Mortgage Deed in Bangladesh 2026: Bank Loans, Redemption, Disputes and Property Tax

Mortgage deed Bangladesh law in 2026: security, disputes and tax

A mortgage deed Bangladesh lenders and borrowers sign is far more than a loan formality. It decides who controls the land if the loan fails, how the owner gets it back, which court or office hears the dispute, and which taxes keep running while the security sits on the record. An unregistered deed can leave a bank with no security; an oppressive one can leave an owner unable to redeem. Getting it right at signing is far cheaper than litigating it later.

This guide brings three connected questions together. First, the deed itself: the forms of mortgage in section 58 of the Transfer of Property Act 1882, registration and stamp costs in 2026, redemption and the rule against clogs, and the regime for usufructuary mortgages of farmland. Second, disputes: suits for foreclosure, sale and redemption under Order XXXIV of the Code of Civil Procedure, bank enforcement under sections 12 and 33 of the Artha Rin Adalat Ain 2003, and fraudulent double mortgages. Third, the property taxes attached to mortgaged land and buildings: holding tax, land development tax, capital gains and the wealth surcharge.

Summary: A mortgage securing Tk 100 or more must be made by a registered deed signed by the mortgagor and attested by two witnesses, and a mortgage by deposit of title deeds to a bank or financial institution must also be registered. The mortgagor keeps a statutory right of redemption until a decree or the parties' own act ends it. Banks enforce through sale before suit under section 12 of the Artha Rin Adalat Ain 2003 and court auctions under section 33; other mortgagees sue under Order XXXIV. Holding tax and land development tax remain the owner's liability throughout.

Key point: Where a mortgage deed gives a bank a power of sale, section 12(3) of the Artha Rin Adalat Ain 2003 bars the bank from suing until it has sold the property, or tried and failed, and credited the proceeds. If it skips that step, the court must deduct the property's value from the decree.

At a glance

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Table of Contents

What a mortgage deed Bangladesh law recognises

Section 58(a) of the Transfer of Property Act 1882 defines a mortgage as the transfer of an interest in specific immovable property to secure money advanced or to be advanced by way of loan, an existing or future debt, or an engagement that may give rise to a pecuniary liability. The instrument that effects the transfer is the mortgage-deed.[1] Three consequences follow. The property must be specific, so a vague schedule is a defect. The mortgagee takes an interest, not ownership. And the deed can secure future advances, which is how revolving bank facilities are covered.

The six forms under section 58

The Act names six forms, and the form decides the remedy: the simple mortgage, where no possession passes and the mortgagor agrees the property may be sold on default; the mortgage by conditional sale, which is a mortgage only if the reconveyance condition is in the same document as the sale; the usufructuary mortgage, where the mortgagee takes possession and the rents and profits; the English mortgage, an absolute transfer subject to re-transfer on repayment.

The remaining forms are the mortgage by deposit of title deeds in Dhaka, Narayanganj, Chittagong or a notified town, and the anomalous mortgage, governed by its own terms and, where they are silent, local usage under section 98. Section 100 treats other security over land as a charge.[1] On a phone, scroll the table sideways.

Which form a bank loan uses

In bank lending the realistic choice is between a registered mortgage deed without possession, carrying an express power of sale, and a registered memorandum of deposit of title deeds. Our guide to loan security documentation in Bangladesh compares the two alongside hypothecation, guarantees and RJSC charge filing. This article concentrates on the terms of the deed, redemption, the routes by which a mortgage deed Bangladesh courts are asked to enforce is tested, and the taxes that run alongside it.

Drafting a mortgage deed Bangladesh banks will register

A bank's standard form is a starting point, not a finished document. Read it against the sanction letter it secures, because inconsistencies between the two are a recurring source of defence arguments in recovery suits.

• Property schedule: district, upazila, mouza, JL, khatian and dag numbers, area and boundaries, matching the latest record of rights. An error here can defeat a sale years later.
• Secured obligations: the limit, interest, charges and any further advances, stated expressly.
• Power of sale: section 69(1)(b) lets a scheduled bank sell without court intervention only where the power is expressly conferred by the mortgage deed itself.[1] The same express power triggers section 12(3) of the Artha Rin Adalat Ain.[3]
• Possession, insurance and taxes: who occupies and lets the property, and the owner's covenant to insure, repair and pay holding tax and land development tax.
• Release: the documents the bank returns and the release deed it executes after full payment.

