The Memorandum of Deposit of Title Deed (MODT) is a legal document registered with the Sub-Registrar when a borrower takes a home loan. It acts as proof that the property’s title deeds are deposited with the lender as security until the loan is fully repaid.
Once the home loan is closed, cancellation of the MODT becomes necessary. Without cancellation, the property continues to reflect an encumbrance in government records, which can cause problems if the owner wants to sell, refinance, or transfer the property. MODT cancellation ensures the borrower gets a clear title, free from the lender’s charge, restoring full ownership rights.
Blog Summary
Upon fully repaying your home loan, the crucial next step is completing the MODT (Memorandum of Deposit of Title Deed) cancellation process to remove the lender’s lien on your property. This involves obtaining a No Objection Certificate (NOC) and drafting a cancellation deed, which must be signed by both borrower and lender with witnesses. The deed is then registered at the Sub-Registrar’s office, along with the applicable stamp duty and registration fees. Lenders typically charge between 0.2% and 0.5% of the loan amount, usually capped around ₹25,000. Once completed, borrowers regain full ownership, original title documents are returned, and property records are updated to reflect the clear title.
What is MODT Cancellation in Home Loans?
MODT cancellation in home loans is the process of removing the Memorandum of Deposit of Title Deed (MODT) registered by the bank when a loan is taken. After home loan closure or loan balance transfer, borrowers must pay MODT cancellation charges and submit an NOC to clear the record. This ensures a clear property title, essential for resale, refinancing, or new home loans.
Suggested Read: MODT Charges for a Home Loan
Why Cancellation Matters After Loan Closure?
Once your home loan is fully repaid, cancelling the MODT isn’t just a legal formality—it’s a crucial step to securing full ownership and keeping your financial profile clean. Without it, the lender’s charge may continue to appear in official records, potentially disrupting future property transactions or credit approvals.
Ensure You Collect the Right Documents
Begin by collecting your No Dues Certificate (NOC) and all original property documents from the lender. These are essential for initiating the cancellation process.
Update the Encumbrance Certificate (EC)
After executing the release deed, make sure the cancellation is registered with the Sub-Registrar’s Office, and that your Encumbrance Certificate reflects a clean title—free from any encumbrances or liens.
Verify Credit Bureau Updates
Finally, ask your lender to confirm that they’ve updated the loan closure with all credit bureaus. This helps maintain an accurate credit score and supports future loan approvals
Legal Meaning of MODT
A Memorandum of Deposit of Title Deeds (MODT) is a legal document executed when a borrower creates a mortgage by simply depositing their property’s title documents with the lender as security—without the need for a full-fledged registered mortgage deed.
Based on Section 58(f) of the Transfer of Property Act
This type of mortgage is known as an equitable mortgage, and it is governed by Section 58(f) of the Transfer of Property Act, 1882. It allows banks to create a charge over your property by holding the original title deeds, without physically transferring ownership.
Why It’s Registered Separately
To make this mortgage enforceable, banks register the MODT with the Sub-Registrar’s Office. While the actual mortgage is created through deposit of deeds, the MODT acts as a recorded confirmation of this agreement in government records.
Valid Only in Notified Towns
Equitable mortgages via MODT are legally valid only in “notified towns”, as designated by the government. Today, most urban and semi-urban areas across India fall under this category.
Source of Information : Digital Repository of Law
CERSAI Filing – What Borrowers Need to Know
The Central Registry of Securitisation Asset Reconstruction and Security Interest in India (CERSAI) is a government-backed digital registry under the SARFAESI Act. It records all mortgages and security interests created by lenders on immovable property—including those under MODT.
When Is CERSAI Filing Done?
