This time, we are not going to update you on any legal amendments or changes, but we are going to provide you with some steps that will help you when dealing with the bank in the event of your property documents being lost by them after loan closure.
Experiencing the loss of original property documents by the bank upon the closure of a home loan can be distressing. When applying for a Home Loan, borrowers submit all original property documents to the lender, who retains them until the loan is fully repaid. These documents are stored in a central repository, managed mostly by third-party entities, and may pass through several hands during the loan tenure, increasing the risk of misplacement.
The loss of critical documents like the sale agreement or sale deed can lead to numerous challenges when attempting to sell the property or obtain a loan against it. In some cases, the bank may not readily acknowledge their negligence in losing the documents, leaving the customer feeling distressed and vulnerable. To address this situation, property owners must take prompt and appropriate actions to minimize further damage and retrieve the lost documents. Both the borrower and the lender have their roles to play in the remedy process.
Here are the steps that a property owner should follow when faced with the loss of original property documents by the lender:
· Refrain from accepting any original document from the bank when there are doubts about its completeness or if some pages are missing. Decline the documents even if the lender assures you they will find the missing ones.
· Avoid signing any acknowledgment or undertaking stating that you have received the documents until you have thoroughly checked them.
· File a written complaint with the bank as soon as you discover the loss of the original documents. Describe in detail the lost document and request a complaint copy with the manager’s signature and bank seal.
· Register a police report or FIR, specifically mentioning that the bank has lost your original documents that were given as collateral.
· Submit a copy of the Police FIR to the bank and obtain an acknowledgment of its receipt.
· Submit a court affidavit to the bank, stating that the original property documents were lost by the bank.
· The bank will publish a public notice in two newspapers, one in English and one in the vernacular language of the state, stating the property details and acknowledging the loss of the original documents. The public has 15 days to file objections, if any.
· Obtain an indemnity bond from the bank, duly attested and notarized on stamp paper, with details of the property, Police FIR, and public notice published in the newspapers.
· Request a duplicate share certificate from the housing society by submitting a copy of the Police FIR and stating that the original property documents were lost by the bank.
· The bank will pay the necessary charges to obtain certified copies from the registrar’s office after completing the above processes.
· Acquire the latest Encumbrance Certificate from the registrar’s office after all the above steps are completed.
· File a complaint with the Banking Ombudsman. If you do not receive any response from them or are not satisfied with their resolution, you can consider approaching the consumer forum.
· If necessary, file a complaint in the consumer forum to claim compensation from the bank for their service failure. The compensation claimed can be equivalent to double the value of the property.
The entire process is the responsibility of the lender or bank, and they should cover all costs associated with obtaining the new documents. However, it is advisable for the property owner to keep copies of all legal documents involved in the procedure for reference.
However, in the event of non-support, the borrower has to take action to complete the entire procedure while keeping the safety of his or her property in mind. Post the procedure, provide the document copies to your society management to further avoid any kind of fraud by using the lost property documents.
In conclusion, in the event of misplaced original property documents by the bank, following the prescribed steps can help property owners mitigate the situation and retrieve the necessary documentation. Both borrowers and lenders should act responsibly to resolve the issue and protect the interests of the property owner. To safeguard your interests, keep copies of all legal documents involved in the procedure for future reference.
We will cover more aspects in our next issue, including the recommendations made by the Kanugo committee on this issue, the time frame for returning original documents by the bank after loan closure, the types of judgments consumer courts can provide in such cases, and the legal provisions concerning these situations.