Due diligence and third-party mortgagors

Owners should run the same checks as the bank: chain of title, current mutation and khatian, the latest land development tax receipt (dakhila), holding tax clearance, and the absence of earlier mortgages or pending suits. Our guides to land ownership verification and land mutation explain the searches. Family members who mortgage their land for someone else's loan risk only the property unless the deed adds a personal covenant, so read for one. Sections 12(6) and 33(7B) of the Artha Rin Adalat Ain both turn on whether the property was lawfully mortgaged by its true owner, which makes title the first battleground in any dispute.[3]

Registration, stamp duty and fees in 2026

Section 59 provides that where the principal secured is Tk 100 or more, a mortgage other than by deposit of title deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses. A proviso extends this to a mortgage by deposit of title deeds where the mortgagee is the Government, a scheduled bank or a financial institution, and a second proviso exempts the tripartite structure in which a bank pays a developer for a flat or plot still to be built, on the buyer's behalf.[1]

Costs of a bank mortgage deed

For a mortgage in favour of a bank or financial institution, the registration fee is slab-based on the sanctioned loan: 1 per cent, between Tk 200 and Tk 500, up to Tk 5 lakh; 0.25 per cent, between Tk 1,500 and Tk 2,000, above Tk 5 lakh up to Tk 20 lakh; and 0.10 per cent, between Tk 3,000 and Tk 5,000, above Tk 20 lakh. Stamp duty under item 39(2) of Schedule I to the Stamp Act 1899 is Tk 2,000 up to Tk 50 lakh, Tk 5,000 above Tk 50 lakh up to Tk 1 crore, and above Tk 1 crore Tk 5,000 plus 0.10 per cent of the remainder.[5]

An e-fee of Tk 100, per-page copying fees and an affidavit on Tk 300 stamp paper are added, and proof of an income tax return is required for loans above Tk 20 lakh. The August 2026 sub-registry guidance also records that stamp duty is waived for housing loans from housing finance institutions but not for housing loans from commercial banks.[5] Deposit memoranda, further charges and powers of attorney are covered in our loan security documentation guide.

No transfer tax on the mortgage itself

Section 125 of the Income Tax Act 2023 bars registration of a transfer unless the transferor pays tax, but section 125(3) excludes a mortgage to a bank or finance company against a loan, and a sale by a bank or finance company empowered to sell under a mortgage.[6] The purchaser-side costs of a sale are explained in our guide to property registration fees in Bangladesh.

Redemption: the mortgagor's core right

Under section 60, at any time after the principal has become due, the mortgagor may pay or tender the mortgage-money and require the mortgagee to return the mortgage-deed and all title documents, to deliver possession if it is in possession, and, at the mortgagor's cost, to re-transfer the property or execute and register an acknowledgement that its interest is extinguished. The right survives until it is extinguished by the act of the parties or by a court decree, and a suit to enforce it is a suit for redemption. A deed may validly require reasonable notice before payment.[1] Redemption is not a favour the bank grants on settlement; it is a statutory right.

Shares, refinancing and payment into court

A person interested in only a share of the property cannot redeem that share alone on a proportionate payment, unless the mortgagee has acquired a mortgagor's share.[1] Co-heirs must redeem the whole or negotiate a partial release, a point that often surfaces in partition suits. Section 60A lets a mortgagor entitled to redeem require the mortgagee to assign the debt and transfer the property to a third person instead, which is the legal basis of a loan takeover by another bank. Where the mortgagee refuses payment, section 83 allows the amount due to be deposited in court before a redemption suit is barred.[1] A proper deposit is the best evidence of readiness to redeem.

Under section 62, a usufructuary mortgagor recovers possession when the money is paid out of rents and profits, or, where those cover only part, when the term expires and the balance is paid or deposited.[1]

Clog on redemption: terms the courts will not enforce

Because redemption is the essence of a mortgage, courts in the common law tradition, Bangladesh included, refuse to enforce terms that prevent, unreasonably postpone or make illusory the right to recover the property on payment: "once a mortgage, always a mortgage". Typical clogs are automatic forfeiture if payment is a day late, an option for the lender to buy the property, a redemption date so distant that the right is worthless, and collateral advantages that outlive the debt.

Statute reinforces the doctrine. Section 60 preserves the right until a decree or the parties' act ends it, and section 58(c) treats a "sale" with a reconveyance condition in the same document as a mortgage.[1] For farmland, section 95A of the State Acquisition and Tenancy Act 1950 deems an out-and-out sale with an agreement to reconvey to be a complete usufructuary mortgage.[4] Ordinary bank terms, such as lawful interest, disclosed and reasonable prepayment fees, notice before redemption, and cross-collateral clauses that the deed states expressly, are generally not clogs. The test is whether, once everything lawfully due is paid, the owner gets the property back free of the mortgage.

