What is Mortgage in RERA?

A mortgage or frankly saying mortgage loan is a debt instrument secured by a specific real estate property with the condition that the borrower is obliged to payback with a pre-determined set of payments.
It can be used in two ways-either in raising funds to buy the real estate property, or by existing property owners to raise funds while mortgaging that property. The term “mortgage” is derived from a French word meaning “death pledge” and refers to the pledge dying when the obligation is totally fulfilled or some breach has been done due to which foreclosure has taken place.
This is a legal process which allows the lender to take the possession and sell the secured property to pay off the loan if any default occurs on account of the buyer.

As per Section 11 (4) (g) of the RERA Act, 2016, it is the duty of the promoter to pay all the outgoings till the transfer of the physical possession to the allottee, for example, maintenance charges, other local taxes, including mortgage loan and interest on mortgages and other liabilities payable to the local authorities.

Proviso to Section 11(4) (g) of the RERA Act, 2016, states that where any promoter fails to pay any of the outgoings collected by him from the allottees including mortgage loan and interest thereon before transferring the property to the allottees, the promoter shall continue to be liable for such outgoings even after the transfer of the property and for any cost of legal proceedings which may be taken by any authority or other person.

The developers must note the above provisions in order to avoid any litigation and continue their work in a hassle-free manner.

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Tags: transfer, property, promoter, maintenance charges.