What is MODT?

When applying for a Home Loan, certain legal and administrative steps are necessary to ensure a seamless and secure disbursement of the loan amount. One of these is the MODT, a term often encountered by Home Loan borrowers. Let us now understand the meaning, full form, registration as well as cancellation process etc. associated with MODT in Home Loans.

What is MODT?

MODT also referred to as MOD stands for Memorandum of Deposit of Title Deeds. It is a legal document that serves as proof of the borrower depositing the title deed of the property with the lender as collateral. By executing the MODT, the lender gets the legal right to the property in case of default, ensuring the loan is secured.

MODT Full Form and Meaning

Under the Memorandum of Deposit of Title Deeds (MODT), the original title deeds of the property are deposited with the lender and against that, a memorandum of deposit of title deeds is signed. The MODT clearly lays out the rights and the obligations of the borrower and the lender with respect to the property, till the MODT is cancelled. In the past, the MODT was not mandatory, but under new RERA regulations, the signing of a MODT is mandatory. Every lender must sign and execute the MODT on stamp paper, which is evidence that original title deeds have been deposited with the lender.

MODT Charges in Home Loans

The MODT charges are fees levied for registering the Memorandum of Deposit of Title Deeds with the sub-registrar’s office. These charges are typically calculated as a percentage of the loan amount and vary from state to state. The nominal stamp duty of 0.10% to 0.50% of the total home loan amount is levied depending on which state you reside in. However, in some states, there is a rule where the MODT deed’s stamp duty cannot exceed Rs. 25,000 regardless of the total loan amount. Key factors influencing MODT charges include:

Steps involved in MODT

There are various steps in the MODT apart from the charges for home loan:

Step 1: How to file a Memorandum Of Deposit Of Title Deed digitally?

Before filing for MODT registration, electronically or physically, you must acquire the Notice of Intimation or NOI from your lender. This notice contains information regarding the disbursal of your home loan. You must submit it to the sub-registrar’s office. You must acquire and file the NOI within 30 days of the loan agreement’s date.

Now, let’s look at how you can submit the NOI and other information through e-filing.

Since 2013, borrowers can register or e-file for MODT by uploading their NOI on the state Department of Registrations and Stamps’ website. Each state has its own e-filing portal.
Once you’re on your state’s webpage, locate all files needed for a MODT deed registration. Here, you may be required to fill out a digital form with space for personal and property details. You will also select the mode of stamp duty payment. Most states accept demand drafts, e-payments, or cash payments made at stipulated banks or on the web portal after printing a challan.
After this, submit the completed form with NOI at the respective sub-registrar’s office. Remember, the online procedure is essentially a way for e-filing the Notice of Intimation for MODT. You can also request your lending institution to file the MODT for you.

Step 2 (only if Step 1 is not done): How to file MODT deed physically?

Here’s how you can file for MODT deed physically.

After acquiring the NOI, carry it to the sub-registrar’s office. Here, you will fill out a form and attach your NOI with it.
After submitting the form, NOI and any other document they may ask for, pay the stamp duty. You cannot pay the stamp duty directly to the officer at the sub-registrar’s office. You must go to a designated bank. They will verify your identity, and collect stamp duty.
Once you’ve paid the stamp duty in full, the bank officer will provide you with its stamped proof. Send this proof along with a photocopy of the notice to the sub-registrar’s office.
The sub-registrar then checks your complete application with proof of duty payment and accepts the hardcopy.

Step 3: How to cancel MODT?

If you want to cancel the Memorandum of Deposit of the Title Deed, follow the short process listed below.

Get a No Objection Certificate or NOC from your lender. It should carry your name, property details, loan account number and other relevant information. It should also state that you have cleared all the dues, and the lender has no claim on the property anymore.
Along with receiving the NOC, you must request a ‘Deed of Receipt’ from your lender. This is proof that they have cancelled the MODT from their end.
Once you’ve paid the stamp duty in full, the bank officer will provide you with its stamped proof. Send this proof along with a photocopy of the notice to the sub-registrar’s office.
With both these documents, visit the sub-registrar’s office and request them to remove the lien from your property.

Why is MODT Important?

The MODT serves several purposes:

Transparency: It formalises the borrower-lender agreement.

Compliance with State Laws: Registration of the MODT ensures the mortgage adheres to the laws and regulations of the respective state.

Key Considerations for Borrowers

Plan for MODT Charges: Borrowers should account for MODT charges in their financial planning.

State-Specific Guidelines: Charges and processes vary by state, so it is essential to understand local regulations.

The MODT is a part of a Home Loan process that ensures legal compliance and safeguards the interests of both borrowers and lenders. Understanding the associated charges can help borrowers plan their finances better and navigate their Home Loan journey with greater clarity.

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