Legal search investigation PNB bank

1. Guidelines on Investigation Reports, Title
Verification of genuineness of title deeds, and
Other precautions
LAW DIVISION CIRCULAR NO. 8 & 15 / LAW / 2020
LKMC

2. Guidelines on Investigation Reports
• Obtaining of the “Title Deed Investigation and
Search Report” is not a mere formality.
• It is a measure to ensure identification of true
owner of the property, to ascertain
genuineness of the security and to ensure that
the mortgagor is entitled to create legal and valid
mortgage.
• Proper identification of the prospective mortgagor
is the first thing to be ensured to avoid
impersonation.
LKMC

3. GENERAL ASPECTS
•In the case of mortgages already created, if extended to secure fresh
facilities/ enhancements and even on renewal of existing limits, Non
Encumbrances Certificate/ Search Report needs to be obtained/ updated
since last mortgage.
•Property Declaration as given in ANNEXURE –II, be obtained from the owner
of the property, who is proposing to create mortgage and it be scrutinized
critically by the branch official before proceeding to accept such a property as
security.
•Original title deeds along with one set of clear photocopy (both sides) should
be submitted by the intending mortgagor to the Branch, to enable the branch to
obtain legal investigation of title and search report. Letter be written to the
advocate as per ANNEXURE –III and the advocate should be given photo
copies of the title deeds and other documents against receipt. The Original title
deed can be shown to the advocate. Copy of the letter be retained and record
be kept properly at the branch.

4. GENERAL ASPECTS
•The search report and certificate thereof should come from the advocate
directly to the Bank and in no case the advocate should handover the same to
the mortgagor/ party.
•Certified copy of the Title Deeds including the chain of documents be
obtained from the concerned Office of the Sub-Registrar/ Registrar of
Assurances, so as to verify the genuineness of the original title deeds
submitted to the Bank and the title/ ownership of the property. The Counsel
should certify in the Search Report that contents of the certified copy,
registration particulars and the photograph, if found affixed, of the intending
mortgagor, tally with that of the original title deeds. The Branch Official should
also cross-check the contents, registration particulars and the photograph on
the title deeds.

5. GENERAL ASPECTS
•Details of certified copies of the revenue records is to be obtained to
confirm that no dues are outstanding against the mortgagor. Tax
receipt regarding property tax etc. be also obtained from the proposed
mortgagor.
•“Legal Investigation of Title and Search Report” has to be given by the
advocate as per ANNEXURE-IV, ANNEXURE–V, ANNEXURE–VA and
ANNEXURE–VB, as the case may be.
• Time gap in giving of the legal opinion/NEC and actual creation of
EM should be avoided. Necessary affidavit be obtained from the
intending mortgagor to the effect that he has not alienated the property
in any manner whatsoever and that the property is free from any charge
etc. If the property is already charged and is a case of second
mortgage/pari passu charge etc., the factual position has to be stated.

6. GENERAL ASPECTS
•“Previously there was no Data Base where from record of Equitable
Mortgages (EMs) of IPs could be verified. With the establishment of
Central Registry under the provisions of SARFAESI Act, 2002, vide
Govt. of India notification dated 31.03.2011, particulars of all mortgages
created by deposit of title deeds (EMs) are required to be filed with
Central Registry (CERSAI). Now, Central Registry will have robust
data of IPs which can be searched by any lender or any person
desirous of dealing with the property by paying prescribed fee to
see whether IPs are already charged with any bank /financial
institution or not

7. GENERAL ASPECTS
Apart from obtaining Non Encumbrance Certificate/Search Report of the
property from the approved Advocate, search has to be made in the
data base of CERSAI. Accordingly, Incumbents are advised that:
•Prior to considering EM of any IP as security, search has to be made in
the Data Base of CERSAI to ascertain whether the IP is already
mortgaged or not.
•Search results from CERSAI including ―no asset matches the search
criteria (NIL Report) be kept with the title deeds.
•Charges for the search payable to CERSAI be recovered by the
branches from borrowers as advised vide L&A Circular no. …….Dated
…………………..