Usufructuary mortgage of rural land: khai-khalasi

Informal lending against farmland has long taken the form of a self-liquidating usufructuary mortgage, commonly called khai-khalasi: the lender cultivates the land for a fixed period, after which the debt is treated as paid and the land returns. Section 2(6) of the State Acquisition and Tenancy Act 1950 defines this as a complete usufructuary mortgage, where the loan and interest are deemed extinguished at the end of the agreed period.[4]

• Only one form: a raiyat may enter into no usufructuary mortgage of a holding other than a complete usufructuary mortgage.[4]
• Seven-year ceiling: the term cannot exceed seven years by any agreement, express or implied, and the mortgagor may redeem early by paying the proportion of the consideration that the unexpired period bears to the whole term.[4]
• Registration: the mortgage must be registered, and one that is unregistered or breaches the conditions is void.[4]
• Summary restoration: if the mortgagee obstructs redemption or refuses to return the land at the end of the term, the magistrate or authorised officer can evict the mortgagee and restore the owner.[4]

Section 95A deems any transfer of a holding under which the transferee enjoys possession and usufruct for a specified period in lieu of the consideration, including a sale with an agreement to reconvey, to be a complete usufructuary mortgage of no more than seven years, whatever the document says.[4] A lender holding a "sale deed" over farmland for a short-term loan may hold nothing more.

Mortgage deed disputes in the civil courts

A dispute over a mortgage deed Bangladesh parties sign usually takes one of three shapes: a mortgagee realising the security, an owner seeking to redeem, or a third party attacking the mortgage itself. Where the mortgagee is not a bank or financial institution, the procedure is Order XXXIV of the Code of Civil Procedure 1908, read with the Transfer of Property Act.[2]

Foreclosure or sale

Section 67 gives the mortgagee, once the money is due, a right to a decree for foreclosure or for sale. But only a mortgagee by conditional sale, or an anomalous mortgagee whose deed allows it, may sue for foreclosure, and a usufructuary mortgagee as such cannot sue for sale.[1] Simple and deposit-of-title-deeds mortgagees sue for sale. Choosing the wrong suit is an error the defendant will exploit.

Preliminary and final decrees

Order XXXIV rule 1 requires everyone with an interest in the security or the right of redemption to be joined, though a later mortgagee may sue without joining a prior one. A successful plaintiff first obtains a preliminary decree that takes or declares the account and fixes a date, within six months, by which the defendant may pay and redeem; the court may extend it on good cause before the final decree.[2]

If the defendant does not pay, a final foreclosure decree debars redemption and discharges all liabilities under the mortgage, while a final decree for sale orders the property sold and the surplus paid to the defendant. Under rule 6 the court may add a personal decree for any shortfall legally recoverable from the defendant. Under rule 5 the defendant can still redeem before confirmation of the sale, but if the property has been sold must also deposit 5 per cent of the purchase money for the purchaser.[2] Rules 7 and 8 govern the mortgagor's redemption suit. See also our guide to land dispute litigation.

Bank enforcement under the Artha Rin Adalat Ain 2003

When the mortgagee is a bank or financial institution, the Artha Rin Adalat Ain 2003 changes the order of events. The provisions that matter most are section 12, on sale before and during suit, and section 33, on auction and vesting in execution.[3] Our guide to the Artha Rin Adalat covers wider procedure.

Section 12: sell first, then sue

Where an institution has lent against a mortgage of immovable property and the power of sale was given at the time of the mortgage, section 12(3) bars it from suing without first selling and adjusting the proceeds, or trying and failing to sell, following so far as possible the tender procedure in section 33. Section 12(5) obliges the borrower to surrender possession on written request, and under section 12(5A) the District Magistrate may recover possession for the bank or buyer. Section 12(8) makes the buyer's title unchallengeable, leaving the borrower a compensation claim for any illegality or irregularity.[3]

If the institution does not comply, section 12(6) requires the court to deduct from the decree the property's valuation as shown by the bank or, failing that, a value fixed on the sub-registrar's report, and under section 12(7) the property then vests in the institution.[3] Our guide on how to defend a bank suit explains how borrowers use this.

