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ASSIGNMENT TOPIC:

MORTGAGE, TYPES, LIABALITIES


AND RIGHTS OF MORTGAGER AND
MORTGAGEE

NAME: UMAIMA ALI


ROLL NO: 145/2K16/LLB
SUBJECT: LAW OF PROPERTY
SUBMITTED TO: MAM REHANA
DEPARTMENT: INSTITUTE OF LAW
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WHAT IS MORTGAGE?
According to section 58 (a) of the transfer of property act, 1882, defines
mortgage as, “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 three essentials of mortgage and these are:
1. Transfer of an interest
2. Specific immovable property 
3. Securing the payment of money advanced 

TYPES OF MORTGAGES:
There are six kinds of mortgages which are detailed as under:
1. Simple Mortgage:
A simple mortgage is one where, without delivering possession of the
mortgaged property, the mortgager 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 may be necessary, m the payment of the mortgage money.
However, the mortgagee cannot directly sell the property. The sale must be
through the intervention of the court. The mortgagee will have to obtain first a
decree from the court for the sale of the mortgaged property since the words
used are “cause the mortgaged property to be sold”.
2. Conditional mortgage: 
It’s defined as a situation, where the mortgagor ostensibly sells the mortgaged
property –
i) On the condition that on default of payment of the mortgage money (loan) on
a certain date the sale shall become absolute or
ii) On condition that on such payment being made the sale shall become void or,

iii) on the condition that in such payment being made the buyer shall transfer
the property to the seller,
PROVIDED that no such transaction shall be deemed to be a mortgage, unless
the condition is embodied in the document which affects or purports to affect
the sale?
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3. Unsufructuary Mortgage:
A usufructuary mortgage is one where the mortgagor delivers or agrees to
deliver the possession of the mortgaged property to the mortgagee and
authorizes him –
i) To retain such possession until payment of the mortgage money,
ii) To receive the whole or any part of the rents and profits accruing from the
property, and
iii) To appropriate such rents or profits; (i) in lieu of interest, or (ii) in payment
of the mortgage money, or (iii) partly in lieu of interest and partly in lieu of the
mortgage money
4. English Mortgage:   It has below characteristics:-
i)   That the mortgagor should bind himself to repay the mortgage money/loan
on a certain day;
ii)  That the mortgaged property should be transferred absolutely to the
mortgagee ; and
iii) That such absolute transfer should be made subject to a proviso that the
mortgagee will recover the property to the mortgagor, upon the payment by him
of the mortgage money on the appointed day
The difference between the mortgage by conditional sale and English mortgage
is that in English mortgage, the mortgagor binds him personally to repay the
money.
5. Mortgage by Deposit of Title Deeds:
In England and popularly in India, this mortgage is called the equitable
mortgage. Under the definition under Section 58 (f) of Transfer of Property Act,
1882, the essential requisites of such mortgage are:
i)   a debt should be there
ii) deposit of the title deed with the lender (most essential)
iii) said deposit is with intention that the said title deed shall be security for the
debt.
Section 96 of the Transfer of Property Act, 1882 places mortgages by deposit of
title deeds on the same footings as simple mortgages. As such, the security can,
like a simple mortgage can be enforced by a suit for sale of mortgaged property,
of course, by the process of the law. And this kind of mortgage does not require
registration and is at par with any other legal mortgage.
6. Anomalous Mortgage:
A mortgage other than any of the mortgages explained so far. Is an anomalous
mortgage. Such a mortgage includes a mortgage formed by the combination of
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two or more types of mortgages as explained above. It may, therefore, take


