Mortgage, as defined under Section 58 of the Transfer of Property Act, 1882, involves the transfer of an interest in immovable property to a creditor as security for the repayment of a debt. The individual transferring the property is referred to as the mortgagor, while the recipient of the interest is termed the mortgagee. Section 58 outlines six types of mortgages, each with distinct rights and liabilities for the involved parties:
- Simple Mortgage: In this type, the mortgagor retains possession of the property but pledges it as security for the debt. If the mortgagor defaults on payment, the creditor has the right to sell the property through a court order to recover the debt.
- Mortgage by Conditional Sale: Here, the mortgagor sells the property conditionally to the creditor. If the mortgagor defaults on payment, the sale becomes absolute, leading to foreclosure.
- English Mortgage: In this arrangement, the mortgagor transfers the property to the creditor but with an agreement to re-transfer it upon debt repayment, akin to a combination of simple mortgage and mortgage by conditional sale.
- Usufructuary Mortgage: The mortgagor delivers possession of the property to the creditor, who then receives rent or profit as interest on the loan. The property is returned upon full repayment of the debt.
- Equitable Mortgage/Mortgage by Deposit of Title-Deeds: This type involves delivering the property’s title documents to the creditor as security. Provisions of a simple mortgage apply here.
- Anomalous Mortgage: This form combines elements of other mortgage types not covered by specific categories. The remedy for the mortgagee may be through sale or foreclosure, depending on the terms.
Additionally, mortgages involving a principal amount of one hundred rupees or more must be executed via a registered instrument, while those below that threshold can be affected by delivery of the property or a registered instrument.
Major rights associated with mortgages include the mortgagor’s right to redeem the property (Section 60) and the mortgagee’s right to sell it through foreclosure (Section 67), though the latter can be limited by contractual agreement.
Section 60 grants the mortgagor the right to redeem the property. Essentially, once the payment of money becomes due, the mortgagor has the entitlement to repay the debt and reclaim all title documents and possession of the property from the mortgagee. However, this right is forfeited if the parties have mutually agreed to extinguish it or if a court decree has nullified it.
Conversely, the mortgagee possesses the corresponding right to sell the property, known as foreclosure. Section 67 empowers mortgagees to seek a court decree for foreclosure if the debt remains unpaid. Failure by the mortgagor to settle the debt on time does not automatically transfer ownership to the mortgagee; instead, the mortgagee must seek a court decree for foreclosure. It’s important to note that while the right to redeem cannot be overridden by contract, the right of foreclosure can be waived by the parties involved.
