Bank Alfalah

The Caring Bank

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Bank Alfalah LimitedHome Finance

Risks involved in Home Finance

Documentation

Bank Alfalah

The Caring BankRisk in documentation

Risks

Whether the bank has created legally enforceable security or not?

Security can be transferable and mortgage.

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Bank Alfalah

The Caring Bank

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Documentation

Facility Offer Letter (FOL)

Finance Agreement

Memorandum of Deposit of Title Deeds

Other Agreements / Undertaking (if advised by Legal Counsel)

Title documents along with ancillary documents

Bank Alfalah

The Caring Bank

Essential Elements of a Valid Contractual Agreement

Offer and Acceptance

Legal objective

Consideration

Mutual agreement / consent on terms and conditions

Legal competency

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Bank Alfalah

The Caring BankFacility Offer Letter

Reference of application for finance

Amount sanction

Facility / product Type

Security

Pricing

Terms and conditions

Acceptance

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Bank Alfalah

The Caring Bank

The duly executed document describes in detail the following

Agreement between bank and customer (s)

Consideration

Undertakings

Declarations

Terms & conditions

Breach of which gives right to them to go to the Court for remedy (ies)

Home Finance Agreement

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Bank Alfalah

The Caring Bank

Memorandum of Deposit of Title Deeds(MODTD)

The Document serves as an instrument to create Equitable Mortgage by the customer (s) with the

Bank.

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Bank Alfalah

The Caring BankMain Contents of the MODTD

Confirmation of depositing the title deed (s) with the Bank

Intentions of the customer to create equitable mortgage

Giving reason of the mortgage as to secure the financial obligations under the finance agreement

List of title document (s)

Specification of the property

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Bank Alfalah

The Caring Bank

Other Agreements / Undertaking (if advised by Legal Counsel)

Agreement to Create mortgage

Undertaking to provide the documents (Purchase cases)

Lady mortgagor iqrar nama

Mortgage deed

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Bank Alfalah

The Caring Bank

Main Features of a Duly Executed Document and risk

Stamp duty For Punjab / Baluchistan / KPK – Rs.100/= Sindh - depend on the amount of finance

Properly filled

Signature of customer (s) on all pages of Finance agreement and MODTD (as per CNIC or bank a/c)

Left Thumb Impressions for male and right Thumb Impression for female customer (s)

Complete witnesses (as per Qanoon-e-Shahadat)

Signing of finance agreement (on behalf of the Bank) by an authorized person of the bank

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Bank Alfalah

The Caring BankMortgage

Transfer of an interest

In specific immovable property

Purpose of securing the payment of mortgage money or performance of an obligation

Which may give rise to financial liability

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Bank Alfalah

The Caring BankMortgage (Cont.)

Mortgagor The property deposited by the owner is called transferor or

mortgagor

MortgageeThe property deposited in favor transferee (Bank) by the transferor is called a mortgagee

Mortgage MoneyThe principal money and mark-up of which payment is secured for the time being is called the mortgage money

Mortgage DeedThe instrument by which the transfer of mortgage is affected is called mortgage deed.

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Bank Alfalah

The Caring Bank

SBP REGULATIONS FOR HOUSING FINANCE

REGULATION R-18

The house financed by the bank/DFI shall be mortgaged in bank’s/DFI’s favour by way of equitable or registered mortgage.

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Bank Alfalah

The Caring BankEquitable Mortgage

A mortgage by deposit of title deed (s) is called equitable mortgage.

A title deed of a property is generally the document by which the property is acquired.

If a document other than a title deed is deposited no valid mortgage can be created.

Difference between a document of title and documents which are evidence of a title.

A Sale Deed in favor of the owner is a title deed A copy of Jamabandi/Fard (an entry in Jamabandi) may be an

evidence of title but it is not a document of title.

The title document to be deposited should be an original one.

No equitable mortgage can be created by deposit of copy of the title document.