Section 33: auction, vesting and title

In execution, the court invites sealed tenders on at least 15 days' notice in a widely circulated Bangla national daily, on its notice board and by local drum-beating. Bidders deposit 20 per cent of a bid up to Tk 10 lakh, 15 per cent up to Tk 50 lakh and 10 per cent above that, and pay the balance within 30, 60 or 90 days respectively or forfeit the deposit.[3]

If the property cannot be sold after a second advertisement, section 33(5) vests it in the decree-holder with possession until the decree is satisfied. Under section 33(6B) the decree-holder may apply for ownership within six years, after which ownership vests automatically. Under section 33(7) the court may instead certify title in the decree-holder, and the certificate operates as a title deed registered with the sub-registrar. Before delivering possession, section 33(7B) requires the court to satisfy itself that the property was lawfully mortgaged by its real owner.[3] A true owner should raise that objection early and consider a deed cancellation suit.

Fraudulent and double mortgages

A recurring mortgage deed Bangladesh dispute involves the same land offered to two lenders, or land mortgaged by someone who does not own it. Section 48 of the Transfer of Property Act makes each later right subject to earlier ones, absent a special contract, so a second mortgagee who did not search ranks behind the first. Section 81 lets a later mortgagee of one property require a prior lender holding several properties to look first to the others, and section 93 denies priority to a mortgagee merely because it paid off a prior mortgage.[1]

Criminal liability

The Land Crimes Prevention and Remedy Act 2023 makes it land fraud to transfer land by concealing information, or to transfer more land than one owns or another's land without authority, punishable under section 4(2) with up to seven years' imprisonment and a fine; section 5 adds land forgery offences.[14] A mortgage is itself a transfer of an interest under section 58, so in our view concealing an existing mortgage when mortgaging again falls within the offence.[1]

Bangladesh Bank's planned mortgage depository

On 29 January 2026 the Governor of Bangladesh Bank, Ahsan H Mansur, announced plans for a "mortgage property depository" so that every mortgage is recorded and the same property cannot be shown to several banks. For loans above Tk 50 crore, the central bank would verify whether mortgages are registered and already used elsewhere, and check declared valuations; he said it would apply first to large loans and take time to implement.[13] Until it is live, the sub-registry search and the borrower's disclosure remain the main protection.

How to put a mortgage deed in place: step by step

For a borrower or third-party mortgagor, this sequence avoids the defects that most often surface later in court.

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For larger facilities or contested security, involve our banking and finance practice before the deed is executed, not after a default.

Property tax on a mortgage deed Bangladesh owners grant

A mortgage does not change who pays property tax. The owner remains liable for the annual taxes on land and buildings, and transactional taxes arise only on sale, whether by the owner or by a bank. Lenders treat arrears as a red flag at sanction, and arrears can delay a sale at enforcement. The bodies involved are below.

Holding tax: city corporations and pourashavas

Holding tax is the annual municipal tax on urban land and buildings, assessed on annual rental value. Dhaka North City Corporation describes three components: a property tax with a ceiling of 7 per cent of annual rental value, a lighting rate of up to 3 per cent and a conservancy rate of up to 7 per cent.[11] Applied rates and assessed rents vary, so check the latest assessment notice. Arrears attract a surcharge: in June 2026 Dhaka South City Corporation exempted taxpayers who cleared arrears by 30 June from the 15 per cent surcharge on overdue holding tax.[12] A buyer at a bank sale should obtain a clearance before completion.

Land development tax under the 2023 Act

The Land Development Tax Act 2023 (Act No. 31 of 2023) replaced the 1976 Ordinance from 1 July 2024 and applies everywhere except the three hill districts. Rates are fixed by gazette. Agricultural land up to 8.25 acres (25 bigha) held by a farming person or family is exempt, but above that the whole is taxable. Non-agricultural land is classed as commercial, industrial, or residential and other, and land partly used commercially or industrially is taxed wholly at that class.[9]

Each year's land development tax is payable without penalty by 30 June, and up to three years may be paid in advance. Arrears unpaid for three consecutive years carry a 6.25 per cent annual penalty and are recoverable by certificate case under the Public Demands Recovery Act 1913, and the demand is never time-barred.[9] Collection is electronic under section 8, and in May 2026 the land ministry directed owners to clear dues by 30 June through land.gov.bd using mobile banking or cards.[10] The dakhila is a "document" under the Land Crimes Prevention and Remedy Act 2023, so a forged receipt used to support a mortgage is land forgery.[14]

Capital gains and the advance tax at registration

On a sale of mortgaged property, section 125 of the Income Tax Act 2023 requires the transferor to pay tax at the prescribed rate before registration, capped at the higher of Tk 20 lakh per katha of land, Tk 1,000 per square foot of structure, or 10 per cent of the deed value.[6] The mouza-based rates under the Source Tax Rules 2026 are in our property registration fees guide.