CERSAI filings are required at two key stages of the loan lifecycle:
| Stage | Filing Type | Filed By | Purpose |
|---|---|---|---|
| At loan disbursal | Creation of charge | Lender | To record that a security interest (mortgage) has been created |
| After loan repayment | Satisfaction of charge | Lender | To confirm that the mortgage has been cancelled and the loan is closed |
MoE vs MODT vs Release/Reconveyance Deed
| Feature / Document | MoE (Memorandum of Entry) | MODT (Memorandum of Deposit of Title Deeds) | Release / Reconveyance Deed |
|---|---|---|---|
| What It Is | Internal document noting receipt of title deeds | Registered document confirming mortgage by deposit of title deeds | Registered document confirming loan repayment and mortgage cancellation |
| When It’s Used | At the time of loan disbursal | At the time of loan disbursal | After full loan repayment |
| Who Issues It | The lender (bank or NBFC) | The lender | The lender (to the borrower) |
| Purpose | Acknowledges that the borrower’s title deeds are with the lender | Legally creates and registers an equitable mortgage | Cancels the mortgage and clears the lender’s charge |
| Registration Required? | No | Yes – with Sub-Registrar Office (SRO) | Yes – with Sub-Registrar Office (SRO) |
| Stamp Duty / Charges | None | Applicable (state-specific; typically 0.1%–0.5% of loan amount) | Nominal fee (varies by state) |
| Appears on Encumbrance Certificate (EC)? | No | Yes | Yes (reflects release of charge) |
| Legally Enforceable? | No (for internal use only) | Yes | Yes |
| Needed for CERSAI filing? | No | Yes – for creation of charge | Yes – for satisfaction of charge |
Suggested Read: Release Deed | Investopedia
Why is MODT Cancellation Important?
Legal Ownership Clarity
Once a home loan is closed, the property still shows an encumbrance unless the MODT cancellation process is completed. By paying the required MODT cancellation charges and submitting an NOC, the borrower secures a clear property title, proving full ownership without any lender’s claim.
Ease of Resale and Refinancing
A property with an active MODT entry cannot be easily sold, refinanced, or used for a new home loan. Completing the MODT cancellation ensures that buyers, banks, and financial institutions recognize the property as free from liabilities, making property resale and loan balance transfer smooth.
Avoiding Future Disputes
If MODT is not cancelled, the property may still appear under lien in government records. This can cause legal or financial disputes during property registration, refinancing, or inheritance. MODT cancellation eliminates such risks, safeguarding the borrower’s rights.
MODT Cancellation Charges in India
The cost of MODT cancellation in India varies depending on the bank, state, and loan amount. While some lenders charge a flat fee between ₹1,000 – ₹5,000, others follow a percentage-based model ranging from 0.1% to 0.5% of the home loan amount, often capped at around ₹25,000 – ₹30,000.
| Category | Details |
|---|---|
| Flat Fee Model | Banks like HDFC, ICICI, Axis, and PNB levy flat charges ranging from ₹1,000 – ₹10,000, regardless of the loan size. |
| Percentage-Based Model | SBI and certain state registrar offices charge a percentage of the loan amount, typically 0.1% – 0.5%, capped at ₹25,000 – ₹30,000. |
| State Variations | States like Tamil Nadu (cap ₹30,000) and Maharashtra (cap ₹25,000) follow specific stamp duty and registration rules. |
Factors Affecting MODT Cancellation Charges
| Factor | Impact on Charges |
|---|---|
| State Stamp Duty Rules | Each state has its own laws. Example: Tamil Nadu cap ₹30,000, Maharashtra cap ₹25,000. |
| Registrar Office Fees | Additional admin/registration costs of ₹1,000 – ₹2,000 may apply. |
| Loan Amount & Type | Higher loan amounts attract higher charges. Example: ₹50 lakh loan @0.3% = ₹15,000. Applies to home loan, LAP, balance transfer. |
| Bank Policy | Private banks (flat charges) vs. Public banks (percentage-based charges aligned with state rules). |
How to Cancel MODT?
Here is a step-by-step process to cancel MODT?
- Home Loan Closure
Repay the full outstanding loan and collect the loan closure certificate.
- Obtain NOC
Request a No Objection Certificate (NOC) from the bank confirming no claim on the property.
- Visit Registrar Office
Submit the NOC and required documents at the Sub-Registrar Office and pay the MODT cancellation charges.
- Verification
Registrar verifies the documents and loan closure records.
