Mortgage

Meaning of Mortgage -
The Transfer of Property Act, Chapter 4 Section 58 to 99 deals with the provision of
mortgage.
Mortgage is the most important kind of Security. The Essential nature of mortgage is that it is
a transfer of interest a specific immovable property. Mortgage is not a transfer of absolute
interest in the property mortgaged like sale or gift.

Definition of Mortgage -
Definition of mortgages given under Section 58(a): ‘mortgage’, 'mortgagor', ‘mortgagee’, '
mortgage- money' and mortgage-deed -
A mortgage is the transfer of an interest in a specific immoveable 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.

Mortgagor -
The transferor is called a mortgagor.

Mortgagee -
The transferee a mortgagee.

Mortgage-money -
The principal money and interest of which payment is secured for the time being are called
the mortgage-money.

Mortgage-deed -
The instrument (if any) by which the transfer is effected is called a mortgage-deed.
Essentials of mortgage

1) There must be a transfer of interest.

There is no transfer of ownership but transfer of interest only for the purpose of securing
payment of money by way of loan. The right of mortgagee is only an accessory right, which
is intended merely to secure the due payment of Debt. Mortgage is simply a transfer of
interest in the immovable property while the ownership still remain with the mortgagor.

2) There must be specific immovable property intended to be mortgaged.

The immovable property must be distinctly specified. The description of the property in the
mortgage deed must be sufficient to identify the property.

3) The transfer must be made to secure the payment of a loan or to secure the performance of
a contract. The consideration of mortgage maybe either

A) Money advanced or to be advanced by way of loan.

B) An existing or future Debt,
C) Performance of an engagement giving rise to pecuniary liability.

Kinds of mortgage
There are 6 kinds of mortgage:
1) Simple mortgage
2) Mortgage by conditional sale
3) Usufractuary mortgage
4) English mortgage
5) Mortgage by deposit of title-deeds
6) Anomalous mortgage.
A) Simple mortgage S.58 (b)
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.

Essentials of simple mortgage

1) There must be a transfer of specific immovable property.

2) The position of the property is retained by the mortgagor.
3) As the possession of the property is not given to the mortgagee, mortgagor has right to
usufruct e.g. Enjoyment of the property.
4) The title is not given to the mortgagee.
5) Mortgagor binds himself to pay mortgage money by Personal security.
6) Mortgagor has a right to sale on execution of decree against the mortgagor,
7) Mortgagee has no right of foreclosure.

B) Mortgage by conditional sale section 58(c)

Where, the mortgagor ostensibly sells the mortgaged property-

on condition that on default of payment of the mortgage-money on a certain date the sale
shall become absolute, or on condition that on such payment being made the sale shall
become void, or
on condition that on such payment being made the buyer shall transfer the property to the
seller, the transaction is called a mortgage 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.

Essentials of mortgaged by conditional sale -

1) Mortgagor ostensibly sells the immovable property by a sale. It is only ostensible and not
real.
2) The Mortgagor has given title and possession to the mortgagee and hence mortgagee gets a
right to usufruct property.
3) On default of payment of mortgage-money the sales
shall be absolute.
4) In case mortgagor repaid the loan, the sale shall become void.
5) That mortgagor is entitled to get the property transferred on such payment.
6) No Personal security and right to sale is given to the mortgagee.
7) Mortgagee gets a right to foreclose the property

C) Usufructuary Mortgage Sec 58(d)

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 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.

Essentials of Usufractuary mortgage

1) No title is given to the mortgagee.
2) Mortgagor has given possession and hence mortgagee enjoy a right to usufruct.
3) Mortgagor has not given any personal security a right to sale a foreclosure toy the
mortgagee.

D) English Mortgage S 58 (e)

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.
Essentials of English mortgage.

1) The mortgagor has given title , possession, right to usufruct to the mortgagor ;
2) The mortgagor bind himself to repay the mortgage money on a certain day.
3) The mortgagee is not given the right to foreclosure.

E) Mortgage by deposit of title-deeds Sec .58 (e) -

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.

The requisite essential -

1) Debt;
2) Deposit of title deeds;
3) An intention that the deed shall be security for the debt; the documents of title to
immovable property with intend to create a security thereon. This mortgage can only be made
in any of the following towns namely Calcutta, Madras, Bombay, Lucknow, Allahabad &
Kanpur and in any other town which the state Government concern may specify on this
behalf.

F) Anomalous mortgage - Sec. 58(f)

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.

It does not fit in above five mortgages, which is a combination of two or more of above
mentioned type mortgage.

ANVIT SEEMANSH
A3221515091
BBA LLB (H)
Section B, 7th sem