What if the Bank Loses My Original Sale Deed

When you find a Home Loan and complete the formalities, the bank asks you to deposit the original sale deed and other documents related to your property by creating an equitable mortgage in the bank’s favour. It is the responsibility of the bank to safeguard the document and return it to you when you close the loan. They also need the original sale deed in case they exercise the right of selling the property and adjusting your loan amount in case of default. Therefore, banks have to take greater care of the documents in their possession. All the Best Lenders for Home Loans follow this process.

In spite of all precautions, what happens if the bank loses your original sale deed?

One point is obvious. The bank is liable to pay you damages if it loses the sale deed or is unable to return the sale deed to you in spite of closing your loan account.

Recently, the Maharashtra State Consumer Disputes Redressal Commission had penalised a foreign bank for losing/misplacing the original sale deeds and other documents of a property owner in Mumbai. The Commission ordered the bank to pay a compensation of 1.15 Lakhs with the condition that the bank should hand over the documents of the property to the rightful owner within three weeks failing which the bank will have to pay  
50,000 as monthly compensation to the aggrieved property owner.

Remember, the law is in your favour. However, you have to follow the laid down procedure under the circumstances

• On settling the Home Loan account, the bank has to check whether there are any more accounts covered by the equitable mortgage.

• If there are none, the bank has to proceed to return the complete set of documents that you had deposited with them at the time of creating the equitable mortgage.

• The bank has to cancel the Memorandum of Deposit of Title Deeds that you had executed at the Sub-Registrar’s office.

• In case the bank has lost the documents including the original sale deed, they have to give it in writing under their seal and signature.

Many customers are unaware of this fact. They take the bank manager’s word for the Gospel Truth and resign to their fate. Never do that. The bank is under an obligation to commit in writing that they have lost the documents. You should also insist on the bank to file a complaint with the local Police Station and obtain a copy of the FIR.

• If the bank refuses to acknowledge the fact in writing, the customer has the right to register a written complaint with the bank mentioning the details of the documents submitted to the bank. Take an acknowledgement and send one copy of the complaint to the local head office of the bank requesting them to take further action.

• Lodging a complaint with the bank’s head office is the first recourse available to you. If the bank is unable to resolve the issue, you have the right to approach the Banking Ombudsman or the Consumer Court to seek Redressal.

• You should complain with the local Police Station and obtain the copy of the FIR. The next step is to advertise in the local newspapers, both in English and the vernacular language about the loss of the documents by the bank. Keep the copy of the Police FIR and the newspaper clippings as proof of your action in response to the report of the loss of the original sale deed and other documents.

Banks sometimes give a letter that they have misplaced the documents. Understand the difference between the words ‘misplaced’ and ‘lost’. When the bank states that they have misplaced the documents, they agree that the documents are still in their possession but have been wrongly placed, thus implying that they are recoverable. However, the word, ‘lost’ is the right one to use because it conveys that the documents are not inpossession of the bank.

You can approach the consumer court for seeking compensation for the loss of the original documents. You have to submit all details to the court. It includes the bank’s letter, their acknowledgement, list of documents, the loan account details, the copy of the FIR and so on. The consumer court has decided in the customer’s favour on several occasions in the past.

The Bank’s Liability

The Bank is liable to compensate the original owner of the property if they lose the original sale deed. The consumer court decides the extent of compensation on a case by case basis. The court also awards compensation for the mental agony you suffer because of the loss of the documents.

The Bank has to assist you in obtaining the certified true copies of the documents from the Sub-Registrar’s office. The bank has to bear the costs of acquiring the copies from the Sub Registrar’s office as well. Usually, you get these certified true copies on paying 500. You have the option of approaching your builder and obtain the duplicate copy of your sale deed from the builder.

Also Read: What is the Ideal LTV Ratio and How Does It Impact a Home Loan Borrower?

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