Society FAQs

Q: Can a housing finance Company sell a property financed through legal mortgage without the intervention of Court? How is a legal mortgage created? What are the cost implications, stamp duty etc. What are the cost slabs for creating an equitable mortgage through Memorandum of Entry?
Mr. G. Dasgupta

Ans: A mortgage deed taken by the Housing Financial Company would normally contain the provision that it can sell the property in the event of default in payment. In such a case if the document does contain the power to sell, then it will be entitled to sell without the intimation of a court.

A legal mortgage would be created by a deed of mortgage or by deposit of title deeds. There could be a registered mortgage which would require stamp duty to be paid under Article 40 of the first Schedule to the Bombay Stamp Act, 1958. This states presently that the stamp duty would be 2% of the amount secured by such deed subject to a maximum of Rs.2/- lakhs. Such a document would normally be lodged for registration.

An alternative to a legal mortgage is an equitable mortgage or by deposit of title deeds. Article 40 of the first Schedule to the Bombay Stamp Act itself states “mortgage deed, not being an agreement relating to deposit of title deeds, bond or pledge or hypothecation (Article 6)”.

Article 6 provides that the stamp duty would be upto Rs.50, 000/-

Q: I am purchasing a flat on a second sale. Flat was constructed in 1996. Now I am buying the flat from the owner directly but the society has not been formed yet. Therefore I believe I will have to take No Objection Certificate (NOC) from the builder. Now as a buyer please guide me necessary precautions to be taken while buying the flat. Secondly with the flat I am getting the stilt parking area also belonging to the flat owner. Will I have to sign a separate agreement for the stilt parking or a copy of allotment of parking to the first owner is O.K. Will I have to register the buying of parking area also? Please guide.
Mrs. R. Baroacha

Ans: As you have rightly pointed out you should take NOC from the father and in addition, you should also take an NOC from the society for the transfer of the flat and the stilt parking space. However it would not be necessary to have two separate agreements of purchase you could have one single agreement for purchase of the flat as well as the stilt parking space.

Q: A builder had entered into two agreements with two different parties for the same flat. One party which had not paid any stamp duty or registration went to High Court and got an injunction. The other party paid stamp duty and got his document registered. How can this party get the stay vacated from the High Court? What action can be taken against the builder?
Mr. S. Sengupta
Ans: You can get the stay vacated from the High Court after presenting complete facts of the case and after the Honourable Court hears your arguments. In the event your document is registered and the document of the opponent is not so registered you would have a proper right on the premises than your opponent. Legal proceedings also can be adopted against the builder.

Q: How many flats can we purchase in one person’s name? After selling the flat is capital gains payable?
Mrs. B. Chaturvedi

Ans: You can purchase any number of flats. However if the flat is in a co-operative society the bye-laws provide that no member should be permitted as a member if he or his family members own another flat in the area of the operation of the society i.e. to say in the same city. However this restriction can be waived by the Managing Committee under the new model bye-laws. Capital gain arise out of the flat depending upon the price received and the year in which the flat was purchased etc.