The Hindu Business Line : Hawk’s eye on land deals

He has brought out a guidebook analysing frauds and fake property documents that were deposited as security with banks, narrating the modus operandi of criminals, while offering advice on the dos and don’ts of property purchase and finance.

M.J. Krishna

The sub-prime mortgage crisis in the US has, with a jolt, brought to centre-stage the importance of accurate and foolproof evaluations — both of the property and the credit-worthiness of the borrower.

Banks seek the services of valuers to evaluate properties pledged by loan applicants. The valuers are engineering professionals who inspect the property, assess its market worth and file their report to the bank. A valuer is not required to verify t he genuineness of the ownership, but merely value the asset.

D. Parthasarathy, an IIT-alumnus, however is a valuer with a difference. He has in fact released a guidebook analysing frauds and fake property documents that were deposited as security with banks, narrating the modus operandi of criminals, while offering advice on the dos and don’ts of property purchase and finance.

Having made over 6,500 property valuations for banks till date, Parthasarathy’s reports have established the bona fides of property ownership along with their value. His dogged investigations have helped save a lot of money for his financing clientele who would otherwise have been saddled with massive defaults on fake documents.

Spot the fraud

In 1997, a loan applicant had identified a vacant land in suburban Chennai as his, and cited the Village Administrative Officer (VAO) as witness. However, during inspection, Parthasarathy noted that the shops nearby had name boards of another locality. The next day, he independently approached the local village office to verify the document records and discovered that the property papers related to some other land located further away and of much less value. To top it all, when he met the VAO at his office, Parthasarathy realised that this was not the man who was introduced to him by the culprit during inspection the previous day!

Another time, while inspecting a property that was acquired 60 years earlier, a middle-aged man was identified in the document as the sole legal heir. Parthasarathy made enquiries with the local Panchayat and traced the family of the original owner mentioned in the parent document. He discovered that the old man had left behind five children, of whom he could meet two, who recollected that they had lost the original document and volunteered to testify with the police. “I suspected something amiss the previous day, when the document identified the legal heir as an only child; you see, in those days, sixty years back, it was rare to see a single-child family!” says Parthasarathy. He cites another case where the documents tendered with the bank were of plots that were, on investigation, found to be taken over by the government for an industrial estate. He advises banks to keep abreast of such developments and look out for advertisements that appear periodically in this regard.

Buyers, beware

For property buyers and financiers, Parthasarathy advises that they obtain a certified copy of all documents from the authorities and compare every detail with the documents provided by the seller/owner to rule out a fake.

One should also source the property’s Encumbrance Certificate (EC) independently before buying or financing any property, he cautions. In one case, he says, he discovered that the original document was a sale deed, while the given document was a settlement deed. In another case, a fake Encumbrance Certificate was exposed when an independently acquired EC showed a lien marked on the property and, naturally, the given property document itself was a fake. With such checks, banks can also avert instances of multiple loans taken on the same property. He cites the case of a film producer who financed his venture by forging ten copies of his property and mortgaging them with different banks. The crime came to light when the film bombed and the loans failed, and when Parthasarathy was assigned by different banks to evaluate the same property for re-possession.

He also cautions people against taking the government’s guideline value when evaluating property. Guideline values only show the latest sale price, and miscreants have been known to have effected a high “sale” amount when transferring property to their accomplices.

Banks must realise that the guideline value is not necessarily the market value of the property; if a bank finances against this exaggerated sale amount, it will lose heavily when the loan fails in repayment.

For apartment buyers, Parthasarathy advises a check on the undivided share of land mentioned in the sale agreement, verify what other buyers in the complex have received as undivided share of land, and then see if the total tallies with the area on which the apartments have been built.

Bankers’ checklist

Housing loans constitute a sizeable chunk for banks in retail lending. At the corporate office of one of India’s largest banks, M.L. Paulson handles this portfolio. In the context of perceived delays in home loan approvals, Paulson agrees with Parthasarathy that bank customers should be more patient during the approval process. “We take the help of lawyers and valuers to verify title deeds and value properties. If there is any delay in the process, customers must understand that all these efforts result in protecting their interest in full. After all, homes are lifetime investments,” says Paulson.

It is a fact that when bankers uncover forged papers while processing a loan application, they seldom lodge a police complaint to bring the criminals to book. They simply return the forged papers after declining the loan. The unanimous view among bankers is that the police do not cooperate and that court cases drag for years.

Su Arunachalam, DIG of Police, CID Chennai, empathises with the bankers; a former bank official himself, he says bankers should be rewarded by their employers for bringing such instances of crime to the police, as this will help act as a deterrent. In this context, Parthasarathy narrates how he discovered, at a lawyer’s office, a bank circular blacklisting a fraudulent defaulter. The valuer recognised the photograph in the circular; Parthasarathy had only recently inspected this person’s property pledged with another bank. Parthasarathy suggests that all banks routinely share reports of such cases amongst themselves. This would help weed out avoidable defaults.

D. Parthasarathy can be reached at dpaindia@gmail.com

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Curry on, Chef

Nectar of the gods

For a piece of London…

Hawk’s eye on land deals

Great Scots!

Play it again

Gripping tales Browser’s Corner