MORTGAGE
As per Section 58 of transfer of property act: “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and “mortgage- deed” are defined as:
(i) MORTGAGE: It is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.
The transferor is called as mortgagor and the transferee as mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.
TYPES OF MORTGAGE
- Simple mortgage,
- Conditional mortgage
- Usufructuary mortgage
- English mortgage
- Equitable mortgage
- Anomalous mortgage
- (II) SIMPLE MORTGAGE: simple mortgage is where without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.
- (III) MORTGAGE BY CONDITIONAL SALE- Mortgage by conditional sale is where, the mortgagor ostensibly sells the mortgaged property-
If the mortgagor fails to repay the loan, the mortgagee has the right to sell the property and recover the loan from the sale amount.
on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or
on condition that on such payment being made the sale shall become void, or
on condition that on such payment being made the buyer shall transfer the property to the seller,
the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale:
Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.
Under such Mortgage, the mortgagor apparently sells the property of the mortgagee on certain conditions –
- On failure to repay the mortgage money before a certain date the sale shall become absolute, or
- On condition that on such repayment of mortgage money the sale shall become invalid, or
- On condition that on such repayment the mortgagee shall retransfer the property.
In such case, the mortgagee is a “mortgagee by conditional sale”.
(IV) USUFRUCTUARY MORTGAGE- It is where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or in payment of the mortgage-money, or partly in lieu of interest or partly in payment of the mortgage-money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee. In a Usufructuary Mortgage, the possession of the mortgaged property is transferred to the mortgagee. The mortgagee receives the income from the property (rent, profit, interest, etc.) until the repayment of the loan. The title deeds remain with the owner.
(V) ENGLISH MORTGAGE- It is where 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 a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage.
In an English Mortgage –
The mortgagor binds himself to repay the borrowed money on a certain date.
The mortgagor transfers the property absolutely to the mortgagee.
But such transfer is subject to the condition that the mortgagee will retransfer the property on repayment before the agreed date.
(VI) MORTGAGE BY DEPOSIT OF TITLE-DEEDS- It is where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay, and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.
In such mortgage, the mortgagor delivers the title document of the property to the mortgagee with an intention to create a security thereon. Such mortgage is valid in towns of Kolkata, Mumbai and any other town as the State Government may notify by publication in Official Gazette.
- Mortgage is created by depositing original title deeds to the creditor or to his agent
- Essential’s
- Delivery of title deeds
- There must be an intention to create a security on them
- Possession need not to be given (according old practice registration is not necessary)
(VII) ANOMALOUS MORTGAGE- A mortgage which is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage. Anomalous mortgage is a combination of different types of mortgages. A mortgage which does not fall strictly into any of the above mortgages is an anomalous mortgage.
Ex: ‘A’ borrowed money from ‘B’ and agreed to repay within 35 years and he also agreed to hand over possession of property and allow ‘B’ to enjoy till repayment. Mortgagor failed to deliver possession. Mortgagee filed to suit for sale. Here if it is simple mortgage it is premature.
In case of Usufructuary mortgage suit for sale is permitted. Partly usufructuary & partly simple mortgage
TERMS
- Transferor(homeowner)…. Mortgagor
- Transferee …. Mortgagee
- Mortgage-money …. the principal money and interest of which payment is
secured for the time being
- Mortgage-deed …. the instrument (if any) by which the transfer is effected
