The term mortgage, put simply, means the Transfer of an interest as security
(commonly known as collateral) given by the borrower(mortgagor) to the loan
lender(mortgagee). Thus, if the borrower is unable to repay the loan or becomes
insolvent, it protects the lender, as he acquires the right over the mortgaged
property. This article talks about various concepts about the mortgage and the
rights and liabilities to which it gives rise to.
Concepts revolving around mortgage are provided under:
- Section 58-104 of The Transfer of Property Act, 1882
- The Indian Contract Act, 1872
Who is a Mortgagee?
A mortgagee is an individual, group of individuals or an organisation that lends
a loan to the borrower. He receives a mortgage as a security for the principal
money and the interest on the payment, collectively known as mortgage money. The
instrument(if any) through which the mortgage is transferred effectively to the
mortgagee is called the mortgage deed.
Who is a Mortgagor?
The borrower who transfers such immovable property to the mortgagee is known as
the Mortgagor. The mortgager is bound to repay the principal amount and the
interest on it, given that no contradictory contract is present. Otherwise, the
Mortgagee acquires the mortgaged property and has the right to recover the
mortgage money through it.
Ex. A gives B a loan of rupees 50 lakh, to which B transfers his immovable
property(his ancestral house) to A as security. Here, A is the mortgagee, and B
is the mortgagor.
Different Kinds Of Mortgage
Keeping the meaning of mortgagor, mortgagee, mortgage-money, mortgage-deed same
as explained above, a mortgage is of six kinds (Section 58 of TPA, 1882):
- Simple Mortgage
- Mortgage by Conditional Sale
- Usufructuary Mortgage
- English Mortgage
- Mortgage by deposit of title-deeds
- Anomalous mortgage
It is the mortgage where the mortgagor does not transfer
the property's possession to the mortgagee and is himself bound to pay the
mortgage money. And consent is expressed by the mortgagor to if he fails to do
so, the mortgagee has the right to have the mortgaged property sold or for sale
to recover the mortgage money. The mortgagee is such a case, is known as
Mortgage by Conditional Sale:
As the name suggests, this kind of mortgage is based on different mortgage-money
payment conditions. Here, the mortgaged property is apparently sold by the
mortgagor on the following conditions:
- if he is unable to repay the mortgage money, the sale is absolute, or
- if he pays the mortgage money, the deal is void, or
- The property is transferred back to the mortgagor on fulfilment of such
payment, given the conditions are documented.
Usufructuary Mortgage: The mortgage, where the mortgagor delivers the
property to the mortgagee or binds himself to do so. And the mortgagee (known as
usufructuary mortgagee) is authorised to collect the profits and rents from the
property as part of the mortgage money until the payment of the loan is
complete; it is called a usufructuary mortgage.
English Mortgage: The mortgagor transfers the property absolutely to the
mortgagee on the provision that the mortgagor is bound to repay the loan by a
specific date. Upon Successful payment, the mortgagee is bound to re-transfer
the property to him as agreed, and the transaction is an English mortgage.
Mortgage by deposit of title deeds: When the mortgagor, a resident of
Calcutta, Bombay, Madras or any other town, where the State Government specifies
this, delivers the documents of title of immovable property to the mortgagee as
a security, is known as Mortgage by deposit of title-deeds.
Anomalous mortgage: This type of mortgage combines two or more mortgages
mentioned above with the same meaning.
With every responsibility follows rights and liabilities. Further, in this
article, we shall discuss the rights and liabilities of a mortgagor.
Rights Of A Mortgagor
The Transfer of Property Act of 1882 offers privileges to a mortgagor in a
mortgage-deed, which are as follows:
Right of Mortgagor to Redeem (section 60)
- Right of mortgagor to redeem (S.60)
- Right to Transfer to the third party. (S.60A)
- Right to inspection and production of documents (S.60B)
- Right to redeem separately or simultaneously (S.61)
- Right of usufructuary mortgagor to recover possession (S.62
- Accession to mortgaged property (S.63)
- Renewal of Mortgaged Lease (S.64)
- Mortgagor's power to lease (S.65A)
- Right in the case of waste (S.66)
The mortgagor on the payment of the due mortgage money with reasonable
notification on the specific time and place has a right to:
- require the mortgagee to deliver the mortgage-deed and the mortgaged
property documents in his possession or under this power
- recover the possession of the mortgaged property from the mortgagee
- to get his property re-transferred at his own cost to him or a third
party by the mortgagee at the mortgagor's desire or get an acknowledgement
registered by the mortgagee extinguishing his right over the property
The right cannot be exercised if extinguished by the parties to the contract or
by a court's decree. The suit to enforce such a right is called a suit for
Right to Transfer to the third party. (S. 60A)According to this section, the
mortgagor has a right to ask the mortgagee to transfer the mortgage deed and the
mortgaged property to a third party at the mortgagor's desire; if the mortgagor
has paid the mortgage money, the mortgagee is bound to do so.