- Final Certificate
Receive cancellation endorsement or updated Encumbrance Certificate (EC) showing clear property title.
Documents Required for MODT Cancellation
| Document | Purpose |
|---|---|
| No Objection Certificate (NOC) | Proof from lender that the loan is repaid and no dues remain. |
| Loan Closure Letter | Confirms successful repayment of the entire home loan. |
| Original MODT Document | Registered proof of the Memorandum of Deposit of Title Deed. |
| Borrower’s ID Proof | Aadhaar, PAN, Passport, or Voter ID for identity verification. |
| Property Documents | Sale deed or property ownership papers (for cross-verification). |
| Payment Receipt of Charges | Receipt of MODT cancellation charges paid at the Sub-Registrar office. |
“Many borrowers forget that clearing a home loan doesn’t automatically clear the property title. Completing the MODT cancellation with an NOC and paying the charges is essential to ensure a clear property title and avoid future hassles.”
– Akul Aggarwal, Home Loan Expert, Credit Dharma
Don’t Delay! Get Expert Help in MODT Cancellation!
Key Acts in India Governing MODT and Its Cancellation
- Transfer of Property Act, 1882
This act provides the legal foundation for the creation of mortgages, including equitable mortgages that are established through the deposit of title deeds. - Registration Act, 1908
It requires the registration of documents related to immovable property, such as MODTs, to ensure their legal validity and enforceability. - Indian Contract Act, 1872
The MODT agreement falls under this act, which outlines the general principles of contracts, including the obligations and rights of parties involved in the MODT. - Limitation Act, 1963
This act specifies the timeframes within which legal proceedings must be initiated for disputes involving property and contracts, including matters related to the cancellation of MODTs.
Suggested Read: Property Tax Online Payment
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Conclusion
MOD cancellation charges process is the final phase that not only marks the end of your loan obligations but also solidifies your complete ownership rights. Taking the time to manage this process carefully will help you avoid any last-minute hurdles and allow you to fully enjoy the peace of mind that comes with true homeownership.
For further guidance or to get started with your home loan journey, visit Credit Dharma today and let us help you achieve your financial goals with confidence.
Frequently Asked Questions
In most cases, you will need to visit the bank at least once to submit the necessary documents for MODT cancellation. However, some banks may offer online or remote options for initiating the process, so it’s best to check with your specific lender.
Documents typically required for MODT cancellation include a loan closure statement, payment confirmation receipt, MODT cancellation request letter, identity proof, and address proof. Ensure you have all documents ready to streamline the process.
Failing to cancel the MODT can lead to complications in the future, such as difficulties in selling the property or obtaining clear legal titles. It’s crucial to complete this step to avoid legal and financial issues related to property ownership.
No, MODT (Memorandum of Deposit of Title Deed) charges are not refundable. They are one-time fees paid by borrowers for the legal process of recording the mortgage and canceling the lien on the property after full loan repayment.
These charges, which typically range from 0.2% to 0.5% of the total loan amount, cover the costs associated with the legal documentation required to release the lender’s claim on the property.
Once paid, these charges are considered final and are not returned to the borrower under any circumstances.
MODT cancellation is the process of removing the Memorandum of Deposit of Title Deed (MODT) registered when a home loan was taken. It legally clears the lender’s charge on the property after loan closure.
Without MODT cancellation, the property continues to show an encumbrance in government records, which can block property resale, refinancing, or applying for a new home loan.
MODT cancellation charges usually range from ₹1,000–₹10,000 (flat fee by banks) or 0.1%–0.5% of the loan amount, capped at ₹25,000–₹30,000, depending on bank and state laws.
The borrower is responsible for paying MODT cancellation charges while closing the home loan or transferring it to another lender.
If MODT is not cancelled, the property remains under encumbrance in official records, leading to legal or financial issues during resale, inheritance, or future loan applications.
Currently, MODT cancellation requires visiting the local Sub-Registrar Office with the necessary documents. Some states may digitize this process in the future.
The process typically takes 7–15 working days, depending on the registrar’s office and document verification speed.
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