various forms depending upon custom, local usage, or contract.
Balloon mortgages last for a much shorter term and work a lot like a fixed-rate
mortgage. The monthly payments are lower because of a large balloon payment
at the end of the loan. The reason why the payments are lower is because it is
primarily interest that is being paid monthly. Balloon mortgages are great for
responsible borrowers with the intentions of selling the home before the due
date of the balloon payment. However, homeowners can run into big trouble if
they cannot afford the balloon payment, especially if they are required to
refinance the balloon payment through the lender of the original loan
Conventional / Low Ratio Mortgages
A mortgage where the down payment is equal to 20% or more of the property’s
value/purchase price. A low-ratio mortgage does not normally require mortgage
protection insurance.
High Ratio Mortgages
A High-Ratio Mortgage is one where the borrower is contributing less than 20%
of the value/purchase price of the property as the down payment.
Open Mortgages
An open mortgage allows you the flexibility to repay the mortgage at any time
without penalty. Open mortgages usually have shorter terms, but can include
some variable rate/longer terms as well.  Mortgage rates on Open Mortgages are
typically higher than on Closed Mortgages with similar terms. 
Closed Mortgages
A closed mortgage is a mortgage agreement that cannot be prepaid, renegotiated
or refinanced before maturity, except according to its terms. 
Fixed Rate Mortgages
The interest rate of a fixed rate mortgage is determined and locked in for the
term of the mortgage. Lenders often offer different prepayment options
allowing for quicker repayment of the mortgage and for partial or full
repayment of the mortgage.
Variable Rate Mortgages (VRM) / Adjustable Rate Mortgages (ARM)
These types of loans differ from a fixed rate mortgage in that the mortgage
rate may be changed during the term of the mortgage. Generally, these
mortgages are initially set up like a standard loan, based on the current interest
rate. The mortgage is reviewed at specified intervals and if the market interest
rate has changed, either changing the size of the payment or the length of the
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amortization period (or a combination of both), the lender then alters the
mortgage repayment plan.

RIGHTS OF MORTGAGOR 
Right of Mortgagor are as follows-
I) Right to Redeem - 
According to Section 60 of the 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
(a) 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
(b) where the mortgagee is in possession of the mortgaged property, to deliver
possession thereof to the mortgagor, and
(c) 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 mortgagee 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 a court. The right conferred by this section
is called a right to redeem and a suit to enforce it is called a suit for
redemption. Nothing in this section shall be deemed to render invalid any
provision to the effect that, if the time fixed for payment of the principal money
has been allowed to pass or no such time has been fixed, the mortgagee shall be
entitled to reasonable notice before payment or tender of such money.
Redemption of portion of mortgaged property-Nothing in this section shall
entitle a person interested in a share only of the mortgaged property to redeem
his own share only, on payment of a proportionate part of the amount remaining
due on the mortgage, except only where a mortgagee, or, if there are more
mortgages than one, all such mortgagees, has or have acquired, in whole or in
part, the share of a mortgagor.
II) Right to inspection and production of documents -
According to Section 60B of the Property Act, 1882 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.
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III) Right to redeem separately or simultaneously:


According to Section 61 of the said Act, 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 anyone such mortgage
separately, or any two or more of such mortgages together.
IV) Right of usufructuary mortgagor to recover possession:
In the case of a 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,-
(a) where the mortgagee is authorized to pay himself the mortgage-money from
the rents and profits of the property,-when such money is paid;
(b) where the mortgagee is authorised to pay himself from such rents and profits
or any part thereof a part only of the mortgage-money, when the term (if any)
prescribed for the payment of the mortgage-money has expired and the
mortgagor pays or tenders to the mortgagee the mortgage-money or the balance
thereof or deposits it in court hereinafter provided.  (Section 62 of TPA)
V) Accession to mortgaged property
According to Section 63 of the Transfer of Property Act, 1882 where
mortgaged 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.
Accession acquired in virtue of transferred ownership- Where such accession
has been acquired at the expense of the mortgagee and is capable of separate
possession or enjoyment without detriment to the principal property, the
mortgagor desiring to take the accession must pay to the mortgagee the expense
of acquiring it.If such separate possession or enjoyment is not possible, the
accession must be delivered with the property; the mortgagor being liable, in the
case of an acquisition necessary to preserve the property from destruction,
forfeiture or sale, or made with his assent, to pay the proper cost thereof, as an
addition to the principal money, with interest at the same rate as is payable on
the principal, or, where no such rate is fixed, at the rate of nine percent per
annum. In the case last mentioned the profits, if any, arising from the accession
shall be credited to the mortgagor. Where the mortgage is usufructuary and the
accession has been acquired at the expense of the mortgagee, the profits, if any,
arising from the accession shall, in the absence of a contract to the contrary, be
set off against interest, if any, payable on the money so expended.
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VI) Renewal of mortgaged:


According to Section 64 of the Act, where the mortgaged property is under
lease, and the mortgagee during possession of the mortgaged property gets
renewal of the lease, then the mortgagor has the right of redemption with
renewal of the lease.

LIABILITIES OF THE MORTGAGOR


1) A Mortgagor must have the right to mortgage such property;
2) The mortgagor must have a legal title of the property;
3) The mortgagor is liable to pay all taxes if the property is not in the possession
of the mortgagee.
4) The mortgagor is liable to pay the lease rent of the mortgaged property if the
mortgaged property is under the lease. The mortgagor must comply also with
the terms and conditions of the lease deed if the mortgaged property is under
lease deed; and
5) The Mortgagor is liable to comply also with the terms and condition of the
previous mortgage deed if any relating with the same property

RIGHTS OF MORTGAGEE:-
Following are the important rights of mortgagee:
1. Selling Right:-
If borrower fails to return the loan in time then the mortgagee has the right to
sell the property of the mortgagor. But it will be sold and getting decree from
the court. Property will be sold by auction.
2. Shortage of Money Case:-
After selling the property if amount is less than the loan, the balance can be
recovered from the person by getting the decree from the court.
3. Usufructuaries Case:-
In this case mortgagee has no right to sell the property and to obtain the decree
from the court. The banker can retain the possession till the recovery of the
loan.
4. Refusal of Debt:-
If a borrower refuses to return the loan or he is unable to pay the debt then the
lender can get a foreclosure decree from the court.
5. Adjustment of Payment:-
The banker has a right to distribute the payment received after the sale of
property according the principal amount, interest and other charges.
6. Joint Suit:-
If the mortgagor are more than one person then suit will be filed against all of
them if the loan is not returned
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7. Sale of Private Property:-


In case of private property the mortgagee will issue at least 3 months’ notice to
the mortgagor before selling the property.

LIABILITIES OF MORTGAGEE:
1.A mortgagee is bound to sue on behalf of all the mortgagees in respect of
which the mortgage money has become due in the absence of express contract.
During the continuance of the mortgage, the mortgagee is bound.
2. To manage the property as a person of ordinary prudence would manage if it
were his own.
3. To use his best endeavour to collect the rents and profits thereof.
4. in the absence of a contract to the contrary, to pay Government revenue and
the other charges of public nature and all rents, out of the income of the
property.
5. in the absence of a contract to the contrary, to make such necessary repairs as
the income of the property permits.
6. Not to commit ant act which is destructive or permanently injurious to the
property.
7. When the whole or any part of the property is insured against loss or damage
by fire, in case of such loss or damage to reinstate the insured property with the
money obtained from the insurance policy or to discharge the mortgage debt
with it, if the mortgagor so directs.
8. To keep clear, full and accurate accounts of all sums received and spent by
him as mortgaged and give them to the mortgagor when asked.
9. To debit receipts from the mortgaged property or where such property is
personally occupied by him a fair occupation rent thereof after deducting the
expenses of management, the collection charges, revenue and costs of repairs,
first against the interest on the mortgage money and then against the principal.
10. To account for the receipts from the mortgaged property. Such accounting
of receipt from the property shall be taken in lieu of interest on the principal
money given to the mortgagor.
This article is very useful to Mortgagor and Mortgagee to know their rights and
liabilities of the property in the Transfer of the property act

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