Real Estate Property is one of the most sort-after investment options in India. The growth in disposable income, demographic changes such as the growing number of nuclear families, a rise in double income earning families, higher income levels within the urban population, the access and availability of bank finance (Loans) are driving the housing demand in India.
Furthermore, attractive tax advantages for housing loans make them ideal vehicles for tax planning.
So, to realize a long cherished dream of owning a property, many of us would like to take Mortgage Finance route. In most of the cases, financing happens through banks/lending institutions and in few cases, it can happen through the loans taken from relatives/friends and by keeping the property as a collateral.
(What is Mortgage? – a legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt.)
Let’s now consider a scenario – Mr Salman has acquired a property through a home loan. He bought this Flat when he was single. He is now a married person and would like to gift 50% ownership share in the property to his spouse. Is this possible? Can he gift a mortgaged property to his wife?
Another scenario can be – Mr Laloo has a big bungalow in his name. He has a mortgage loan on this property. He meets an untimely demise. Can his legal-heirs inherit this property which is mortgaged?
Given the high capital values of properties, most are bought with the help of home loans. So, what happens if you inherit/gift a property that has an outstanding home loan?
What does the Law say about gifting a Mortgaged property?
As per Section 128 of the Transfer of Property Act, a donor can gift a mortgaged property. However, the donee (receiver of the gift) is personally liable for all the debts and liabilities that are associated with that property.
When you take a home loan, your lender/banker creates a Mortgage Lien on the property. A mortgage lien is a form of conditional ownership of your property claimed by your home loan provider. A lien is the legal right of a creditor to sell the collateral property of a debtor who fails to meet the obligations of a loan contract.
So, ideally when you are gifting a mortgaged property, you have to intimate your Lender about your decision and take their consent. If you take a written consent from your lender then Gift becomes a valid one.
In case, you do not take consent from your lender then this may lead to a legal litigation. Gift Deed executed by you can then be revoked through court of law by your lender.
Kindly remember the below points;
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(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)
(Post first published on 26-June-2018)
This post was last modified on July 12, 2023 10:07 am
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I bought a house in auction from bank which was mortgaged registered in the name of bank in the year 2017. But the owner of the house has taken 60 lakhs from the tenant by entering into an unregistered agreement in the year 2023. Now how will the tenant get his money back and who is liable to pay him?.
The house was auctioned in the year 2023 August
Hi,
'Buyer should be aware'.
He/she should have done the due diligence or consulted the legal expert before entering in to the agreement.
As the mortgage has been registered, the exx-owner of the house should pay back the money to his/her tenant.
Kindly consult a lawyer in this regard.
I have taken a housing loan in my name and then property is in my father's name..now my father eants to gift deed the property to me .we have obtained noc from bank as well..how to calculate the stamp duty on gift deed and approximately how much can it cost
Dear Sir,
I have borrowed a home loan & the property is in my Father's name.
The original documents are with the bank.
Now I want to get the property in my name to claim tax exemption for the home loan which I am repaying.
But without original documents I an unable to register the property (gift deed) in my name .
How can I get it done. ?
Please suggest.
Thanks in advance.
Dear Ramesh,
You need to approach your banker and get NoC from them.
Is mortgage property against cc in bank is giftable or can we settled with family member?
Dear Bhavin,
As per Section 128 of the Transfer of Property Act, a donor can gift a mortgaged property. However, the donee (receiver of the gift) is personally liable for all the debts and liabilities that are associated with that property.
So, I believe it is possible to give with CC against the property. But, always advisable to let the banker/lender know about your intention to gift the property and then take the decision accordingly!
Me and my brothers are heirs to our deceased parents home. We are wanting to transfer title and deed to our niece. Can this be done?
Dear Lisa,
May I know who is she related?
Also, did your parents leave any written WILL?
There is a list of ‘Relatives’ from whom one can receive gift(s) and there is no need to pay any income tax.
Kindly go through below articles :
* Got a Gift? Find out, if it is Taxable or Tax-free?
* 5 ways of transferring your Immovable (or) Real Estate Property
* What is Mutation of Property? How to apply for Mutation of Property?
House is registered on the name of both husband and wife however, only one person pays the monthly loan to the bank. Can we transfer the house to one person only when the loan is still going on with the bank . What steps are we to take with the bank .Are we to register again or can one person gift etc...
Dear anita,
Yes, it is possible.
But, you may have to first get an NOC from your banker, make a Gift Deed (transfer) and then get the name removed from the loan account.
Hello, I have a property which is under use and mortgaged by my brother. I have given my consent and signed on the mortgaged documents. I want to now transfer the property in my brother's name. Can it be transferred to his name without paying the value of utilized funds. The original papers are of course with the bank. Please advise.
Dear Kamaldeep,
Are you a co-owner and co-borrower for this property/loan?
Yes, you can gift your share of ownership to him, but you may have to first inform the banker/lender, get the NoC and can proceed.
Related articles :
* 5 ways of transferring your Immovable (or) Real Estate Property
* Got a Gift? Find out, if it is Taxable or Tax-free?
Hi Sir,
We have borrowed a housing loan and the property is in my husband name. The original deed documents are currently with the bank in mortgage.
But now we want to transfer the loan or property to my husbands younger brother name.
Can it possible without sale deed or not?
Please let me know how it can be done.
Sir my dad is sick of cancer home is on loan if anything happens to him what can we do get rid of that home loan importantly my mom is the co owner pls tell a way to get rid from home loan
Hi Sir,
I have borrowed a housing loan and the property is in my mothers name. The original deed documents are currently with the bank in mortgage.
I am trying to get a gift deed for this property to claim tax exemption for the housing loan which I am repaying. But without original documents I an unable to register a gift deed.
But here your blog shows that we can get gift deed on mortgaged property too. In property register office, original documents are asked for gift deed registration.
Please let me know how it can be done.
Dear Priyalakshmi,
I believe that there is no need to show original documents in Sub-Registrar Office and that too for a Gift Deed, its not required.
Your mother can provide a copy of the Deed and can execute Gift deed by paying applicable charges at SRO.
You need to inform about this to your banker.
Related articles :
* Got a Gift? Find out, if it is Taxable or Tax-free?
* 5 ways of transferring your Immovable (or) Real Estate Property
Thank you for the information!
I will check again in the SRO.