What is a Mortgage Under Property Law? 

by  Adv. Rupa K.N  

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Mortgage in property law

Introduction

A mortgage in property law is the transfer of an interest in real estate. Section 58 defines a mortgage as the transfer of a defined immovable property interest for the purpose of financing the loan.

  • Payment of money received or to be advanced through a loan.
  • A current or prospective debt
  • The performance of an engagement may result in a monetary responsibility.

The individual conveying the loan is known as the mortgagor, and the person lending the money is known as the mortgagee; hence, the mortgagor pays the mortgagee interest.

Types of Loans

Mortgage in property law is supplied as loan security in the form of an assignment of a partial interest in any moveable property. A transfer performed to liquidate debt is not a mortgage in property law; nevertheless, if the mortgagor already has provided money, the mortgage in property law may sign a mortgage deed as collateral for its payment. Before receiving the whole sum from the mortgage in property law, the mortgagors also may finalize the mortgage deed.

A loan might be secured or unsecured. Unsecured loans are provided only on the debtor’s commitment to settle (for example, on a promissory note). Secured loans, on the other hand, are those in which the creditor receives security from the debtor in exchange for repayment of the loan.

Understand the Mortgage under Property Law: Consult an Expert

Important Mortgage Elements

The following things must be included in the transactions in order to form a mortgage in property law:

  • Mortgage debt is not an enforceable case under the transfer of property since it is just a transfer of interest in immovable property. It varies from a sale in that the entire interest in the property is transferred, whereas a  mortgage in property law is a transfer of interest but not ownership.
  • Specific Immovable Property – The interests credited by a mortgage in property law must be in a specific immovable property and cannot be described in a broad sense. Land and advantages derived from items fixed to the soil, such as trees, buildings, and machinery, are examples of immovable property.
  • Consideration – The consideration may be money advanced or to be extended by loan, present or prospective debt, or execution of the engagement resulting in pecuniary obligation.

Kerala State vs. Cochin Chemical Refineries[2]: The Supreme Court has ruled that a mortgage transaction does not become ineffective simply because the mortgagee could not pay the amount on the day of the deed’s execution.

Types of Mortgage in Property Law

Section 58 specifies six types.

  • A simple mortgage
  • By way of a conditional sale
  • Usufructuary mortgage
  • English mortgage
  • Title deeds
  • Analogous mortgage
  • Easy Mortgage: In a simple mortgage in property law, the debtor bears the mortgagee a fiduciary obligation to repay the loan and gives his property as security, which may be liquidated if payment is not made.
  • By way of conditional sale: It is a mortgage in property law with the appearance of a sale and the provision that ownership of the sold properties is restored to the original owner upon debt repayment.
  • Equitable mortgage: Mortgage in property law obtained by the deposit of title documents (section 58F). This is where the deposit of title deeds to immovable property is enough. It is common in Calcutta, Madras, and Bombay. It means, according to local practice, that there must be a depth, a deposit of title deeds, and their death must be secured by a deposit of title documents. This sort of mortgage in property law does not have to be registered.
  • Usufructuary mortgage: The estate is provided as security to the mortgagee, who is given ownership and allowed to repay the debt with the property’s rent and earnings.
  • Analogous Mortgage: A mortgage in property law that is not a simple, English, fair, usufructuary, or conditional sale mortgage is referred to as an analog mortgage (section 58). (g). In this case, the mortgagee has the right to foreclose as well as sell the property if the arrangement allows it.

    Mortgage Law: Seek Expert Legal Assistance to Navigate Property Ownership

Payments

If the mortgagee is a minor, the payment or offer must be given to his legitimate guardian. Payment must be provided to all joint mortgagees if there are two or more, and payments must be made to the mortgagee’s lawful heir if the mortgagee dies. Payment must be made in the country’s coins or currency notes.

The Amendment Act of 1929 added to the Act the right of the mortgagor to request that the mortgagee transfer the property and mortgage obligation to a third party at his discretion. The goal of this privilege is to help the mortgagor pay off the mortgagee by receiving a loan from a third party covered with the same property.

Repayment of Mortgage in Property Law

Section 60 of the Transfer of Property Act of 1882 allows the mortgagor the power to redeem and specifies that at any point after the principal money has become due, the mortgagor has a right to payment or acceptance of the mortgage money at an appropriate time or place to demand the mortgagor to:

  • Provide to the mortgagor the mortgage deed and any papers relevant to the mortgaged property in your possession or under your power of mortgage.
  • To give ownership of the mortgaged property to the mortgagor if the mortgage is in ownership of it.
  • At the cost of the mortgage in property law, he must either re-transfer the mortgaged property to him or to such third person as he may direct, or he must execute and (in cases where the mortgage has been affected by a registered instrument) register a recognition in having written that any right in derogation of his interest transmitted to the mortgagee has been extinguished, provided that the right conferred by this section has not been extinguished by an act of parties or a decree of a court.
  • The right provided by section 60 is known as the right to redeem, and it is available to the mortgagor. The right of the mortgagor to redeem the mortgaged property after loan repayment is a right that he has by virtue of his residual ownership in the property.

Obligations and rights

During the mortgage in property law procedure, a mortgagor’s rights and obligations become clear. A legal consultation can make you aware of your rights and obligations. Get your document verification done with an expert.

Every mortgage instrument grants the mortgagor privileges while imposing responsibilities on the mortgagee. The following are the powers allowed to a mortgagor under the Transfer of Property Act of 1882:

  • The capacity to give a mortgaged item of real estate to a third party rather than retransferring it.
  • Right to obtain inspection and production documentation
  • The right to enter
  • The Right to Improve
  • Renewal of lease rights
  • Possibility of awarding a lease

    Consult an Expert to Understand the Legal Aspects of Mortgages under Property Law.

Mortgagor’s responsibilities and liabilities

In addition to the rights conferred by the Transfer of Property Act, a mortgagor has duties. A mortgagor’s responsibilities are as follows:

  • duty to decrease waste (section 66)
  • duty to compensate for a defective title 
  • duty to compensate for a defective title 
  • obligation to pay the mortgagee 
  • obligation to pay lease rent to a mortgagee

Conclusion

The notion of the mortgage in property law is one of the fundamental concepts under the Transfer of Property Act, 1882, section 58, since it assists in safeguarding the mortgagor’s obligation and also in redeeming the property as soon as the mortgagor pays back the sum owing to the mortgagee.

Mortgage in Property Law is an important aspect of credit delivery. Get expert advice if you wish to know more.

Adv. Rupa K.N

Adv. Rupa K.N

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Advocate Rupa K.N, with over 24 years of independent practice, specialises in providing legal expertise, advice and guidance to a broad range of customers. Having been practising law independently for several years after doing her B.A. LLB from Bangalore University and PGDM from the National Institute of Personnel Management.

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