Immovable Property :
The auditor should inspect the title deed, the solicitor’s/advocate’s opinion taken by the bank in respect thereof, and the mortgage deed. For valuation, he may rely upon the architect’s or valuer’s report (which should be taken atleast once in three years) after carrying out appropriate audit procedures to satisfy himself about the adequacy of the work of the architect/valuer for his purpose.10 He should also examine the insurance policies.
In some cases, banks make advances against immovable properties where the title deeds are not in the name of the borrower. For example, an advance may be given against the security of a flat in a co-operative group housing society, the title deeds of which may not be in the name of the borrower. In such cases, the auditor should examine the evidence regarding the right or interest of the borrower in the property mortgaged, e.g., power of attorney, share certificate of co-operative group housing society, ‘no objection certificate’ from the society/lessor (in the case of leasehold properties) for offering the property as security, etc.
In case the bank has accepted third party property as a security. The owner of the property should also execute guarantee bond in bank’s favour. The mortgage value in bank’s favour should be equal/in excess of loan amount covered by such mortgage.