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Mortgage Project
Mortgage Project
A mortgage is the transfer of an interest in specific immovable 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 a mortgagor, the transferee a 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.
CREATION OF MORTGAGE
Where the principle money secured is one hundred rupees or upwards, a mortgage otherwise
than a mortgage by deposit by title deeds can be effected only by a registered instrument
signed by the mortgagor and attested by at least two witnesses. When the principle money
secured is less than one hundred rupees, mortgage may be effected either by a registered
instrument signed by the mortgagor and attested as aforesaid, or (except in the case of a
simple mortgage) by delivery of the property
Types of Mortgage
1. Simple Mortgage- 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.
2. Mortgage by Conditional Sale- Where, the mortgagor ostensibly sells the mortgaged
property
On condition that on default of payment of the mortgage-money on a certain
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
3.Usufructuary Mortgage- 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 partly in payment of the
mortgage money, partly in lieu of interest and partly in payment of the mortgage money,
the transaction is called a usufructuary mortgage and the mortgagee a usufructuary
mortgagee.
4. English Mortgage- 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
5. Anomalous Mortgage- 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
6. Equitable Mortgage (Mortgage by deposit of Title Deeds)- 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.
To create a valid mortgage by deposit of title deeds, there must be a delivery of the title
deeds relating to an immovable property by the debtor to a creditor or his agent in a
notified town with the intention to create a security thereon
mortgagee
where the mortgagee is in possession of the mortgaged property, to deliver
Provided that the right conferred by this section has not been extinguished by the act of the
parties or by decree of court
Obligation to transfer to third party instead of re-transference to mortgagorSection 60 A, Transfer of Property Act provides that where a mortgagor is entitled
to redemption, then on the fulfillment of any conditions on the fulfillment of
which he would be entitled to require a retransfer, he may require the mortgagee,
instead of retransfering the property, to assign the mortgage debt and transfer the
mortgaged property to such third person as the mortgagor may direct the
mortgagee and the mortgagee shall be bound to assign and transfer accordingly.
The provisions of this section do not apply in the case of mortgagee, who is or has
been in possession.
Rights to inspection and production of documents- A mortgagor as long as his
right of redemption subsists, shall be entitled at all reasonable times at his request
and at his own cost, and on payment of the mortgagees cost and expenses in this
behalf, to inspect and make copies or abstracts of or extracts from documents of
title relating to the mortgaged property which are in the custody or power of the
mortgagee
Right to foreclosure for sale- In the absence of a contract to the contrary, the
mortgagee has, at any time after the mortgage money has become due to him, and
before a decree has been made for the redemption of the mortgaged property, or the
mortgage money has been paid or deposited as hereinafter provided, a right to obtain
from the Court a decree that the mortgagor shall be absolutely debarred or his right to
redeem the property, or a decree that the property be sold.
Right to sue for mortgage money- The mortgagee has a right to sue for the mortgage
money in the following cases and no others, namely:
Where the mortgagor binds himself to repay the same;
Where, by any cause other than the wrongful act or default of the mortgagor,
or mortgagee, the mortgaged property is wholly or partially destroyed or the
security is rendered insufficient within the meaning of section 66, and the
mortgagee has given the mortgagor a reasonable opportunity of providing
further security enough to render the whole security sufficient, and the
becoming due
Right to appoint a receiver- Section 69A, Transfer of Property Act provides that a
mortgagee having the right to exercise a power of sale under section 69 shall, subject
to the provisions of sub-section (2), be entitled to appoint by writing signed by him or
on his behalf, a receiver of the income of the mortgaged property or any part thereof.
Right to accession to mortgaged property- If after the date of a mortgage, any
accession is made to the mortgaged property, the mortgagee, in the absence of a
contract to the contrary, shall for the purposes of the security, be entitled to such
accession
Right to the benefit of the renewed lease- Where the mortgaged property is a lease,
and the mortgagor obtains a renewal of the lease, the mortgagee, in the absence of a
contract to the contrary, shall for the purposes of the security be entitled to the new
lease.
Liabilities of mortgagee in possession- Section 76, Transfer of property Act provides
that when, during the continuance of the mortgage, the mortgagee takes possession of
the mortgaged property:
he must manage the property as a person of ordinary prudence would manage
the property
where he has insured the whole or any part of the property against loss or
damage by fire, he must, in case of such loss or damage, apply any money
which he actually receives under the policy, or so much thereof as may be
necessary in re-instating the property, or, if the mortgagor so directs, in
mortgaged property
Loss occasioned by his default- If the mortgagee fails to perform any of the duties
imposed upon him by this section, he may, when accounts are taken in pursuance of a
decree made under this Chapter, be debited with the loss, if any, occasioned by such
failure
Liability to bring one suit on several mortgages- Section 67A, Transfer of Property
Act provides that a mortgagee who holds two or more mortgages executed by the
same mortgagor in respect of each of which he has a right to obtain the same kind of
decree under section 67 and who sues to obtain such decree on any one of the
mortgages, shall, in the absence of a contract to the contrary, be bound to sue on all
the mortgages in respect of which the mortgage money has become due.