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What Is Memorandum of Deposit of Title Deed?

What Is Memorandum of Deposit of Title Deed?

When applying for a home loan, you are handed over a checklist of documents. One of those documents is a MODT deed.

MODT stands for the Memorandum of Deposit of Title Deed. You can consider it one of the lesser-known hidden charges you pay to the state government when taking a loan. So, let’s understand what it is, the benefits of MODT, the features of MODT deed, and how to file a deed digitally.

What is MODT in Home Loan? Meaning, Features & Importance

Through a MODT deed, a borrower gives a printed undertaking. It states that they have deposited their property’s title document with the lender out of their free will. The title document deposit takes place in exchange for a loan.

A borrower must register the MODT deed at the state sub-registrar’s office. There is a nominal stamp duty of 0.10% to 0.20% of the total home loan amount, depending on which state you reside in. However, there is a caveat. The MODT deed’s stamp duty cannot exceed Rs. 25,000 regardless of the total loan amount. 

Earlier, the MODT undertaking was not mandatory in all states, but with recent regulations, almost all financial institutions ask for this document when disbursing the final loan instalment. Lenders make this document mandatory in the paperwork checklist as this acts as proof that they have the right to recover debts if a borrower keeps defaulting on their EMIs.

Benefits of MODT Deed in Home Loans and Why It Matters

Here are the top three benefits of MODT deed.

  • The registration for acquiring a MODT happens quickly.
  • Once you’ve repaid your loan, you can cancel the MODT easily.
  • You don’t need to repay any registration fee or retransfer the MODT once the property title is handed over to you.

MODT Charges in Home Loan: What You Should Know

After understanding “What is MODT in home loan?” it must be clear that MODT legally gives the lender the right to the property if you default.

To register the mortgage deed, you must pay MODT charges for home loan. These mortgage deed charges are usually calculated as a percentage of your loan amount.  MODT fees in home loan amounts to about 0.10% to 0.20% of the total home loan amount. These charges vary by state and lender, many borrowers in India end up paying a capped amount, often Rs. 25,000, even when the loan is large.

Since home loan MODT costs are usually an upfront and non-refundable cost in addition to interest and processing fees, it’s wise to budget for MODT charges in India.  


Also Read-  How to choose the right home loan tenure?

Legal Aspects of MODT: Registration and Stamp Duty in India

The Memorandum of Deposit of Title Deeds (MODT) plays a crucial role in legally securing a home loan. Beyond the procedural steps of filing the Notice of Intimation, borrowers must understand the MODT legal process to ensure their mortgage is enforceable. The legalities mainly revolve around MODT registration, MODT stamp duty, state-specific rules, and mandatory paperwork.

  • MODT Registration: Mandatory in several states to make the mortgage valid under property and registration laws. Its detailed process is given in another section in this article.
  • MODT Stamp Duty: Charged as a small percentage of the loan amount and governed by each State Stamp Act. Usually varies between %0.1 to 0.2% of the home loan amount.
  • MODT Registration Charges: Additional fees payable at the sub-registrar’s office for officially recording the MODT.
  • MODT Documentation: The document needs to clearly list the parties involved i.e. borrower, lender, and witnesses (with their full addresses) for legal clarity. The loan details should also be recorded as part of the security agreement. After execution, the MODT needs registration details like date of registration, registration number, name/address of the Sub-Registrar (or registering authority), to make the lien legally enforceable.

Why is MODT Important for Both Borrowers and Lenders?

MODT meaning refers to a legal document created when a borrower deposits property title deeds with a lender as security for a loan The reason why MODT is required is to make the mortgage valid, transparent and safe, giving both borrower and lender confidence throughout the loan tenure. A MODT legally records that the lender holds the property’s title deeds until the loan is repaid.

The importance of MODT comes from the security it creates in a home loan. This offers clear MODT benefits for both sides.

  • MODT for borrowers ensures smoother approval, better loan terms and protection of ownership.
  • MODT for lenders provides a legally enforceable charge on the property, reducing the risk of default.

How to File MODT Digitally: Step-by-Step Process

Before filing for MODT registration, electronically or physically, you must acquire the Notice of Intimation or NOI from your lender. This notice contains information regarding the disbursal of your home loan. You must submit it to the sub-registrar’s office. You must acquire and file the NOI within 30 days of the loan agreement’s date. 

Now, let’s look at how you can submit the NOI and other information through e-filing.