The Finance Act 2026 provides that capital gains on transfer of property are no longer treated as final tax, so the seller computes the actual gain in the return and credits the amount paid at registration.[7] For individuals, gains on assets held more than five years are taxed at 15 per cent, otherwise at slab rates.[8] Our guide to sale deeds covers the conveyance.

Wealth surcharge

Property counts towards net wealth, which drives the surcharge on an individual's income tax. For 2026-27 it is 10 per cent where net wealth is over Tk 4 crore up to Tk 10 crore, or the taxpayer owns more than one car or house property over 8,000 square feet in a city corporation; 20 per cent over Tk 10 crore up to Tk 20 crore; 30 per cent up to Tk 50 crore; and 35 per cent above.[8] The outstanding mortgage debt is a liability in the wealth statement. Our tax compliance practice advises on these returns.

Mistakes that undermine a mortgage deed Bangladesh lenders hold

• Unregistered deposit memoranda: for a bank lender, they do not satisfy section 59.[1]
• No express power of sale: the bank cannot sell out of court under section 69(1)(b).[1]
• Disguising a loan as a sale of farmland: section 95A will treat it as a seven-year usufructuary mortgage.[4]
• Suing before selling: a bank risks a section 12(6) deduction from its decree.[3]
• Concealing an earlier mortgage: a priority problem and potential land fraud.[14]

What to watch for the rest of 2026

Three developments matter. Bangladesh Bank's mortgage property depository, if implemented, will make double mortgaging of large-loan collateral much harder.[13] The Finance Act 2026 move away from final-tax treatment of property gains means sellers, including owners selling to repay a bank, need a proper capital gains computation.[7] And online land development tax payment is tightening the link between tax records, mutation and title that lenders rely on.[10]

Whether you are taking security, granting it over family land or facing a recovery suit, the decisive choices are made early: the form of the deed, the power of sale, the property description and the response to the first demand. TRW's banking and finance litigation practice and real estate disputes practice act for lenders, borrowers and third-party mortgagors. Contact TRW to discuss your matter.

Frequently asked questions

Must a mortgage deed be registered in Bangladesh?

Yes, where the principal secured is Tk 100 or more. Section 59 of the Transfer of Property Act requires a registered instrument signed by the mortgagor and attested by two witnesses, and this also applies to a mortgage by deposit of title deeds in favour of the Government, a scheduled bank or a financial institution.[1]

What are the types of mortgage under section 58?

Simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title deeds and anomalous mortgage. Section 100 separately recognises a charge.[1]

What is the stamp duty on a bank mortgage deed in 2026?

Under item 39(2) of Schedule I to the Stamp Act, Tk 2,000 for loans up to Tk 50 lakh, Tk 5,000 above Tk 50 lakh up to Tk 1 crore, and above Tk 1 crore Tk 5,000 plus 0.10 per cent of the excess, with a slab-based registration fee on top.[5]

When can I redeem my mortgaged property?

At any time after the principal has become due, by paying or tendering the mortgage-money, until the right is extinguished by agreement or decree. If the lender refuses payment, you may deposit the amount in court under section 83.[1]

What is a clog on redemption?

A term that prevents or makes illusory the mortgagor's right to recover the property on payment, such as automatic forfeiture on late payment or an option for the lender to buy the property. Courts refuse to enforce such terms.

How long can a khai-khalasi mortgage of farmland last?

No more than seven years. Section 95 of the State Acquisition and Tenancy Act 1950 allows a raiyat only a registered complete usufructuary mortgage of up to seven years, with proportionate early redemption; non-compliant mortgages are void.[4]

Can a bank sell mortgaged property without going to court?

Yes, where the deed expressly gives the power of sale. Section 12 of the Artha Rin Adalat Ain requires the bank to sell, or try to, before suing, and the buyer's title cannot be challenged; the borrower's remedy for irregularity is compensation.[3]

What happens if mortgaged property cannot be sold at auction?

Under section 33 of the Artha Rin Adalat Ain it vests in the decree-holder with possession until the decree is satisfied, and ownership vests on application within six years or automatically when six years expire. The court may instead certify title in the bank.[3]

Is mortgaging the same land twice a crime?

Transferring land by concealing information is land fraud under section 4 of the Land Crimes Prevention and Remedy Act 2023, punishable with up to seven years' imprisonment and a fine, and the later mortgagee ranks behind the earlier one under section 48 of the Transfer of Property Act.[1] [14]

Who pays holding tax and land development tax on mortgaged property?

The owner. Holding tax is payable to the city corporation or pourashava, and land development tax by 30 June each year, now mainly online. Most mortgage deeds also oblige the owner to keep both current.[9] [11]