8. GENERAL ASPECTS
•To provide support and assistance to the users, CERSAI has set up
help desk at New Delhi for trouble shooting both in technical and
functional areas through telephone (Nos. 011 26176847, 011-26176855,
011- 26176856) & email (email ID helpdesk@cersai.org.in). To further
augment the support, CERSAI has launched a web based Helpdesk
system and the same can be accessed at
http://www.helpdesk.cersai.org.in through internet. The system
facilitates users to raise queries online and track their status.
•Further for any clarification/assistance pertaining to Central Registry,
branches may refer the matter to MIS Division, Head Office

9. GENERAL ASPECTS
•In case property proposed to be mortgaged with the bank
is situated in other states, the Circle Office within whose
jurisdiction the property is situated will provide the name of
panel advocate and the branch shall obtain the
investigation and title search report from each panel
advocate, recommended by Circle Office.
•Where the relevant guidelines provide for obtaining two
Investigation and Title Search Reports, such reports shall
be obtained from two different panel advocates and the
Branch head has to verify that both the said reports are
consistent with each other.

10. INVESTIGATION OF TITLE – SPECIFIC POINTS/
ASPECTS TO BE TAKEN CARE OF:
1. OWNERSHIP OF PROPERTY
2.PROPERTY
3.ENCUMBRANCES
4.CHAIN OF TITLE
5.IMPERSONATION BY MORTGAGOR
6.LEGAL OPINION
7. GENERAL

11. OWNERSHIP OF PROPERTY
•(a) i) Who is/ are the owners of the property which is to be
mortgaged?
•ii) Whether identity of the owner is established?
•iii) Whether the said owner is liable in the A/c as borrower or
guarantor?
•iv) If the owner only provides security without incurring
personal liability, whether proper link is established as to how
this person wants to give mortgage e.g. borrower‘s proposal,
letter from the person making an offer to create security alone.
•(b) Is the owner‘s title a valid, absolute, clear and marketable
one?

12. OWNERSHIP OF PROPERTY
(c) Whether the property is ancestral/ or under joint ownership or the
minor is having interest in the property?
(d) Whether the property has been mutated in the names of the person
offering mortgage in the Municipal Records/Local Authorities /Revenue
Authorities (in case of Agricultural Land)?
(e) Is/are the owner(s) fully competent to mortgage the property?
(f) If the property does not stand or the title deed relating to the property
is not in the name of the person offering the mortgage, how does the
person offering the mortgage derive title?
(g) Is the chain of the title to the property complete and in proper
sequence?

13. OWNERSHIP OF PROPERTY
(h) If the person offering the mortgage is not the owner of full share in
the property, the details of the share to which the person offering the
mortgage is entitled. If such share/ interest of the party is mortgaged,
what are the prospects of salability of such share to be mortgaged and
whether the property is freely accessible. Whether share has been
partitioned by metes and bounds? Whether share is Identifiable or
Demarcated at the spot? Whether consent of other co-owners is to be
obtained / is available.
(i) Whether the property to be mortgaged has been or proposed to be
acquired under Land Acquisition Act, 1894?
(j) Whether Urban Land Ceiling Act is applicable in the State where the
property is located?

14. PROPERTY
(a) Whether full (present) description of the property is given? If this
description varies with the description as given in the title deed,
whether proper explanation is available?
(b) Whether the property to be mortgaged is inspected by Bank
officials? Whether actual boundaries of the property tally with the
boundaries given in the Sale/ Conveyance Deed?
(c) Whether a certificate of the officials about the inspection done is
held on record?
(d) Whether the property is vacant plot or built up?
(e) Whether photograph of the property to be mortgaged is taken duly
authenticated by the person offering the mortgage?
(f) Who is in possession of the property? If any person other than the
person offering the mortgage is in possession of the property, result
of enquiries made as to the nature and extent of their interest.
Whether enquiry has been made from the neighbour regarding the
ownership and possession of the property?

15. PROPERTY
(g) Whether property is freehold or leasehold. If leasehold,
whether permission of the lessor is obtained? In case of
leasehold, what is the rate of sharing of unearned income
with lessor, in the event of sale of the property? Whether
copy of title deed favouring lessor (other than Govt.) is
made available to examine the validity of the lease?
Whether terms & conditions given in the lease deed have
been complied with? If any condition is violated, effect
thereof.
(h) Whether the property built up is as per plan duly
sanctioned by competent authority?

16. ENCUMBRANCES
(a) Has declaration relating to property been obtained from
the person offering the mortgage?
(b) Does the property suffer from any lien/ attachment from
any court or any other authority, subject matter of
dispute or litigation?
(c) Is the property free from encumbrances? If property
belongs to the Company, ROC records needs to be
searched.
(d) Whether upto-date outgoing in respect of the property
namely house tax, property tax, lease rent and ground
rent or any other dues / taxes have been paid and
receipts are held?