  • Since 2013, borrowers can register or e-file for MODT by uploading their NOI on the state Department of Registrations and Stamps’ website. Each state has its own e-filing portal.
  • Once you’re on your state’s webpage, locate all files needed for a MODT deed registration. Here, you may be required to fill out a digital form with space for personal and property details. You will also select the mode of stamp duty payment. Most states accept demand drafts, e-payments, or cash payments made at stipulated banks or on the web portal after printing a challan.
  • After this, submit the completed form with NOI at the respective sub-registrar’s office. Remember, the online procedure is essentially a way for e-filing the Notice of Intimation for MODT. You can also request your lending institution to file the MODT for you.

How to Register MODT Physically: Procedure & Charges

Here’s how you can file for MODT deed physically.

  • After acquiring the NOI, carry it to the sub-registrar’s office. Here, you will fill out a form and attach your NOI with it.
  • After submitting the form, NOI and any other document they may ask for, pay the stamp duty. You cannot pay the stamp duty directly to the officer at the sub-registrar’s office. You must go to a designated bank. They will verify your identity, and collect stamp duty.
  • Once you’ve paid the stamp duty in full, the bank officer will provide you with its stamped proof. Send this proof along with a photocopy of the notice to the sub-registrar’s office.
  • The sub-registrar then checks your complete application with proof of duty payment and accepts the hardcopy. 


How to Cancel MODT After Loan Repayment

If you want to cancel the Memorandum of Deposit of the Title Deed, follow the short process listed below.

  • Get a No Objection Certificate or NOC from your lender. It should carry your name, property details, loan account number and other relevant information. It should also state that you have cleared all the dues, and the lender has no claim on the property anymore.
  • Along with receiving the NOC, you must request a ‘Deed of Receipt’ from your lender. This is proof that they have cancelled the MODT from their end.
  • With both these documents, visit the sub-registrar’s office and request them to remove the lien from your property.

Also Read-   How To Cancel Your Memorandum For Deposit Of Title Deed (MODT)?  

Conclusion

Now that you know all the features of MODT deed, it’s time to apply for housing finance. Haven’t finalised a lender yet? Partner with Tata Capital to avail of some of the most competitive home loan interest rates at flexible repayment tenures and relaxed eligibility criteria.

Visit our website to know more!

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FAQs

What is the purpose of a Memorandum of deposit?

A Memorandum of Deposit ensures the lender has legal rights over the property's title deeds from the borrower as security until the home loan is fully repaid. It safeguards the lender's interests.

How to cancel the Memorandum of deposit of title deeds?

To cancel an MoD, you must repay the loan in full. The lender then issues a No Objection Certificate (NOC) stating that you have cleared all the dues. Along with the NOC, request a 'Deed of Receipt' as proof that the lender has cancelled the MODT. Visit the sub-registrar's office with the documents to cancel the lien from your property.

Is the mod charge refundable?

No, MoD charges are typically non-refundable as they cover the legal and administrative costs of creating and registering the documents.

What is the maximum amount of MoD charges?

MoD charges include the stamp duty charges, which vary by state but are usually 0.10% to 0.20% of the loan amount. Check your state's stamp duty fees for an exact calculation.

How does MODT protect lenders in case of loan default?

The MODT full form in banking stands for Memorandum of Deposit of Title Deeds, which creates a legal charge on the property. If a borrower defaults, the lender can enforce this security and recover dues without needing fresh possession rights, making recovery faster and legally stronger.

What documents are required for MODT registration?

MODT registration typically needs the loan agreement, property title papers, borrower KYC, sanction letter and the Notice of Intimation. These documents support the MODT, meaning legal document created when a borrower deposits property title deeds with a lender as security for a loan, and help authorities verify ownership, loan details and the lender’s security interest before approving registration.

Can the MODT deed be cancelled before full loan repayment?

No. The MODT full form in banking signifies a security document that stays active until the entire loan is cleared. Only after full repayment can the lender issue an NOC and allow formal cancellation of the registered Memorandum of Deposit of Title Deeds.

Is MODT applicable to other types of loans besides home loans?

Yes, MODT charges for home loan also apply to other mortgage-backed loans like LAP or construction finance. Wherever property is pledged as security, the answer to “What is MODT in Home Loan?” remains the same, a legal charge created through title-deed deposit.

How long does MODT registration take?

MODT registration usually takes a few days to a week, depending on state processing speed and document accuracy. Delays occur if required papers aren’t complete or if stamp duty and MODT charges aren’t paid correctly during filing.

What is the legal framework governing MODT in India?

The MODT full form (Memorandum of Deposit of Title Deeds) is governed by the Transfer of Property Act, Registration Act and respective State Stamp Acts. These laws define what is MODT and set rules for validity, charges and enforcement. 


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