the bank to start the process of getting a copy of the sale deed from the sub-registrar’s office. At the same time, submit a copy of the FIR to your housing society to get a duplicate share certificate. Get a receipt from the bank after they receive these documents from you. From here, the bank would start its process.
What the bank will do?
Publish about the loss in three newspapers
The bank will publish about the document loss in three daily newspapers – two English dailies and one regional – providing all the details, and request the public to return it if they have, by any chance, found the documents. They typically provide a timeline between 15 days and a month within which the public can return the documents or raise any issue about the matter.
Issue an indemnity bond and approach the sub-registrar’s office
In case of no response from the public, the bank will create an indemnity bond, elaborating the details, along with the FIR copies, share certificate, newspapers prints, etc. The bank will approach the sub-registrar’s office with all these documents and the due charges and request duplicate copies of the sale deed. Following this, a copy of the sale deed would be issued.
What if the bank refuses to cooperate?
Banks may refuse your request for a written acknowledgement of the document loss. In such a situation, a borrower can move the consumer court. To present a strong case, keep all the documentary proof, such as the proof of the entire loan repayment and the bank’s failure to return the original sale documents. Since these days EMIs are deducted online, this would be easy to prove.
Remember that you must first approach the district consumer forum before moving the state and apex fora. This could be a time-consuming process, but certainly rewarding. The court would, in all likelihood, rule in favour of the consumer, evident from the above-mentioned case studies.
Latest update
NCDRC asks PNB to pay borrower Rs 50.65 lakh fine over loss of property papers
The National Consumer Dispute Redressal Commission (NCDRC) has directed United Bank of India (UBI), now Punjab National Bank (PNB), to pay a penalty of Rs 50.65 lakh over losing a borrower’s property documents. In 1983, one Ashok Kumar Garg, a former employee of UBI, took a home loan of Rs 67,690 from the bank’s Sufdarjang Development Area branch for the purchase of a property at New Delhi’s Tagore Nagar. Under the usual practice, the bank took the property papers at the time of sanctioning the loan.
Read full coverage here.
FAQs
The bank lost my property document and returned it later. Can I move the consumer court?
Yes, you can move the consumer court seeking compensation for your monetary and mental troubles.
Why do banks keep sale deeds?
Banks hold partial rights to your property till the loan is fully repaid. The property documents work as collateral in that situation.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
sunita.mishra@proptiger.com
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