04 August 2008
One of my clients is a HUF proprietory concern. The elder karta expired before few days. In one bank the account (co-operative) the name of new Karta was taken on records without any hitch and he is able to operate the HUF account. But in one other bank (private sector),the (HUF) proprietory concern has bank loan. The bank is not ready to change the name that smoothly and asking to execute all new documents for the loan. HUF is undying entity and only karta changes. How can I convince the bank that no execution of new documents is necessary. Please note that the documents are not registered with any government authority as it is not necessary.
04 August 2008
Production of a legal heir certificate and declaration by all the members should enable you to convince the bankers. What is the difficulty expressed by the banker?
04 August 2008
You should represent the case before the bank officials with an undertaking by all the present members in the form of a Letter of continuity which will state that we as the members do hereby undertake that mrtgage/lien on the assets of the HUF shall continue as it is and we hereby promise to repay the loan in terms of the Loan Agreement signed and agreed by the late Karta on behalf of the HUF. I think this will serve the purpose.
Also, explain the constitution of the HUF with the present members with a note thereon that in the event of the death of the Karta the next eldest male member becomes the Karta of HUF.
CAclubindia