Right to inspection and production of documents (S.60B)
Under his right to redemption, the mortgagor can request at all reasonable times
on his own cost the and on successful payment of the expenses incurred by the
mortgagee on his behalf to inspect and make a copy or extract the documents of
the mortgaged property and mortgage-deed under the possession of the mortgagee.
Right to redeem separately or simultaneously (S.61)
On the execution of more than one mortgages favouring the same mortgagee, in the
absence of a contract, the mortgagor can, on the payment of the due of one of
the mortgage, redeem the deed on one individual or more mortgage-deed
Right of usufructuary mortgagor to recover possession (S.62)
In a usufructuary mortgage, the mortgagor has a right to recover possession of
the mortgage deed from the mortgagee when the mortgagee has received the
mortgage money from the property's profits and rents or has received the balance
payment from the mortgagor.
Accession to mortgaged property (S.63)
The mortgagor is entitled to the mortgaged property accession upon redemption,
if any, during the mortgage's continuance when in possession of the mortgagee if
a contract for the contrary does not exist. The mortgagee has no right to claim
the assession when redeemed by the mortgagor.
Renewal of Mortgaged Lease (S.64)
When the mortgaged property has a lease and in possession of the mortgagee,
renewal of lease is obtained. Upon redemption, the mortgagor has a right to
receive the lease's benefits unless mentioned otherwise in the contract.
Mortgagor's power to lease (S. 65A)
While in lawful possession of the property, the mortgagor has the right to make
the lease, which shall be binding on the mortgagee unless otherwise stated in
Right in the case of waste (S.66)
- The lease made shall be conducted in a regular manner of management of
the property and as per the customs and local law
- The reasonable and the highest rent shall be obtained, with no promise
of premium or condition of advance payment
- Shall not contain an agreement for renewal
- The lease shall take effect from no longer than six months from the day
of formation of the lease
- In case of lease of a building with or without land, the lease shall not
exist for more than three years and with an agreement of the rent and
conditions applied if not followed.
According to this, the mortgagor is not liable to the mortgagee for the
property's deterioration but shall not do an act, which is catastrophic or
permanent injury is caused to the property if it is insufficient as the
Liabilities Of A Mortgagor:Multiple liabilities are arising from the rights enjoyed by a mortgagor under
the Transfer of Property Act, 1882, which are discussed below:
- Covenant for the title
The mortgagor has a contract with the mortgagee to transfer the property to the
mortgagee, with which there is a warranty for the title of the property. If the
mortgaged property title is found defective, the mortgagee can bring an action
against the mortgagee for the principal amount and the damages incurred.
- Liability to indemnify for defective title
When the property title is found to be defective on the part of the mortgagor,
the mortgagor is liable to pay damages to the mortgagee. The injuries are for
the charges incurred by the mortgagee in claiming the right to the title.
- Liability to avoid waste (S. 66)
The mortgagor is liable if he acts in a way that leads to waste of property or
destroys or injures the property, reducing its value and making it insufficient
for security. Waste is of two types:
- Permissive Waste:
It is the small waste for which the mortgagor is not liable for
- Active Waste:
When the destruction cases a greater waste and reducing the
value of the property, the mortgagor is liable
- Improvements to mortgaged property (section 63A)
When the mortgaged property undergoes improvements in the continuance of a
mortgage need, the mortgagor is liable to pay the amount incurred.
When such improvements are necessary to prevent the property from destruction
and are incurred by the mortgagee, the mortgagor is liable to pay the amount in
addition to the mortgage money and the principal, if not contract to the
contrary is present. The interest has to pay at the required rate, and 9% if no
rate is specified.
- Liable to compensate mortgagee
When the property is in possession of the mortgagee and the mortgagee incurs the
property's taxes, the mortgagor is liable to pay the mortgagee's expenses. If
the property is in the mortgagor's possession, he is liable to pay all the
property taxes and public charges.
- Accession acquired in virtue of transferred ownership
The accession incurred at the mortgagee cost or which is capable of separate
possession acquired at the mortgagor's desire, the expenses occurred are to be
paid by the mortgagor. Also, if such accession is necessary to save the property
from destruction or harm, the mortgagor is liable to pay the amount and is
entitled to the profits.
Through the evolution of The Transfer of Property Act of 1882 has to widen the
horizon concerning the rights and liabilities of a mortgagor and a mortgagee.
This saves them from exploitation and securing the property mortgaged from
The Indian Contract Act, 1872 specifies the formation of mortgage deals to
ensure security and protection of the economically lower society. The articles
describe, in brief, the concepts of the rights and liabilities of the mortgagor.Award Winning Article Is Written By: Ms.Falgun Wairya
Authentication No: JL118670261032-05-0721
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