MORTGAGE DEED

 

Definition of Mortgage:

The Transfer of Property Act, 1882, Sec. 58, defines a mortgage. A mortgage is :

(a) The transfer of an interest,

(b) In specific immovable property.

(c) For the purpose of securing.

(i) The payment of money advanced or to be advanced by way of loan, or (ii) An existing or future debt, or (iii) The performance of an engagement which may give rise to pecuniary liability. The transfer of an interest in immovable property must, in order to Constitute institute a mortgage, before one of the purposes mentioned on (c) above.

Not only rights of ownership but other interest in immovable property can be mortgage, like lessee's rights, mortgaged, rights and mortgage's rights. A mortgage by the owner is known as a mortgage of proprietary rights, of mortgager's rights as mortgage of equity of redemption or subsequent mortgage and of mortgage rights as sub-mortgage.

 

Transfer of an Interest

These words are to be contrasted with the words "transfer of ownership" used in the definition of sale in section 54. In a sale all the rights of ownership, which the transferor has, pass to the transferee. In a mortgage out of the bundle of tights which constitute ownership, some are transferred to the mortgagee and some remain vested in the mortgagor. The rights remaining with the mortgagor (also called equity of redemption) can again be transferred.

 

Specific Immovable Property

The word "specific" shows that the description of the immovable property should not only be free from ambiguity and uncertainty, but that it should be specific as distinguished from general. The description must at least be sufficient to identify the property. The ruses laid down in Sec. 21 and 22 Registration Act for description of property must be followed. A proper description of the property is necessary to create a mortgage and for its registration. Securing payment of money advanced or to be advanced by way of loan a mortgage maybe exacted to secure a loan of money already taken or to secure a future loan. A "security", speaking generally, is anything that makes the money more assured in its payment or more readily recoverable. It is the assurance in its payment or ready recoverability that constitutes a particular thing a security for the debt. A mortgage may be executed for the purpose of providing a security for the repayment of a loan already taken or for a loan to be taken in future. A mortgage may not only be made for a specific sum but to secure a current account . between the parties up to a limit named. It is sufficient if the money is left at the mortgager's disposal in a bank deposit

Securing an Existing or Future Debt:

A mortgage may be made as security for the payment of a present debt or for the payment of a debt that may be incurred in future. A mortgage may be made to secure the unpaid price of a house purchased. A future debt may be a contingent liability, e.g. to secure the payment of the respondent's costs in appeal. A security bond given to an officer of the court to secure an amount that may be decreed or ordered by the court is a mortgage to secure a future debt.

 

Securing the Performance of An Engagement:

The word "engagement" means a contract and the qualification "as may give dse to pecuniary liability" means a contract the fulfillment or non fulfillment of which may result in a liability to pay money. In other words it contemplates a liability to pay money arising out of a contract. It includes cases in which there is a legal obligation to pay damages or to pay for the value of improvements due to a person who is to continue in possession of the land.

Kind of Mortgages:

Section 58 of the transfer of property Act enumerates six kinds of mortgages.

(i)            Simple Mortgage:

the salient features are: (a) Mortgager under takes personal liability for repayment. (b) No possession of mortgaged property is delivered. (c) On mortgager's default in making payment mortgagee is entitled to cause mortgaged property to be sold. (d) There is no foreclosure of the mortgaged property. (e) No power of sale out of court. Power to sell mortgaged property is only obtained on a decree for sale being obtained. (f) The mortgage must be effected by a registered deed even if the consideration is below Rs. 100.

 

(ii) Mortgage by Conditional Sale:

the salient features (a) The mortgage ostensibly sells the mortgaged property. (b) The stipulation being that the sale shall be absolute in default of payment by a particular date or that the sale shall be void on payment by a particular date and the property retransferred. (c) The remedy of he mortgage is by foreclosure and not by sale. (d) The mortgage must be by registered deed if the consideration is Rs. 100 or more. If the consideration is less than Rs. 100 possession is necessary. (e) The transaction must be embodied in a single deed.

 

(iii) Usufructuary Mortgage:

the salient features are: (a) There is delivery of possession of the mortgage property to the mortgagee. 103 (b) The property remains in the possession of the mortgagee till full repayment. (c) The profit of the property is appropriated by the mortgagee towards liquidation of the advance. (d) The property is returned when the amount due is personally paid or is discharged by rent and profits received. (e) There is no remedy by sale or foreclosure. (f) The mortgage must be affected by a deed registered if the consideration is Rs. 100; registration is optional but delivery of property is essential.

