Friday, 4 February 2022

What is a Mortgage?



By swatee Shukla 

The mortgage is defined in section 58 of the “transfer of property act 1882”. It is the transfer of an interest in specific immovable property for the purpose of securing payment of the money advanced by way of a loan. The transferor is called a mortgagor, the transferee a mortgagee, the principal money and interest of which payment is secured are called ‘mortgage money and the instrument by which transfer is effected is called a mortgage-deed. There are six kinds of mortgages according to this act.

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 failure to pay according to his contract, the mortgage 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 simple mortgage and the mortgagee a simple mortgagee.

Mortgage by the conditional sale- where the mortgagor ostensibly sells the mortgaged property on condition that on default payment of mortgage- money on a certain date the sale shall become absolute, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called by conditional sale and the mortgagee a mortgagee by conditional sale. 

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 authorizes him to retain such possession until payment of the mortgage-money, and to receive the rents and profits acquired from the property ( or any part of such rents and profits and to appropriate the same) instead 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. 

English mortgage- where the mortgagor binds himself to re-pay the mortgage money on a certain date and transfers the mortgaged property absolutely to the mortgagee, but the subject to a proviso that he will retransfer it, o mortgagor, upon payment of the mortgage money as agreed, the transaction is called an English 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. 

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. 

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