Instrument – Memorandum of Deposit of Title Deeds (MODTD)

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Bank Alfalah

The Caring BankRegistered / legal Mortgage

Instrument – Mortgage Deed

The mortgagor binds himself personally to pay the mortgage money

Physical possession of property with the mortgagor

No power of sale out of court (only through court decree)

Effected through a registered document (even if the consideration is below Rs.100/-)

If the person does not have title deeds but he is owner of the property, he must create a mortgage by a registered instrument

Concessional rate of stamp duty and registration fee for home loan mortgages Maximum Rs.1,500/- stamp duty Maximum Rs.1,500/- registration fee

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Bank Alfalah

The Caring BankOther Kinds of Mortgages

Simple Mortgage:

The essentials of a simple mortgage are as:- The mortgagor undertakes personal liability.

No physical possession of the property is delivered to the mortgagee.

No power of sale out of the property given to the mortgagee, but a decree for the sale of mortgaged property must be obtained by the mortgagee.

It must be affected by a registered document even if the consideration is below Rs. 100.

In simple mortgage two remedies are open to mortgagee; A suit for a money decree. A suit for the sale of the mortgaged property.

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Bank Alfalah

The Caring BankOther Kinds of Mortgages (Cont.)

English Mortgage

The mortgagor binds himself to repay the mortgage money on certain date.

The property mortgaged is transferred absolutely to the mortgagee and is followed by delivery of possession.

Such absolute transfer is made subject to this condition that the mortgagee upon repayment of the mortgage money on the fixed date will re-convey the property to the mortgagor.

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Bank Alfalah

The Caring BankOther Kinds of Mortgages (Cont.)

Usufructuary mortgage Delivery of possession of the mortgaged property to the

mortgagee.

The mortgagee is to retain the possession until repayment of the money and to receive rents and profits.

The mortgage is redeemed when the amount due is personally paid or is discharged by rents and profits received.

No foreclosure and not allowed to sale

When the mortgage is for Rs. 100 /- or upwards , the instrument must be registered . If the mortgage is for below Rs. 100 /- the instrument may not be registered and the mortgage may be created by delivery of the property .

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Bank Alfalah

The Caring BankOther relevant concepts

Token Registered Mortgage

A combination of equitable and registered mortgage is called Token Registered Mortgage.

LienA right given to another (bank) by the owner of property (mortgagor) to secure a debt. A lien is an encumbrance on one person's property to secure a debt.

Transfer Deeds and Transfer of Allotment Letters

Where the mortgagor holds original “transfer deed” regarding the land, he may create a mortgage by mere “deposit” of the title deed with the mortgagee bank. And if he does not hold transfer deed, but he has the allotment rights of the property, he must create a mortgage by a registered instrument i.e. “registered mortgage deed”.

Local Commission for registered documents execution

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Bank Alfalah

The Caring BankProperty documents contents

Documents required in different areas and authorities with respect to nature of product

Transfer process & risks involve in different areas / authorities (in Home / Plot purchase cases)

Procedure of retrieval of title documents and permission to mortgage

Mortgage and Lien creation / intimation process in different areas and authorities

Agreement to sell required only in Home / Plot purchase cases

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Bank Alfalah

The Caring Bank

Properties having record of Revenue

Certified copy of oral mutation in favour of Customer.

Fresh Fard for loan duly countersigned by concerned Tehsildar. (In case of Home construction/renovation case)

Fresh Fard for sale duly countersigned by concerned Tehsildar. (In case of Home / plot purchase case)

Aks Shajra / Naqsha Mouqa

Approved Building Plan from the Town Planner.

