Creation of second charge on immovable assets

If you desire to obtain 2nd Equitable Mortgage charge where the first charge by way of Equitable mortgage is with another Bank or Financial Institution, then, the requirement would be to make or constitute the first charge holder as your agent enabling the borrower to deposit or redeposit the title deeds with him for creation of second equitable mortgage. This can be done by simple letter addressed by the first charge holder to the second charge holder agreeing to act as the agent of second charge holder to accept deposit/redeposit of title deeds from the borrower on behalf of the second charge holder also. The mortgage confirmation letter of the borrower should clearly state the fact of deposit/redeposit of his documents of title with the first charge holder as security for the loan availed by the borrower from the second charge holder. Suitable recital should be recorded in the mortgage register of the 1st charge holder and copy duly certified by the first charge holder should be sent to the second charge holder. In the letter accepting agency by the 1st charge holder, the first charge holder should agree to accept deposit of the documents of title of the Borrower as the agent of second charge holder till the borrower discharges the liability of the second charge holder or till second charge holder permits in writing, release of the title deeds to the borrower.

I appreciate your reply, and with due respect, I want to explain my previous post.

If X bank sanctioned some facility to Y company for first charge in X Bank favour on  Y’s immovable property and after creation of charge  some Z company request for another facility from the X Bank, and Y ready and willing to offer mortgage his immovable properly in the form of Second Charge.

In this connection what documents / amendment are required to protect the banks interest.

thanks in advance.

Is Y a Public Limited company? Is it offering its corporate Guarantee to X Bank for Z company's Loan? Appropriate resolution under section 370(b) has to be obtained first by Y company. It can then extend second charge on its fixed assets in favour of loan granted by X Bank to Z  company by appropriate mortgage recital and confirmation letter. RoC registration : modification of charge, may be carried out. If creditor is Bank, then CERSAI registration may also be taken out.

For creation of second charge which will be available to creditor only after the liabilities of the first charge holder are paid / exhausted. The original title documents are always with the first charge holder hence a Registered Tri party agreement between the First Charge Holder, Second Charge Holder and the principal borrower has to be signed where in all terms and conditions are incorporated depending upon fact situation of each case.  

1. Consent letter from the first charge holder if it is fact that first charge is created,

2. Copies of the same set of documents of title which the mortgagor deposited with the First Charge Holder

However while accepting the second charge, it is advisable to verify that there are no encumbrances over the property or transfers (prior to creation of first charge or second charge) 

Agreed with narendra S.P

Originally posted by : Capt Gurvinder Singh
	For creation of second charge which will be available to creditor only after the liabilities of the first charge holder are paid / exhausted. The original title documents are always with the first charge holder hence a Registered Tri party agreement between the First Charge Holder, Second Charge Holder and the principal borrower has to be signed where in all terms and conditions are incorporated depending upon fact situation of each case.

Correct 

Originally posted by : narendra.s.p
	If you desire to obtain 2nd Equitable Mortgage charge where the first charge by way of Equitable mortgage is with another Bank or Financial Institution, then, the requirement would be to make or constitute the first charge holder as your agent enabling the borrower to deposit or redeposit the title deeds with him for creation of second equitable mortgage. This can be done by simple letter addressed by the first charge holder to the second charge holder agreeing to act as the agent of second charge holder to accept deposit/redeposit of title deeds from the borrower on behalf of the second charge holder also. The mortgage confirmation letter of the borrower should clearly state the fact of deposit/redeposit of his documents of title with the first charge holder as security for the loan availed by the borrower from the second charge holder. Suitable recital should be recorded in the mortgage register of the 1st charge holder and copy duly certified by the first charge holder should be sent to the second charge holder. In the letter accepting agency by the 1st charge holder, the first charge holder should agree to accept deposit of the documents of title of the Borrower as the agent of second charge holder till the borrower discharges the liability of the second charge holder or till second charge holder permits in writing, release of the title deeds to the borrower.

Absolutely Practical procedure .