MORTGAGE : According to Section 58 (a) of the Transfer Of The Property Act,1882, a ‘mortgage‘ is the transfer of an interest in specific immovable property for the purpose of securing the following :
- the payment of money advanced or to be advanced by way of loan,
- an existing of future debt, or
- the performance of an engagement which may give rise to a pecuniary liability.
In simple words, mortgage means taking of loan in place of some security (immovable property).
PARTIES OF MORTGAGE : Two parties are involved here which are as follows :
- The person who transfers an interest is called the mortgagor.
- The person in whose favor the interest in property is being transferred is known as the mortgagee.
- The instrument by which the transfer is effected is known as the mortgage deed.
- The principal money and interest of which payment is secured for the time being is called the ‘mortgaged-money’.
ELEMENTS OF MORTGAGE :
- Transfer of an interest
- Specific immovable property
- Consideration of mortgage
6 TYPES OF MORTGAGES :
SIMPLE MORTGAGE :
It is a kind of mortgage where the mortgagor binds himself to repay the mortgage-money. No possession of the property is transferred in case of Simple Mortgage. It should be done by registered deed. The mortgagee can exercise his right to make the sale of that specific immovable property by the intervention of the court.
MORTGAGE BY CONDITIONAL SALE :
It is a kind of mortgage where the mortgagor ostensibly sales his property on conditions :
- on the repayment of such loan taken, the sale become void and the property will be retransferred by the mortgagee in the favor of the mortgagor,
- in case of failure of payment of mortgage-money on certain time, the ostensible sale will become absolute.
In case of mortgage by conditional sale, the mortgagee has the right of foreclosure.
USUFRUCTUARY MORTAGAGE :
Usufructuary Mortgage is such a kind of mortgage where the possession of the property is being transferred in favor of the mortgagee so that the mortgage-debt or interest can be satisfied out of the rents or profits of that property. In such kind of mortgage, the mortgagee can neither have a right of sale nor of foreclosure.
MORTGAGE BY DEPOSIT OF TITLE DEEDS :
It is popularly called an ‘equitable mortgage’. It is a kind of mortgage where there is a delivery to the mortgagee, documents of title to immovable property with intent to create a security thereon. It requires neither a registration nor an attestation.
ENGLISH MORTGAGE :
An English Mortgage is a transaction in which the mortgagor binds himself to repay the mortgage-money on a certain date and transfers the mortgaged property absolutely to the mortgagee but subject to the condition that he will retransfer it to the mortgagor upon payment of the debt.
ANOMALOUS MORTGAGE :
In such a mortgage, the possession may or may not be delivered. A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title deeds within the meaning of section 58 is called an anomalous mortgage.
RIGHTS OF THE MORTGAGOR AND MORTGAGEE
RIGHTS OF THE MORTGAGOR :
- Right to redeem the mortgage.
- Right to inspection and production of documents relevant to the mortgage transaction.
- Right to redeem the mortgage separately or simultaneously.
- Right to appropriate accessions, if any, to the mortgaged property.
- Right to appropriate improvements, if any, to the mortgaged property.
- Right to renewal of lease where the mortgaged property is leasehold.
- Right to effect lease of the mortgaged property.
RIGHTS OF THE MORTGAGEE :
- Rights to foreclosure or sale of the mortgaged property in default of non-payment of debt.
- Right to sue mortgagor for the recovery of mortgage-money.
- Right to exercise power of sale if given under the mortgage-deed.
- Right to get a receiver appointed.
- Right to accession to mortgaged-property.
- Right to have the benefit of renewed lease if mortgaged property is leased out.
- Right to spend money in preserving the property, defending mortgagor’s title or in renewal of lease if the property is in possession.
- Right to receive proceeds of revenue sale of the mortgaged property.
DUTIES OF THE MORTGAGOR AND MORTGAGEE
DUTIES OF THE MORTGAGOR :
- Liability to guarantee his title in the mortgaged property.
- Liability to defend his title in the mortgaged property.
- Liability to make payments of public.
- Liability to pay rents if the mortgaged property is leased hold and mortgagee is a lessee.
- Liability to discharge prior encumbrances on the mortgaged property.
DUTIES OF THE MORTGAGEE :
- Liability to manage the property with ordinary prudence.
- Liability to collect rents and profits with due diligence.
- Liability to pay the government dues in case there is no contract to the contrary.
- Liability to spend money for necessary repairs in the mortgaged property.
- Liability not to commit waste on the mortgaged property.