Mortgage and Types of Mortgage in Law

mortgage-and-types-of-mortgage-in-law
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Mortgage Definition:

According to Section 58, A mortgage is defined as “it is the transfer of an interest in specific immovable 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”.

The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.

Types of Mortgage in Law:

There are six types of Mortgage in law:

  1. Simple Mortgage
  2. Mortgage by Conditional Sale
  3. Usufructuary Mortgage
  4. English Mortgage
  5. Mortgage by deposit of title-deeds
  6. Anomalous Mortgage

1.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 mortgagee shall have a right to cause the mortgaged-property to be sold and the proceeds of the 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.

2.Mortgage by Conditional Sale:

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 and the mortgagee a mortgagee by conditional sale.

3.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 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 an usufructuary mortgage and the mortgagee an usufructuary mortgagee.

4.English Mortgage:

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.

5.Mortgage by deposit of title-deeds:

Where a person 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.

6.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.

Essentials of Mortgage:

  1. Two parties i.e. Mortgagor and Mortgagee.
  2. Loan/ Mortgage-money
  3. Immovable property as a security/ Mortgaged property.
  4. Transfer of right of interest.
  5. Stipulated period.
  6. Written and registered.

Rights and Liabilities of Mortgagor:

Right of mortgagor to redeem (Right of Redemption):

According to Section 60 of Transfer of Property Act, 1882;

At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee-

  1. To deliver to the mortgagor the mortgage-deed, and all documents relating to the mortgaged property which are in possession or power of the mortgagee (Delivery of documents),
  2. Where the mortgagee is in possession of the mortgaged property to deliver possession thereof to the mortgagor (Delivery of possession), and
  3. Either to transfer the mortgaged property to the mortgagor, or to such third person as he may direct, or to execute an acknowledgment in writing that the mortgage has been extinguished (Reconveyance or acknowledgment).

Right and Liabilities of Mortgagee:

Right to foreclosure or sale (Right of foreclosure):

According to Section 67 of Transfer of Property Act, 1882;

The mortgagee has at any time after the mortgage-money has become due to him, and before a decree has been made for the redemption of the mortgaged property, or the mortgage-money has been paid or deposited as hereinafter provided, a right to obtain from the court a decree that the mortgagor shall be absolutely debarred of his right to redeem the property or a decree that the property be sold.

Read More: Transfer of Property

Conclusion:

It is concluded that the definition of a mortgage is the transfer of an interest in specific immovable 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. There are six types of mortgage in law that is simple, conditional, usufructuary, English, by the deposit of title deed and anomalous mortgage.

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