 

(iv) English mortgage:

the salient features are: (a) The mortgage property is transferred absolutely by the mortgage to the mortgagee. (b) There is a personal covenant to repay on a certain date. (c) There is a stipulation for its retransfer in case of repayment of the loan. (d) the remedy of the mortgagee is by sale and not by fore closure. (e) power of sale out of court is conferred on certain persons under some circumstances (Sec. 69)

 

(v) mortgage by deposit of title deeds:

the salient features are: (a) Such a mortgage is only created in the towns of Calcutta, Chennai, and Mumbai in any other town which the state Government may by notification in the official Gazette, specify. A number of towns and cities have been specified. (b) It is created by delivery of the material title deeds in respect of the mortgaged property to the mortgagee; no delivery of possession of property takes place. (c) It is made only for the purposes of securing a past debt or advance or to cover future advances. (d) No registration is necessary even if there is a writing recording the deposit. (e) The remedy is by sale and not by fore closure. (f) All the provisions relating to a simple mortgage apply to an equitable mortgage

 

(vi) Anomalous mortgagee:

The salient features are: (a) A mortgage which is not a mortgage of the 5 kinds enumerated above is an anomalous mortgage. (b) It may be a combination of two or more kinds of mortgages (c) The remedy is by sale or by foreclosure depending on he terms of the deed. (d) It the mortgage is foe a consideration of Rs. 100 or more the deed must be registered, if below Rs. 100 delivery of possession is essential, registration is optional.

 

Mortgage Registration:

(i) A simple mortgage can, whatever be the amount secured, only be made by a written instrument signed by the mortgagor attested by at least two witnesses and registered. (ii) For a mortgage by deposit of title deeds no formalities are prescribed. It can be either oral or written. When such a mortgage so reduced to writing it must be attested by at least two witnesses and registered if the money secured is a Rs. 100 or more. But a mere memorandum of an oral mortgage does not require registration. (iii) The other four kinds of mortgage, if the amount secured is Rs. 100 or above can only be effected by a written instrument signed by the mortgage, attested by at least two witnesses and registered. If the amount secured is less than RS.1 00 the mortgages can be effected either by a written instrument signed by the mortgagor, attested by at least two witnesses and registered or by delivery of the property. A mortgage may be drafted either as added poll (unilateral document) exacted by the mortgagor and the mortgagee.

 

Right of Redemption:

The mortgager's right of redemption after the date fixed for payment is called the equity of redemption. The mortgagor who has parted with some rights of ownership has the right to resume what he has parted with. The right cannot be fettered or taken away by any term or condition in the mortgage deed. The right of redemption arises when the principal money secured by the mortgage has become due and may be exercised at any time thereafter, subject of the law of limitation. It is, however, permissible for the parties to make a provision that the mortgagor may discharge the debt within a specified period and take back the property. The right is exercised by the payment or tender to the mortgagee at the proper time and at the proper place of the mortgage money. The right of redemption is regulated by sec. 60 of the transfer of property Act, and the right of usufructuary mortgagor to recover possessor is governed by Sec. 62.

 

Right of foreclosure:

The right of foreclosure is a right of the mortgagee to obtain a decree absolutely. Debarring the mortgagor from exercising his right to redeem the property. The result of the passing of a decree for foreclosure is that the mortgaged property vests in the mortgagee and the mortgagor cannot recover it. But this right can only be exercised in the case of a mortgage by conditional sale and in an anomalous mortgage the terms whereof provide for foreclosure. Another right which a mortgagee has is applying to the court for a decree for the sale of the mortgage property to satisfy the amount secured by the mortgage. A usufructuary mortgagee and a mortgagee by conditional sale cannot exercise this right. These rights can be exercised, in the absence of a contract to the contrary after the mortgage money has become due and before a decree for redemption had been passed or the mortgage money has been paid or deposited (Sec. 67).

 

Mortgagee's right to sue for mortgage money: -

While Sec. 67 provides remedies against the mortgaged property Sec. 68 provides a personal remedy against the mortgager. The circumstances in which a suit for the mortgage money can be filed are enumerated in Sec. 68. Stamp Duty on mortgager of immovable property - stamp duty is chargeable under Art. 40 schedule I of the stamp Act.