Requirement of share certificate for loan against property
Paresh Vaidya
(Querist) 26 February 2014
This query is : Resolved
I bought a house in re-sale from an existing owner of the house (and not the builder) in the year 2010. That time I took a home loan from Bank ‘A’. The original share certificate was given to Bank ‘A’ along with the original Sale Deed and other documents. The original share certificate was in the name of the seller and Bank ‘A’ accepted it. The share certificate did not bear the stamp of the society nor the seal, but carried the signatures of Chairman, Secretary and a Committee Member.
2 years later, in the year 2012,I transferred the home loan from Bank ‘A’ to Bank ‘B’. All the original documents were submitted to Bank ‘B’. Bank ‘B’ also accepted the share certificate – without my name and without the society stamp / seal.
Now one and a half years later, in the year 2014, I have again transferred the loan to Bank ‘C’. I applied for home loan as well as a top up loan (i.e. loan against property) from Bank ‘C’. Bank ‘C’ has already disbursed the home loan pending the original document submission (since this is a normal practice as the retrieval of original documents from previous bank takes time), but did not disburse the top up loan amount.
After I submitted the original documents to Bank ‘C’ and have been following up for the top up loan amount disbursement, now the Bank ‘C’ is insisting on two things: (1) stamp of the society on share certificate and (2) reason as to why even after three years, the society has not transferred the certificate in my name.
With respect to (2), I have obtained a letter from society in favour of Bank ‘C’ (which is in addition to the customary NOC which society has issued in respect of each loan – from Bank ‘A’, ‘B’ as well as ‘C’), stating that the transfer of share certificate is pending since the general body meeting of the society has not taken place (howsoever weird it may sound, this is THE TRUTH that no general body meeting has taken place), and as and when the meeting takes place for transacting the business related to the transfer, the same will be processed.
In fact, in all the NOCs also, society has mentioned that certificate is yet to be transferred in my name and as and when the same is done, the certificate will be directly sent to the respective bank.
With respect to (1), I find it a complete irrelevant demand by Bank ‘C’ for the following reasons:
a. Irrespective of the stamp, the certificate is not in my name and hence, the Bank ‘C’ has already got a letter (in addition to the NOC) acknowledging this fact; and
b. None of the earlier banks had insisted on the same.
I have heard that share certificate or no share certificate – does not impact the title to the property so long as I have a registered sale deed and I have been regular in paying my maintenance.
In view of the above case, I wish to know whether the Bank ‘C’ has a right to demand stamp on the share certificate. I also don’t know whether a normal rubber stamp will do or will it require a ‘seal’.
Kindly advise.
R.V.RAO
(Expert) 27 February 2014
bank C can dispense with society stamp, as done by bank A and B.
the title to the property is secured by regd.sale deed.
At best lack of society stamp can be a simple procedural lapse by the society.but the share cert.is any way accepted by all lenders.
write to society to directly address the bank C on the issue and let society undertake to affix seal soon after their meeting or whatever reasonable cause etc..
banks problem is audit of bank records when such things are pointed out.
if u r keen to get top up loan from bank C ,offer the bank any mutually acceptable collateral security temporarily till the issue of society stamp is sorted out.
ajay sethi
(Expert) 27 February 2014
bank can insist on flat being transferred in share certificate in the name of buyer . further it should bear society stamp .
bank will hand over share certificate to you and on completion of formalities Share certificate should be forwarded to bank
if for 3 years AGM has not been held then for such a society administrator should be appointed .
Rajendra K Goyal
(Expert) 27 February 2014
Bank C is right in asking share certificate in your name. Take up the matter with the society for an early transfer of share certificate in your name.
T. Kalaiselvan, Advocate
(Expert) 28 February 2014
Transfer certificate is another essential requirement for disbursement of loan which is almost a title deed. The society may inform the bank directly the reason for non issuance of the said certificate so that the bankers can manage the situation based on the said letter.
