Document background
The Demand Letter Mortgage is a widely used form of security documentation in Indian banking and financial services, particularly favored for its cost-effectiveness and simpler execution process compared to registered mortgages. This document type is created when a borrower deposits original title deeds with a lender and provides a covering letter acknowledging the creation of the mortgage. The document must include specific elements required under Indian law, including clear property description, loan terms, and the lender's right to demand repayment. It's commonly used in both commercial and residential lending, providing lenders with security while avoiding the higher stamp duty and registration costs associated with registered mortgages. The document's validity is recognized under the Transfer of Property Act, 1882, though its enforceability may vary by state. This type of mortgage is particularly popular in major Indian commercial centers where property values are high and parties seek to minimize transaction costs.