Non Encumbrance Certificate from Sub Registrar

Sale deed to be executed favoring our customer (s) in case of home / plot purchase cases

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Bank Alfalah

The Caring Bank

Properties having Registered Sale Deeds/Gift Deeds / Transfer deeds etc

Original title document in favor of customer

Certified copy of title document from Sub Registrar

Original title documents of previous owner as a chain document

Certified copy of mutation in favour of customer

Fresh Fard for loan / sale duly countersigned by concerned Tehsildar

Non Encumbrance Certificate from Sub Registrar

Aks Shajra / Naqsha Mouqa

Approved Building Plan from the Town Planner

Fresh PT-1 along with Clearance Certificate (In case of excise and taxation property)

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Bank Alfalah

The Caring Bank

Properties having allotment letters of LDA/CDA/GDA.

Original transfer letter in favor of customer

All original transfer letters of previous owners as a chain documents

Original allotment letter in favor of first allottee as a chain document

Original Possession letter issued by the authority

Clearance certificate

NOC/Permission to mortgage from authority

Completion Certificates or extension in building period

Approved building plan from the authority.

LDA Placement letter (in case of dual record of LDA and Excise & Taxation)

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Bank Alfalah

The Caring BankProperties having allotment letters of DHA

Original transfer letter in favor of customer

Site Plan

No Demand Certificate (NDC) apply receipt

Approved building plan from the authority

Tax Clearance certificate from Cantonment Board.

NOC/Permission to mortgage from authority.

Completion Certificate

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Bank Alfalah

The Caring Bank

Properties having allotment letters of Cooperative Housing Societies etc.

Original transfer of allotment letter in favor of customer

All original transfer letters of previous owners as a chain documents (if Society has not cancelled the same in the record)

Original Possession letter issued by the Society

Approved building plan from the competent authority

Clearance certificate regarding the dues of Society

NOC/Permission to mortgage from Society

Copy of bye laws of the society

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Bank Alfalah

The Caring Bank

Lease Holds Rights (Property falls under the jurisdiction of Cantonment Board).

Original sale deed of lease hold rights in favor of customer

Certified copy of sale deed of lease hold rights

Original lease deed made between Government of Pakistan and lessee

Mutation letter along with original GLR (General Land Record)

Approved Building Plan from Cantonment Board

Completion Certificate

Permission to mortgage

Tax Clearance Certificate from Cantonment Board

NOC for sale from GHQ and/or MEO (if required)

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Bank Alfalah

The Caring Bank

Documents required under Army Officer’s Housing Scheme

Original allotment letter issued by Directorate of Army Officer’s Housing Scheme, GHQ Rawalpindi in favor of customer

Clearance Certificate for dues / NOC for sale from the authority

NOC/Permission to mortgage from the authority

Approved Building Plan from authority.

Completion Certificate.

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Bank Alfalah

The Caring Bank

Property documents required in Privately developed Housing Schemes

Transfer / allotment letter of privately developed housing societies is not a title document and should not be accepted as security

The developers who executed / will execute sale deed favoring our customer (s) can be accepted as security

In case the developer is a private limited company then search report analysis is required

Other documents are some about same as required in sale deed / revenue properties

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Bank Alfalah

The Caring BankDocuments required in BTF cases

Attested copies of documents / list of documents held by the bank.

Certified copy of title document from Sub Registrar

Approved Building Plan

No Objection Certificate regarding the outstanding liability

Redemption deed (in case of registered mortgage)

Cancellation of GPA (in case of GPA)

Fresh Fard for loan duly countersigned by concerned Tehsildar

NOC / permission to mortgages

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Bank Alfalah

The Caring Bank

Issues of Enforcement under the Banking law

Gift deed in purchase transaction

Property acquired/awarded by the Operation of Law

Property purchased through registered General Power of Attorney

Minor’s PropertyUnder the Guardian and Wards Act minor’s property cannot

be transferred without the permission of Guardian Court.

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Bank Alfalah

The Caring Bank

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End of Presentation

Thanks

MUHAMMAD WAQAR ASLAM

Manager Credit Administration – Mortgages

Bank Alfalah LimitedCredit Administration Centre

LDA Plaza Branch Lahore