Land as a Immovable Property

According to the Sheldon’s Practice and Law of Banking, Sheldon says that a legal term land is not meant only surface of soil but it include everything above and under. These include water or everything under the land though it may be some precious minerals or stones. Holden also said that the word Land give a broad meaning when used by the lawyer. The word is used in every day speech.

Definition of Immovable Property

Immovable Property is a property which is fixed with earth and you cannot move without destroying it. You can also say it is a real estate in other words. Immovable Property may be a land which is encompasses with some kind of building.

The most popular Immovable Property May for which bankers from all over the world are willing to advance the loan is the land or real estate.

Again Immovable property includes all the things attach to the land like building, benefit and things attaching to land everlastingly, it may be allowances for hereditary, rights to ways, attached lights and fisheries but Immovable property does not includes the following thing;

(a) Any adjusted timber to building, or crops or grass which are growing on the land, whether the land has been occupied or not by another party;

(b) The trees and their fruits whether they grown or expected to be grown the future;

(c) Machinery which is fixed on the land or attached but now it has been removed or separate from the land”

The above mentioned points has separated machinery and buildings from “Land”, and consequently the relative mortgage deed of such machinery needs an altogether different treatment by the bankers almost throughout all over the world.

Note:

It is very exciting to analyze that when the land on which such machinery attached is being mortgaged, the machinery will automatically stand mortgaged: but where the land is not being mortgaged, and only the machinery is being charged as security, hypothecation of the machinery will be sufficient.

Land as Security taken by the banks for advancing the loan:

Banks seek many advantages and disadvantages while taking the land as security for advancing the loan. The advantage may be that the value tends to increase with the passage of time. The location and purpose may be matters in this advantage. When the value of money decreases the value of property tends to rise. That’s why this is very reliable security for the bankers while advancing the loans.

The main advantage is its tendency to increase in value over a period of time, due to its location and purpose. While the value of money falls, the value of land rises, therefore, it forms a sound and reliable security.

On the other hand there are also few disadvantages of advancing the loan against land as Immovable property. The law for mortgage property is a little complicated. There are several issues like Inheritance or many other issues make difficulties for the recovery of outstanding issues against the clients.

However some other status like residential, commercial, industrial, or agricultural- may also affect the marketability of property. These kinds of status make the difficult to estimate the correct value because there can make the difference of prices.

Preliminary Enquiries for advancing the immoveable property

The banks are emphasizing on the advancing the loan. For this purpose the banks takes several preliminary enquiries before advancing the loan against the property, land, building or machinery.

While advancing the loan against the immoveable property the bank must take the preliminary investigation.

Investigation of Title of immoveable property:

The bank must be satisfied with the borrower’s ownership of that property which he is offering for undertaking for advancing the loan. The banker must satisfy himself that his borrower has a good title to the property

(1) Value of immoveable property:

The banker must satisfy himself that the property is suitable for his purpose, and that in case of forced sale he would not suffer any loss. As far as possible (he banker should inspect the property himself he must know the about the property whether it is s free-hold or lease-hold free-hold immoveable property or lease-hold immoveable property, must check the force sale value, and present value.

(2) Search for Prior Charges on immoveable property:

The bank must also seek whether there is any charge against the property or not i.e. the bankers will search for the office of the Collector and Sub-Registrar or the District Registrar to ensure that there exists no prior charge on the property, because any transfer of interest in an immovable property is subject to all previous mortgages and charges which had been registered. At least 20 years record will be preferable.

(3) A search certificate issued under the seal and signature of the registration authority should be obtained as evidence.

(4) Appropriate Form of Charge for immoveable property: When the banker is satisfied as to his borrower’s title, he should decide about the execution of mortgage. In case of a registered mortgage the deed should be properly drafted, it should be signed by the borrower who now becomes the mortgagor, and should he witnessed by two independent persons; and the deed should he properly stamped and registered.

(5) Registration of Charge on immoveable property: according to some Act if the borrower is a limited company, the mortgage should be registered with the Security and Exchange Commission. The lending banker is responsible to register the charge. This will help the banker to press his claim on the assets of the company if and when it goes into liquidation.