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Indian Real Estate News : Mumbai
Points to note during sale of mortgaged property
Source: The Economic Times Nov 11, 2013
It is usually a challenge to sell a mortgaged property as all property documents are kept by the lender. The owner can sell the property only when the loan is paid back and the documents are released by the lender.

Though the seller may use photocopies of these documents to initiate a deal, the sale cannot be fully executed till such time the loan is outstanding with the bank. The seller may have to seek funds from the buyer to first pay off his loan and get the documents released.


The seller has to get the 'loan outstanding letter' and the list of property documents in its control from the lender. It also states the amount of loan outstanding.


The buyer pays an amount equivalent to the outstanding loan to the seller's housing loan account with a request for closure of loan.


The seller then receives the 'no due' letter from the lender, which states that the loan has been fully paid up and no payment is pending.


The lender will close the account and return the original documents usually within 10-15 working days of receiving the outstanding amount.


The buyer or seller may also be able to raise a bridge loan from their bank to pay the lender and get the documents released.

The seller and buyer may enter into a MoU indicating the obligations for payments and completion of all formalities.

If there is a transfer of loan from one borrower to another with the same lender, the process can get simplified.

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