Legal documentation is essential in India’s real estate industry. It helps protect the interests of property owners and financial institutions. The Release Deed is one such essential document. A release deed is different from a relinquishment deed. A relinquishment deed transfers rights between heirs or co-owners. A release deed facilitates the payment of a claim, lien, or mortgage. This includes settling a contract or repaying a mortgage.
We will explain to you what a release deed, when you must have one, and why it is necessary for a secure and stress-free sale.
What is a Release Deed?
A release deed is a legal document. It officially gives up a claim or right to a property, and serves as official proof that a binding agreement has been fulfilled and no further obligations remain. This can be done by a lender, financial institution, or lien holder. The deed means that all financial obligations are fulfilled. The releasing party has no legal rights or claims on the property.
Release deeds often apply to home mortgages. This happens when a bank or housing finance company gives up its legal claim after the loan is fully paid off. This is a prerequisite to confirm that the borrower is the lawful and sole owner of the property with the right to sell it.
Purpose and Importance of the Release Deed
The release deed indicates that a property is free from any encumbrances, such as financial or contractual claims. It’s important to view this in terms of mortgage repayments. The borrower must pay back all the money owed to the lender. Then, the lender should formally confirm that all payments are complete. When the bank signs a release deed, it gives up all legal rights to the property. This lets the owner access the property freely and without contest.
This is the strongest evidence for disclosure, essential for clear property registration and records. Without this document, a property can still be encumbered, even if fully repaid. This makes resale or refinancing difficult. When a release deed is in public records, it boosts public trust in the transaction’s accuracy.
A release deed helps real estate developers, property owners, and contractors work more smoothly. It also prevents legal issues tied to the property. In short, it helps turn cash quickly, ensures legal status, and prepares for the market. These are key steps in a property’s lifecycle.
How Do Deeds of Release Work?
Occurs after all financial obligations, such as a housing loan, are fully paid off. The process begins with the borrower. They have fully repaid their loan and request a release deed from the mortgagee or charge holder. Major proceedings include,
- Loan Closure Verification: The lender verifies that all loans, including both interest and principal, have been paid off.
- Deed Drawn Up: Once the verification is done, deed is drafted, detailing the original mortgage, the borrower, the lender, and the property is released.
- Stamp Duty and Registration: The deed uses non-judicial stamp paper. It gets registered at the local sub-registrar office. Both parties and two witnesses must be present.
- Title Clean Update: After registration, land records are updated to show the removal of the encumbrance.
This process certifies that the property has a clear legal title. It ensures smooth future transfers, refinancing, or development.
Types of Deeds of Release
The nature and the engagement of the legal release and the involved parties determine the types of release deeds. Knowing every type shall give a clear reflection of the paper required in a certain case,
Full Release Deed: This is the most common type of deed. It is used when the lender wants to free the entire property from the mortgage after the loan is fully repaid. This means that the title is no longer encumbered in any way.
Partial Release Deed: This type is used to release only part of the property from the burden of being secured. This often happens with large land lots or phased contracts. Here, units are released during their repayment phase.
Conditional Release Deed: In this case, the release is subject to certain conditions. If the situation does not meet the conditions, this agreement may become annulled.
Release Deed Without Consideration: This is an agreement for a non-monetary transfer. It often happens between family members, but anyone can do it if it’s voluntary and legal.
Features of a Deed of Release
A mutual release is a common feature of a deed of release wherein the parties agree to release each other from the following obligations,
- Title & Date: Clearly labelled as “Release Deed” with the date of execution.
- Parties Involved: Full legal names and addresses of the releasor (person releasing rights) and releasee (beneficiary).
- Property Details: Accurate description of the property; survey number, location, and boundaries.
- Consideration Clause: States if any payment or settlement has been made (if applicable).
- Statement of Release: Explicit declaration that the releasor is relinquishing all claims.
- Signatures: Signed by both parties.
- Witnesses: Attestation by at least two independent witnesses.
- Registration: Must be registered under the Indian Registration Act, 1908 for legal validity.
Documents Required for the Release Deed
To complete the process of a Release Deed registration in India, the following papers are needed,
- Original Mortgage Deed or Loan Agreement: The one provided at the time of the mortgage is their instrument.
- Loan Repayment/Closure Certificate: A legal document from the financial institution stating that they have paid in full all the dues.
- Title Documents of the Property: A document like the sale deed or land title deed would be a definite proof of who the owner is.
- Encumbrance Certificate (EC): It is proof that no other financial or legal claims are present on the property.
- No Objection Certificate (NOC): A declaration from the financial institution or the housing society (if applicable) that they have no dispute with the property.
- Identity Proofs: The releasor and the releasee’s Aadhaar card, PAN card, or passport.
- Address Proofs: Utility bills, voter ID, or driving license.
- Passport-size Photographs: From both parties.
- Witness Documents: Photos and current address of two witnesses.
These papers are necessary for the legalization of the transaction and are useful in controlling all future property conflicts.
Release Deed Stamp Duty
By paying the applicable stamp duty and registration charges on the release deed, you can have it registered at the sub-registrar office. Here are the release deed stamp duty and registration charges in India (Average). Know how to pay stamp duty online in this linked article.
| Stamp Duty | Registration Charges | |
| Release Deed by Legal Heirs for ancestral property | Rs. 200/- | 1% of the Market/Agreement Value or Rs. 30,000/- (Whichever is less) |
| Release Deed for Any Other Cases | 6% of the market/ agreement value of the property. | 1% of the Market/Agreement Value (or) Rs. 30,000/- (Whichever is less) |
Conclusion
A release deed protects your rights by clearly expressing the transfer of, or release from, certain property or claims. Whether it involves a family arrangement, a mortgage closing, or any other transfer of ownership, it will provide legal clarity and thus help prevent any future disputes.
While a release deed may be prepared by any person, it is better to have the document prepared by an attorney and properly registered to shield the interests of all parties involved in the transaction. The moment your release deed is drafted, you then have the comfort of knowing that your rights are safe.
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