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Tax4india ›› Indian Law ›› Property And Real Estate ›› Mortgage
Mortgage
Mortgage By Deposit Of Title Deeds / Equitable Mortgage
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.
Rights And Liabilities Of Mortgagor
The rights and liabilities of a mortgagor under a mortgage are as under:
- Right of mortgagor to redeem:
Section 60, Transfer of Property Act provides that at any time after the principal money has become due, the mortgagor has right on payment or tender, at a proper time and place, of the mortgage money, to require the mortgagee
- To deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee;
- where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor; and
- at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and where the mortgage has been effected by a registered instrument to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgage has been extinguished:
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 mortgagor
Section 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 mortgagee’s 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.
- Rights to redeem separately or simultaneously
A mortgagor who has executed two or more mortgages in favour of the same mortgagee shall, in the absence of a contract to the contrary, when the principal money of any two or more of the mortgages has become due, be entitled to redeem any one such mortgage separately or any two or more of such mortgages together.
- Right of usufructuary mortgagor to recover possession
In the case of usufructuary mortgage, the mortgagor has a right to recover possession of the property together with the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee.
- Accession to mortgaged property
Where mortgage property in possession of the mortgagee has during the continuance of the mortgage received any accession, the mortgagor upon redemption, shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession.
- Improvements to mortgaged property
Section 63A (1), Transfer of Property Act provides that where mortgaged property in possession of the mortgagee has during the continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement and the mortgagor shall save only in cases provided for in sub-section (2) be liable to pay the cost thereof.
- Renewal of mortgaged lease
Where the mortgaged property is a lease, and the mortgagee obtains a renewal of the lease, the mortgagor, upon redemption, shall in absence of a contract by him have the benefit of the new lease.
- Mortgagor’s power to lease
Section 65A(1), Transfer of Property Act provides that a mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee.
- Waste by mortgagor in possession
A mortgagor in possession of the mortgaged property is not liable to the mortgagee for allowing the property to deteriorate; but he must not commit any act, which is destructive or permanently injurious thereto, if the security is insufficient or will be rendered insufficient by such act.
A security is insufficient, unless the value of the mortgaged property exceeds by one-third or, if consisting of buildings, exceeds by one-half the amount for the time being due on the mortgage.
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