Question:
When the land is mortgaged to the bank, after selling the land to someone else and paying the bank’s money, will the deed of the person to whom it was sold be cleared? A person is selling 2 flats of the house to repay the bank loan while the house is in the bank. Those who are buying are very scared now.
Answer:
When a property is mortgaged to a bank, the bank holds a legal interest in the property until the loan is paid off. If the property is sold to another party while it is still mortgaged, the buyer will need to ensure that the mortgage is settled before the sale is finalized.
To clear the title and ensure the buyer receives full ownership rights, the seller must pay off the loan with the bank and obtain a release of the mortgage. The deed of the property can only be transferred to the new buyer once the mortgage is discharged and the bank issues a no-objection certificate or release document.
Here are the steps to clear the situation:
- Verify Loan Repayment: Ensure the bank loan is paid off in full. This can be confirmed by obtaining a statement from the bank.
- Obtain No-Objection from the Bank: The seller should request a no-objection certificate or release of mortgage from the bank, which acknowledges that the debt has been paid.
- Transfer the Deed: Once the mortgage is cleared, the deed can be transferred to the buyer, and the buyer will have clear ownership of the property.