Property Mortgage Laws In India

The Transfer of Property Act, 1882 deals with the mortgage of immovable property in India. The mortgage is the transfer of an interest in immovable property for the purpose of securing a loan or the performance of an engagement. Hence, though mortgage does not transfer the property to a third-party, it creates an interest in the immovable property. In this article, we look at some of the major laws and regulations concerning the property mortgage in India.

Transfer of Property Act

The Transfer of Property Act deals with the mortgage of immovable property in India. A property mortgage is a transfer of an interest in a specific immovable property for securing the payment of money advanced in the form of a loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

Mortgagor - Mortgagee

Mortgagor: In a property mortgage transaction, the mortgagor is the person who borrows the money in lieu of creating a mortgage on the property, as an assurance to pay the debt. Mortgagee: Mortgagee in a mortgage transaction is the person lending money. Typically a bank or financial institution.

Types of Mortgage in India

Simple Mortgage

The simple mortgage is when a mortgagor binds to pay the mortgage money as per loan documents or gives the mortgagee, a right to sell the property and apply proceeds towards the loan of the mortgagor. In a simple mortgage, the possession of the property is not deliverable to the mortgagee.

Mortgage by Conditional Sale

A mortgage by conditional sale is when the mortgagor sells the mortgaged property to the mortgagee with a condition, with the sale becoming absolute in case of a payment default. In case of payment of mortgage then the same property is void as per terms.

Usufructuary Mortgage

The usufructuary mortgage is when a mortgagor delivers possession of a property to the mortgagee and authorizes the mortgagee to hold possession of the property until payment of the debt. Usually, rent or profits from the property while in possession of the mortgagee is applied in whole or in part towards the debt.

English Mortgage

An English mortgage is when a mortgagor binds himself to repay the loan on a certain date and transfer the property absolutely to the mortgagee, subject to the provision that the mortgagee will re-transfer the property back to the mortgagee on payment of the loan amount as agreed.

Mortgage by Deposit of Title-Deeds

Mortgage by deposit of title deeds is when the mortgagor delivers to the mortgagee, title to immovable property, with an intent to create security until the payment of the debt.

Anomalous Mortgage

Any mortgage which is not a simple mortgage or mortgage by conditional sale or usufructuary mortgage or English mortgage or a mortgage by deposit of title deeds can be an anomalous mortgage.

Validity of Property Mortgage

Any mortgage other than a mortgage by deposit of title deeds is valid only if the mortgage is entered by way of a registered instrument that is signed by the mortgagor and attested by at least two witnesses.

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Frequently Asked Questions

Common questions about Property Mortgage Laws in India: Comprehensive Overview.

A property mortgage is the transfer of an interest in an immovable property for the purpose of securing a loan or the performance of an engagement. It does not transfer the ownership of the property, but creates an interest in the immovable property as security for repayment of the loan.

The mortgagor is the person who borrows money and creates a mortgage on their property as security for repayment of the loan. The mortgagee is the person or entity, typically a bank or financial institution, that lends the money and holds the mortgage interest in the property.

The different types of mortgages in India include simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title-deeds, and anomalous mortgage. Each type has its own specific features and legal implications.

A simple mortgage is when the mortgagor binds themselves to pay the mortgage money as per the loan documents or gives the mortgagee the right to sell the property and apply the proceeds towards the mortgagor's loan. The possession of the property is not delivered to the mortgagee in a simple mortgage.

A mortgage by conditional sale is when the mortgagor sells the mortgaged property to the mortgagee with a condition that the sale becomes absolute in case of a payment default. If the mortgage is paid, the sale is void as per the terms.

An English mortgage is when the mortgagor binds themselves to repay the loan on a certain date and transfer the property absolutely to the mortgagee. However, the mortgagee is required to re-transfer the property back to the mortgagor upon payment of the agreed loan amount.

Any mortgage other than a mortgage by deposit of title deeds is valid only if it is entered into by way of a registered instrument signed by the mortgagor and attested by at least two witnesses.

A usufructuary mortgage is when the mortgagor delivers possession of the property to the mortgagee and authorizes the mortgagee to hold possession until payment of the debt. The rent or profits from the property during the mortgagee's possession are applied, in whole or in part, towards the debt.

A mortgage by deposit of title-deeds is when the mortgagor delivers the title documents of the immovable property to the mortgagee, with the intent to create security until the payment of the debt.

An anomalous mortgage is any mortgage that does not fall under the categories of simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, or mortgage by deposit of title-deeds.