17. CHAIN OF TITLE
Examination of chain of title is one of the most crucial aspects in title
investigation. To what extent chain of title needs to be examined, will
depend upon facts of each matter, e.g. in case property has been
allotted by a development authority, chain of title can be examined from
the date development authority first allotted the property. Examination of
chain of title should cover the entire period from the date of last
transfer or 13 years whichever is longer.
Chain of title, once clearly established, would mitigate the incidence of
creation of mortgage by multiple title deeds/ coloured photo copy of the
document etc., because it may be very difficult for a proposed
mortgagor to have custody of all link deeds and other relevant records
as to previous titles.

18. IMPERSONATION BY MORTGAGOR
i. Branch may insist on opening of bank accounts (with photograph,
introduction, confirmation of address through registered letter
ensuring KYC compliance) by owners of property who offer the
same as collateral security against loans given to third parties.
ii. Branch should communicate with the owners of the property
through registered letter to confirm proof of residence and their
willingness to offer the security as collateral.
iii. Genuineness of E-stamps be verified through E-Stamping Site by
filling up mandatory fields i.e. Certificate No., Unique Doc.
Reference, purchased by, description of document, stamp duty
amount etc.

19. IMPERSONATION BY MORTGAGOR
However, in exceptional cases, If the person offering the
mortgage is not an account holder of the Bank and it is
decided not to insist upon for opening of account,
antecedents of the mortgagor be verified and photograph
duly attested be obtained and kept along with letter of
request showing the intention to create mortgage by deposit
of title deeds. Confirmation of address through registered
letter as advised hereinabove be got done invariably.
The copy of Income Tax Return, PAN Card, details of
bank accounts/ property tax records/ telephone bills etc
be obtained and verified.

20. LEGAL OPINION
(a) The search report should be obtained covering the entire period
from the date of last transfer or 13 years whichever is longer.
(b) Do the title deeds produced raise any doubt about its genuineness?
Do the registration particulars - number, date and page particulars
etc. as shown in the original title deed and contents thereof tally
with the information as stated in the records of registration office as
well as with certified copy of the title deed?
(c) Does the photograph of previous owner and of intending mortgagor
as affixed/ seen in the title deed tally with records of registration
office as well as with certified copy of the title deed?
(d) If any permission/sanction of lessor/court/other authority is required
in order to enable creation of the mortgage by the person offering
the mortgage. If so, whether the same have been obtained?

21. LEGAL OPINION
(e) Whether any other permission from any other authority/ income tax authority
or any other authority under any law, Rules or Regulations is required for
creating mortgage or any certificate is to be submitted to the Bank to show that
no dues are outstanding to Income Tax Department? If so, whether the same
has been obtained.
(f) If there are impediments in creation of mortgage, what are the legal
measures for overcoming the impediments?
(g) If the property relates to any flat/apartment in a Co-operative Housing
Society, whether the formalities to be fulfilled having regard to the byelaws,
Rules and Regulations of the Society are spelt out.
(h) Whether searches at the office of ROC, Courts, other offices like
Cooperative Societies, Development Authority, if required, are made?
(i) Whether balance sheets (in case of company) and other relevant documents
which may disclose encumbrances were examined?
(j) Whether any other procedure, like declaration to be made in respect of
agricultural property has to be complied with. If so, whether the details are
narrated?

22. GENERAL
(a) Whether the original title deeds are available?
(b) Whether Valuation Report from approved Valuer has
been obtained?
(c) Does the legal opinion regarding title show any
shortcomings?
(d) Whether, for the purpose of creation of the mortgage by
deposit of title deeds, the branch where the mortgage is
to be created is a place notified for the purpose under
Section 58 (f) of Transfer of Property Act?
(e) Whether any stamp duty is payable at the time of
creation of the mortgage by deposit of title deeds?

23. OTHER PRECAUTIONS
• Fresh search report of Immovable Property (IP) in respect of which
bank decides to initiate action under SARFAESI Act, 2002 or in respect
of which DRT has initiated proceeding to auction the property, is
required to be taken before initiation of SARFAESI action or before
putting the mortgaged property to auction irrespective of search report
obtained at the time of accepting an immovable property as security.
•Both the search reports (fresh and original search report which was obtained
at the time of mortgage) are required to be checked and compared to the
effect that they confer the title to the mortgagor. Branch Manager may also
get the legal audit done from the panel advocate before initiation of SARFAESI
action or initiation of auction proceeding by DRT
•Branch shall ensure that both the search reports are obtained from
different advocates, and are submitted on format prescribed by the
bank.
•In case of discrepancy, in the title deeds/ search reports, opinion of the
Law Officer posted in the CO/ ZO/ LCB/ELCB/HO, as the case may be,
is required to be sought.

24. THANKYOU