Understanding Mortgage Plots in VUDA / VMRDA Approved Layouts
Many buyers notice that a few plots in an approved layout are marked as “Mortgage Plots.” This often raises questions such as:
- What are mortgage plots?
- Why are they kept aside?
- Can they be sold?
- When are they released?
- Does it affect buyers?
Understanding this concept helps buyers better evaluate a layout and understand how planning authorities ensure infrastructure development.
This guide is part of our VUDA Approved Plots in Vizag (Now VMRDA Approved Plots) Knowledge Center and explains how mortgage plots work in approved layouts.
Mortgage Plots with Protective Fencing in VMRDA Approved Layout
What Are Mortgage Plots in VUDA / VMRDA Approved Layouts?
Mortgage plots in VUDA / VMRDA approved layouts are plots transferred by the developer as security in favour of the planning authority during layout approval.
This security ensures that the developer completes the promised internal development works within the approved layout.
Unlike a bank mortgage, these plots are not pledged for a loan. They are held as security to protect the public interest and encourage completion of infrastructure.
Why Does VMRDA Keep Mortgage Plots?
When a layout is approved, the developer promises to provide infrastructure such as:
- Black-top roads
- Storm water drains
- Internal drainage
- Water supply network
- Overhead water tank (where applicable)
- Street lighting
- Electrical infrastructure
- Avenue plantation
- Parks
- Rainwater harvesting structures
- Plot demarcation
- Utility areas
Rather than relying only on the developer’s promise, the authority keeps certain plots as security until these works are completed.
How Much Land is Kept as Mortgage?
Under the VUDA handbook, developers were generally required to mortgage 15% of the plotted area as security. Recent VMRDA layout approvals continue to specify 15% plotted area mortgaged to the authority.
Important: The exact requirement depends on the applicable rules and the approval conditions for a specific project. Buyers should refer to the sanctioned layout approval for the project they are considering.
Who Holds the Mortgage?
The mortgage is created in favour of the planning authority (such as VMRDA for current layouts).
The authority retains control over the mortgaged plots until the conditions for release are satisfied.
Can Mortgage Plots Be Sold?
No.
During the mortgage period, the developer cannot sell, allot or otherwise dispose of the mortgaged plots.
Recent VMRDA approval proceedings specifically state that mortgaged plots shall not be sold until the mortgage is released.
Why Is This Rule Important?
This protects buyers.
If developers were allowed to sell every plot immediately, there would be less assurance that roads, drainage, lighting and other promised facilities would actually be completed.
The mortgage requirement creates a strong incentive to finish the infrastructure.
When Are Mortgage Plots Released?
Mortgage plots are generally released after the developer completes the required internal development works and the planning authority is satisfied that the approval conditions have been fulfilled. Under the older VUDA handbook, release followed completion of development to the authority’s specifications. Current VMRDA approvals also require a formal request from the developer after completing the works and handing over required public areas.
What Development Works Must Be Completed?
Although conditions vary by project, authorities commonly require completion of:
- Black-top roads
- Storm water drainage
- Internal water supply
- Electrical distribution
- Street lighting
- Avenue plantation
- Park development
- Rainwater harvesting
- Utility areas
- Plot stones and numbering
- Boundary works where required
- Handover of public open spaces and master plan roads to the local authority.
Difference Between Mortgage Plot and Bank Mortgage
| Mortgage Plot | Bank Mortgage |
|---|---|
| Security to VMRDA | Security to Bank |
| Not a loan | Loan taken |
| Released after development | Released after loan repayment |
Can Banks Give Loans on Mortgage Plots?
No. Banks and financial institutions generally do not provide loans on plots that are still under mortgage with VMRDA. A mortgage plot is retained by VMRDA as security until the developer completes the required infrastructure and the mortgage is officially released. Once VMRDA issues the mortgage release and the plot becomes free from mortgage, it may be eligible for financing, subject to the bank’s policies and verification.
What Happens If the Developer Does Not Complete the Works?
This is one of the most important protections in the layout approval system.
If the developer fails to complete the required infrastructure, the planning authority has the power—under the applicable approval conditions—to retain or dispose of the mortgaged plots and use the proceeds to complete the internal development works.
How to Check Whether Mortgage Has Been Released
- Ask the developer
- Check VMRDA release proceedings
- Verify approval documents
- Ask for the VMRDA mortgage release order
Does Buying Another Plot in the Layout Become Unsafe?
Not necessarily.
The existence of mortgage plots does not mean the layout has a problem.
In fact, mortgage plots are normally part of the approved layout process and are intended to protect buyers by encouraging completion of infrastructure.
However, buyers should still verify:
- Layout approval.
- LP Number.
- Current development status.
- Availability of roads and utilities.
- Legal documents.
Can Building Permission Be Issued on Mortgage Plots?
Generally, no.
VMRDA approval conditions commonly state that building permissions should not be issued for mortgaged plots until the authority executes the release (re-conveyance) of those plots.
How Can Buyers Identify Mortgage Plots?
In many approved layout plans:
- Mortgage plots are specifically marked.
- Plot numbers are listed in the approval proceedings.
- The mortgage deed reference may also be mentioned in the approval documents.
Documents Buyers Should Check
- LP Number
- Approved Layout Plan
- VMRDA Mortgage Release Order (if applicable)
- Sale Deed
- Encumbrance Certificate
- Title Documents
Frequently Asked Questions
Are mortgage plots bad plots?
No. They are simply plots kept as security until the developer fulfils the required development obligations.
Can I buy a mortgage plot?
Not until the mortgage has been officially released and the applicable conditions have been satisfied.
Does every approved layout have mortgage plots?
Many approved layouts include mortgage plots as part of the approval conditions, but buyers should review the specific sanctioned layout because requirements can vary.
How do I know whether the mortgage has been released?
Ask the developer for the mortgage release or re-conveyance documents and verify them along with the layout approval records.
Can I Register a Mortgage Plot?
Generally, mortgage plots cannot be registered or sold until VMRDA officially releases the mortgage. Buyers should always verify the mortgage release status before proceeding with any purchase.
Final Advice for Buyers
When evaluating a VUDA- or VMRDA-approved layout, don’t just ask:
- “Is this layout approved?”
Also ask:
- What is the LP Number?
- Which plots are under mortgage?
- Has the mortgage been released?
- Are all internal development works completed?
- Have roads, parks and public areas been handed over where required?
These questions can help you better understand the development status of the project and make a more informed purchase decision.
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Related Resources
- VUDA Approved Plots in Vizag
- Projects in Bhogapuram
- Projects in Anandapuram
- Projects in Kothavalasa
- Projects in Atchutapuram
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