Lease deed hold property

Querist : Anonymous (Querist) 05 June 2024 This query is : Resolved
Need some guidance

A is property holder has given land to B on lease for 10years(Register lease). Now B approach to our ban for credit facility of TL for construction of shed on lease property and WC both facilities under pmegp with CGTMSE coverages.

A is neither guarantor nor partner of firm.
Whether Equitable mortgage will be done on lease property or not.

Though assests created out of fund.
What happened if account turned NPA within 1year
whether Serfesai will apply.
No guarantee will be given by CGTMSE department because account turned NPA within lock-in.

What is openion EM of lease is applicable or not.

Please guide me.

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kavksatyanarayana (Expert) 05 June 2024
Mortgage cannot be given on leased property to the lessor or lessee.

T. Kalaiselvan, Advocate (Expert) 05 June 2024
If the lease deed do not authorise the lessee to mortgage the property for the purpose of loan, then the bank cannot get the property as collateral for the purpose of equitable mortgage.
An equitable mortgage is a legal arrangement where a borrower offers their property as security for a loan without transferring ownership to the lender. In this type of mortgage, the lender holds an equitable interest in the property, giving it the right to sell it if the borrower fails to repay the loan.
If the borrower do not own the property by a title deed, then how can the bank accept the property as a collateral security.
It is not advisable to advance any loan specifically in the mode as mentioned by you.

P. Venu (Expert) 05 June 2024
What is TL?
What is WC?
What is pmegp?
What is CGTMSE?
What is EM?
What do you mean by "A is neither guarantor nor partner of firm"?
What do you mean by "Though assests created out of fund."

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