Suppose you have taken a home loan of Rs. 50 lakh from a bank. While giving the loan, the bank kept your property documents as security and registered the MODT. Now, after 15 years, you have repaid the entire Rs. 50 lakh along with its interest. But the bank's mortgage is still showing in the property's registration records. In such a situation, MODT cancellation or mortgage release is required so that the bank's charge can be officially removed. And in today’s blog we will understand everything about a memorandum of deposit and how to cancel a memorandum of deposit.
What is a memorandum of deposit of the title deed?
The Memorandum of Deposit of Title Deed (MODT) Cancellation Deed is a legal document used to officially release the bank's mortgage on a property after repaying a home loan or loan against property. Example: Suppose you have taken a home loan of Rs. 50 lakh from a bank, and the bank has kept your property documents as security. Now, after 15 years, you have repaid the entire loan along with interest. But the bank's mortgage is still registered in the government property records. In such a situation, the bank can execute a MODT Cancellation Deed or Mortgage Release Deed, which is registered at the Sub-Registrar Office as required. This officially records that the bank's mortgage has been released and there is no longer any charge on the property for that loan. In one line: A MODT Cancellation Deed is a legal document used to remove the bank's registered mortgage on a property after loan repayment.
Why is MODT cancellation important?
To Remove the Bank's Mortgage: It helps officially remove the bank's registered charge on the property.
Ease of Selling the Property: When you sell the property, it will help you show clear property records to the buyer.
Ease of Getting a New Loan: If you want to take a loan on the same property in the future, it is important to release the old mortgage.
To Avoid Legal Problems: If the old mortgage remains in the property records, it may cause confusion or delays in future transactions.
To Update Property Records: This provides proper proof in government records that the bank's mortgage has been released.
When can you start the MODT cancellation process?
You can start the MODT cancellation process when your home loan or loan against property is fully repaid. When you clear all your EMIs and outstanding dues, the bank gives you a loan closure letter and NOC. After this, you can request the bank to release the mortgage. If the MODT is registered and a cancellation deed is required, it can be registered at the Sub-Registrar Office. This officially removes the bank's old mortgage on the property.
Home loan closure procedure: The step before cancellation
A typical home loan closure procedure looks like
Step 1: Check the Outstanding Loan Amount
First, find out from the bank how much of your home loan amount, interest, and any charges are outstanding.
Step 2: Repay the Entire Loan
Now, pay all pending EMIs and outstanding amounts to the bank. If you are closing the loan early, get a foreclosure statement first.
Step 3: Submit a Loan Closure Request
After repaying the loan, request the bank to officially close the loan account and get closure confirmation.
Step 4: Get NOC and Loan Closure Letter
Collect the No Objection Certificate (NOC), No Dues Certificate, and Loan Closure Letter from the bank. These documents prove that you have fully repaid the loan.
Step 5: Collect Original Property Documents
Get your original Sale Deed, Title Deed, and other property documents back from the bank. Check that all documents are complete.
Step 6: Complete MODT Cancellation
If there is a registered mortgage on the property, get the mortgage released by the bank. If required, the MODT Cancellation Deed or Release Deed must be registered at the Sub-Registrar Office.
Step 7: Verify Property Records
Check that the bank's mortgage charge has been removed from the property's registration records and applicable CERSAI records.
Step 8: Check Credit Report
After some time, check your CIBIL report and confirm that the home loan status is showing as Closed.
How to cancel MODT: step-by-step process
Here are the complete steps to cancel the MODT step by step.
Step 1: Repay the Home Loan Completely
First, clear all your home loan EMIs, outstanding interest, and applicable charges so that no loan amount remains pending with the bank.
Step 2: Get the NOC and Loan Closure Letter from the Bank.
After repaying the loan, collect the No Objection Certificate (NOC), No Dues Certificate, and Loan Closure Letter from the bank. These documents confirm that your loan has been closed.
Step 3: Request MODT Cancellation
Now, request the bank to release the mortgage on the property. The bank will check whether the MODT was registered or a Notice of Intimation (NOI) was filed and explain the required process accordingly.
Step 4: Prepare the Cancellation Deed
If a registered cancellation or release deed is required, get the document prepared with the bank's help. It includes loan details, property information, and confirmation of the mortgage release.
Step 5: Register at the Sub-Registrar Office
If registration of the release deed is required, complete the formalities at the Sub-Registrar Office with the bank's authorized representative. You may also have to pay applicable stamp duty and registration charges.
Step 6: Collect Original Property Documents
Collect your original Sale Deed, Title Deed, and other property documents from the bank. Do not forget to carefully verify all the documents.
Step 7: Verify Property Records
Finally, check that the mortgage release is properly reflected in the property's registration records. Also, get confirmation of CERSAI charge satisfaction from the bank.
Documents required for MODT cancellation?
Original MODT Document:
No Objection Certificate (NOC)
Loan Closure Letter:
Property Documents:
Identity Proof:
MODT Cancellation Deed/Release Deed:
Bank Authorization Letter:
Witnesses' ID Proof:
Stamp Duty and Registration Fee Receipt
What are the common mistakes to avoid?
1. Ignoring MODT Cancellation After Loan Closure
Many people think that after repaying the home loan, all the work is completed. But if the mortgage is registered, its release should also be officially recorded.
2. Not Collecting NOC from the Bank
After repaying the loan, do not forget to collect the NOC, No Dues Certificate, or Loan Closure Letter from the bank. These documents are important proof of loan closure.
3. Not Verifying Original Property Documents
While collecting the original Sale Deed, Title Deed, and other property documents from the bank, check whether any document is missing or damaged.
4. Providing Incorrect Property Details
Incorrect property address, survey number, owner name, and loan details in the MODT Cancellation or Release Deed may cause problems during registration.
5. Signing the Cancellation Deed Without Checking
Before signing any release document, confirm that it contains the correct property details, mortgage registration details, and the bank's release confirmation.
FAQs
How long does MODT cancellation take?
The MODT Cancellation process can take from a few days to a few weeks, depending on the bank, documents, and Sub-Registrar Office formalities.
Can I cancel the MODT without the lender's help?
Generally, no, you cannot complete MODT cancellation without the help of the lender (bank or NBFC). Because the mortgage on the property is registered in favor of the bank, the bank's NOC, release confirmation, and, if required, the signature of an authorized representative are needed to officially release it.
What happens if my lender loses the original documents?
If the documents are lost while in the bank's custody, it is the bank's responsibility to help obtain duplicate or certified copies and bear the cost.
What is MODT cancellation?
MODT cancellation is a legal process in which the bank's registered mortgage on a property is officially removed after fully repaying the home loan so that the bank's old charge no longer remains on the property.