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Things to do if the bank loses the original sale deed of a property

A home loan borrower should immediately obtain an acknowledgment in writing from the bank that the sale deed has been lost. The letter should bear a seal and signature of the bank officials

A few weeks ago, Maharashtra State Consumer Disputes Redressal Commission had penalised a foreign bank for losing the original sale deed of a property owner in Mulund, who was unable to sell the apartment in the absence of the documents. The bank was made to pay Rs 1.15 lakh compensation to the property owner who had taken a loan of Rs 9 lakh and had even repaid it. The commission also ordered that the documents be handed over to the property owner within three months and that failure to do so would invite a monthly compensation of Rs 50,000.

Those seeking a home loan must be aware that while borrowing the amount from a bank, the property owner is required to deposit a collateral security to be able to secure against default in repayment. And one of the common form of security is to deposit the property title deed with the bank until the loan is repaid. What happens if the bank loses the title deed and is unable to return it after the loan is repaid?

What should a consumer do if he learns from the bank that the original sale deed is lost? Should he take it in writing from the bank that the document is lost or the bank's word is enough?

Sunil Tyagi of Zeus Law, a corporate commercial law firm, one of whose areas of specialisation is real estate transactional and litigation work, is of the view that in case a customer is informed by the bank that the original title document deposited by the customer with the bank has been lost, he should obtain an acknowledgement to the effect from the concerned bank in writing. The customer should also insist that the bank file a complaint with the police regarding the loss of original title documents and provide the copy of the same to the customer.