How to Cancel a Mortgage on Deposit of Title Deed (MODT) and Secure Clear Ownership of Your Property
Learn how to cancel your MODT after loan closure, clear property title, and regain full ownership with this simple step-by-step guide.
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When you take a home loan in India, one of the most common methods of securing the loan is through a Mortgage by Deposit of Title Deed (MODT). This legal arrangement allows the lender to hold your property documents as security until the loan is fully repaid. However, once your loan is repaid, it is crucial to cancel the MODT to regain full and clear ownership of your property.
Failing to cancel the MODT can lead to future legal or financial complications, especially during resale or transfer of ownership. This blog walks you through the complete, step-by-step process to cancel a MODT and obtain clean property title.
Before buying any property, it's always safer to check if the MODT has been cleared—some platforms now show only properties with clean title and no active mortgage.
What is a Mortgage on Deposit of Title Deed (MODT)?
A MODT is a type of equitable mortgage where the borrower submits original property documents (title deed) to the lender as collateral. This arrangement is legally documented and registered at the sub-registrar’s office to make it enforceable.
Why is MODT Cancellation Important?
Cancelling the MODT after loan repayment is essential for the following reasons:
- To remove the lien on your property
- To obtain clear and marketable title
- To avoid legal issues during sale or transfer
- To regain original documents and control of your asset
Step-by-Step Process to Cancel a MODT
1. Repay the Loan in Full
The first step is to clear all outstanding dues, including the principal amount, accrued interest, penalties, and any administrative charges. Ensure you collect the final payment receipt for your records.
2. Obtain No Objection Certificate (NOC) and Deed of Receipt
Once the loan is fully repaid:
- Request a No Objection Certificate (NOC) from the lender. This document confirms that there are no dues pending and the lender has no claim over the property.
- Ask for a Deed of Receipt, which serves as formal proof that the lender acknowledges repayment and consents to the cancellation of the MODT.
3. Draft the Cancellation Deed
The next step is to prepare a Cancellation Deed, also known as a Deed of Release. This legal document should:
- Reference the original MODT agreement
- Clearly state the loan repayment details
- Include the lender’s consent for the cancellation
It’s advisable to hire a legal expert or property lawyer to draft this document to avoid errors or omissions.
4. Sign the Cancellation Deed
Both the borrower and the lender (or their authorized representatives) must sign the cancellation deed in the presence of at least two witnesses. This makes the document legally binding and enforceable.
5. Register the Cancellation Deed
Visit the Sub-Registrar’s Office where the original MODT was registered. Submit the signed cancellation deed for registration. Don’t forget to:
- Carry original identity proofs of both parties
- Pay the applicable registration charges
- Submit copies of the NOC, Deed of Receipt, and loan closure statement
Once processed, the registrar will register the cancellation and provide a certified copy of the deed.
6. Collect Original Property Documents
After successful cancellation, the lender must return all original property documents to you, including:
- Sale Deed or Title Deed
- Encumbrance Certificate
- MODT registration copy
- Loan closure documents
Ensure everything is collected and verified before signing any receipt from the lender.
If you're searching for properties with clear documents and no pending MODT, make sure to choose listings that show verified ownership and completed loan closures.
Final Checklist: Documents Needed for MODT Cancellation
- Loan Closure Statement
- No Objection Certificate (NOC)
- Deed of Receipt
- Cancellation Deed (Drafted and Signed)
- Identity Proofs of Borrower and Lender
- Original MODT Agreement
- Two Witnesses (with ID Proofs)
Conclusion
Cancelling a Mortgage on Deposit of Title Deed (MODT) is a critical final step in your home loan journey. It legally clears the lender’s claim on your property and restores full ownership rights to you. Though the process involves some paperwork and legal formalities, it is a one-time effort that ensures peace of mind and clean title to your most valuable asset.
If you’re nearing the end of your home loan repayment or have recently closed it, don’t delay the MODT cancellation. Consult a real estate lawyer if needed and complete the process without hassle.
If you’ve closed your home loan, don’t delay MODT cancellation — also read: Should You Buy Property with Loan or Cash?
Frequently Asked Questions (FAQs) on MODT Cancellation
1. What is a MODT in property loans?
A MODT (Mortgage by Deposit of Title Deed) is a legal agreement where the borrower deposits original property documents with the lender as collateral for a loan. It is registered at the sub-registrar’s office and serves as a lien on the property.
2. Is it mandatory to cancel the MODT after loan repayment?
Yes, it is highly recommended. Even if your loan is fully repaid, the MODT remains legally valid unless a cancellation deed is registered. Without cancellation, your property's title is not considered completely clear.
3. What is a No Objection Certificate (NOC)?
A No Objection Certificate (NOC) is a document issued by the lender stating that the borrower has repaid the loan in full and the lender has no further claim on the property.
4. What is a Deed of Receipt?
A Deed of Receipt is a legal document provided by the lender acknowledging that the loan has been repaid and agreeing to the cancellation of the MODT. It is used while drafting the Cancellation Deed.
5. Who prepares the Cancellation Deed?
The borrower or their legal representative usually prepares the cancellation deed. However, it must be signed by both the borrower and lender (or their authorized representatives), and registered at the sub-registrar’s office.
6. Can I cancel the MODT without the lender’s involvement?
No. The lender’s consent is mandatory. You must obtain a NOC and Deed of Receipt from the lender and get their signature on the Cancellation Deed.
7. Where do I register the Cancellation Deed?
The Cancellation Deed must be registered at the same sub-registrar’s office where the original MODT was recorded. You’ll need to pay a nominal registration fee for this process.
8. How much does it cost to cancel a MODT?
The cancellation cost includes:
- Legal drafting fee (if using a lawyer)
- Registration charges (varies by state, typically ₹100 - ₹1,000)
- Stamp duty (often nominal or waived for MODT cancellation)
9. How long does the MODT cancellation process take?
If all documents are in order, the registration of the cancellation deed typically takes 1–2 working days. However, obtaining the NOC and Deed of Receipt from the lender can take a few days to a couple of weeks.
10. What if I lose the original MODT or property documents?
Immediately inform your lender and file an FIR (First Information Report) with the police. You may need to submit an indemnity bond or a copy of the FIR to obtain duplicate documents and proceed with MODT cancellation.
