Marketable Title of Property and Derivation of Title for 30 Years 

Banks accept immovable properties such as land, land with building and apartment with marketable title as security for the loans and other credit facilities sanctioned to various borrowers. Securities are insisted to ensure that the banks recover the advanced amount in case of default in repayment. Landed property can be primary or collateral security. Marketable title proves that the owner has clear and undisputable legal right over the property.

Marketable title of the owner of the property is essential for banks to safeguard enforceability of the mortgage and protect its security interest in a hassle free manner.  Banks examine derivation of title of the properties through own legal officers or empanelled panel lawyers to ensure error free title of the owner. Hence, banks can sell the property through SARFAESI action or with minimum legal support.

Why do banks insist for derivation of title of property for 3o years?

Generally, banks insist for derivation of title of the property for the last thirty years. Major reasons for derivation of title for 30 years are:

a) Limitation period of 30 years is applicable for dispossession by Government or Local Authorities.  30 years derivation is essential to confirm that there is no such vested right to dispossess the present owner.

b) A minor will get 3 years, after attaining majority (18 years), to question a transfer taken place during his minority. Hence a minor may get maximum 21 years to question the title of property in which his interest was involved. On derivation of 30 years title, minor’s interest will be covered.

c) Limitation  period is 30 years for  redemption of usufructuary mortgage or recover possession of the property by predecessors. Derivation of 30 years of title examines existence of such rights.

d) Derivation of 30 years reveals existing life interest, senior citizen’s rights, benami transactions, rights between the parties to the documents etc. which may adversely affect the enforceability of security property.

e) Oral partition is permitted by law and properties subject to oral partition are often offered as security. If the property offered as security is subject to oral partition, whether all the legal heirs have been parties to the partition/minor’s right is involved etc. will be revealed only if derivation of title is done for 30 years.

f) As per S.90 of Indian Evidence Act, there is a presumption that documents of minimum thirty years old are properly executed / prove themselves. If private documents of 30 years or more are produced from proper custody and are on their face free from suspicion, the court may presume that they have been executed by the persons whose signatures they bear or in whose handwriting they purport to be and that they have been duly attested and executed.

g) 30 years perusal of title deed confirms that the title is not impacted by Mary Roy’s case.

Banks normally do not insist for production of all original prior deeds covering 30 years, if the available documents contain the recitals explaining the derivation for past 30 years. If the title deed does not contain such details, original/certified/photocopies of the prior title deeds may have to be obtained for scrutiny. It may also be noted that in certain types of loans, some banks insist for derivation of title for 13 years only.