Creation of Charge on Immovable Property in India

Here are some notes about the creation of charge on immovable property in India:

  • What is a charge? A charge is a security interest in immovable property that is created by an agreement between the owner of the property (the “chargor”) and the person who is granted the charge (the “chargee”).
  • What are the different types of charges? There are two main types of charges:
    • Simple mortgage: A simple mortgage is a charge that gives the chargee the right to sell the property if the chargor defaults on the loan.
    • Equitable mortgage: An equitable mortgage is a charge that does not give the chargee the right to sell the property, but gives the chargee the right to sue the chargor for the amount of the loan.
  • How is a charge created? A charge is created by an agreement between the chargor and the chargee, which is usually in the form of a deed. The deed must be registered with the Registrar of Assurances in the district where the property is located.
  • What are the benefits of creating a charge? There are several benefits to creating a charge on immovable property, including:
    • The chargee has a security interest in the property, which means that the chargee has priority over other creditors if the chargor defaults on the loan.
    • The charge can be used to secure a loan, which can help the chargor to obtain a better interest rate on the loan.
    • The charge can be used to provide security for a business transaction, such as a sale of goods on credit.
  • What are the risks of creating a charge? There are also some risks associated with creating a charge on immovable property, including:
    • If the chargor defaults on the loan, the chargee may be able to sell the property, which could result in the chargor losing their home.
    • The charge may be difficult to enforce if the chargor is insolvent.
  • What are the procedures for creating a charge? The procedures for creating a charge vary depending on the type of charge and the location of the property. However, in general, you will need to contact a lawyer to initiate the process.

Here are some additional notes:

  • The Registrar of Assurances may charge a fee for registering a charge.
  • The charge must be registered within 30 days of its creation.
  • The charge will be void if it is not registered within the 30-day period.