Professional Documents
Culture Documents
Simple Mortgage
Simple Mortgage
Simple Mortgage
Preface
A mortgage as per 58 of the Transfer of Property Act, 1882 is the transfer
of an interest in a specific immoveable property for the purpose of securing
the payment of money. This paper examines all essentials of a simple
mortgage in detail, as well as its important features, such as the rights of
the mortgagor, mortgagee, with emphasis on the right to redemption. It
also highlights features of sub mortgage and tacking.
Introduction
According to Section 58 of the Transfer of Property Act, 1882, a mortgage is
the transfer of an interest in specific immoveable 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 agreement which may
give rise to pecuniary liability.[1]
The transferor is called a mortgagor, the transferee a mortgagee; the
principal money and interest the payment of which is secured for the time
being are called the mortgage money and the instrument by which the
transfer is affected is called the mortgage deed.[2]
Essentials of mortgage[3]
If however the debtor borrows money from the creditor and puts this clause
that the creditor cannot sell the mortgaged property before the repayment
of loan then it is not a mortgage as there is no transfer of interest from the
property mortgaged. The basic difference between sale and mortgage is that
in mortgage there is a part of interest that is transferred while in a sale
there is complete transfer of rights.
The three most important features of a mortgage are:
The mortgagor can claim his right to the property he mortgaged after
he repays his loan.
1. Rights of Redemption: The mortgagor has the right to get back the
mortgaged property if
His right to get back his mortgaged property has not been quashed by
the court or by one of the contracting parties.
The mortgager who has redeemed the mortgage is entitled to the following
rights:
He can get back all the valid legal documents accrued in the process of
executing the mortgage deed.
He also has the right to get back the property he mortgaged as his
own expense or ti a third person as directed by him.
1. Right to Sue for Mortgage Money: The mortgagee can claim his
mortgage money by filing a suit in the following situations:
2. Right of Sale: The mortgagee is well within his right to sell off the
mortgaged property on non payment of loan by filing a suit and
getting a decree from the court. However Sec. 69 of the Transfer of
Property Act gives the right to the mortgagee to sell off the mortgaged
property without filing a suit in the court of law and getting a decree to
sell the mortgaged property.
2. Right of Foreclosure: The mortgagee has a right to move court and file
a suit against the mortgagor barring him from claiming the mortgaged
property back. The right of foreclosure can be claimed in mortgage by
conditional sale and anomalous mortgage.
2. Right of Accession to Property: If any alteration is made to the
mortgaged property, then the mortgagee is entitled to both the
property that has been mortgaged and the alteration as security for
the money loaned.
2. Right to Possession: the mortgagee is legally empowered to take
control of the mortgaged property as per the terms of the contract of
mortgage. This right is available in usufructuary mortgage.
Sub mortgage[6]
A mortgage becomes a sub mortgage when the mortgagee, who is the
current possessor of the mortgaged property, uses the mortgaged property
as an advance. The mortgaged property as is property of the mortgagee as
long as the mortgagor has not repaid his loans, he can use the mortgaged
property to get loans by re-mortgaging the already mortgaged property.
The sub mortgagee has all the rights of the mortgagee and has all the legal
rights of the mortgagee. He has the right to get repaid the money loaned,
file a suit against the mortgagee turned mortgagor and take mortgaged
property as security. The sub mortgage is also called mortgage of
mortgagee.
Tacking[7]
A debtor can lawfully execute more than one mortgage at the same time on
his own property. But the priority of the mortgages will be according to the
dates on which they were executed.
Simple mortgage[8]
Definition
Simple mortgage is executed where without any property being delivered to
the mortgagee; the mortgagor makes himself liable to repay the debt[9]. It
is implied by him in an express or implied manner that in the event of nonrepayment of loan, the mortgaged property can be used to make good of the
loan by the mortgagee[10].
The fundamental characteristic of simple mortgage is that the mortgagee
has no right to liquidate the property without the permission of the court.
The mortgagee can[11]:
File a suit for recuperation of the entire sum without offering the
property.
Personal Liability
A simple mortgage entails two types of liabilities, personal liability and the
mortgaged property[12]. In a standard mortgage deal, the mortgagor does
not have any personal liability and on non-repayment of loans, the
mortgagee can move on to liquidate the mortgaged property in order to
make good of the loan. But in a simple mortgage, there is a personal liability
on part of the mortgagor to repay the loan along with the mortgaged
property, hence the mortgagee has to option to move against either the
mortgagor personally thus obtaining a decree against him or he can move
against the mortgaged property to liquidate it for the payment of loan. The
presence of a personal covenant is very important in a simple mortgage and
that is what distinguishes it from other forms of mortgage.
No Delivery of Possession
There is no delivery of mortgaged property in simple mortgage. The money
can be recovered by a money decree. A clause to transfer the complete
interest of a mortgaged property to the mortgagee on non-payment of loans
changes the simple mortgage into mortgage with possession.
Sale of Property
In mortgage, the mortgagor may give the power to sale the property either
expressly or impliedly. This basically means that on the event of nonpayment of debt, the mortgagee can sell the mortgaged property. But even
if the contract of mortgage specifically talks about selling the property on
non-payment the mortgagee cannot go ahead with the sale of the
mortgaged property and has to wait for the intervention of the court to sell
the mortgaged property.
Adverse Possession
A trespasser who removes the mortgagor and takes possession of the land
that land can still be legally mortgaged. The trespasser can become the
owner of the limited right the mortgagor has over the land mortgaged by
him but it does not in any way take away the legal rights of the mortgagee
over the mortgaged land in a simple mortgage .Adverse possession is valid
only when the mortgagee who has a right over the mortgaged land does not
take possession over the land in time and he runs against time which is from
the day he gets his right to interest over the mortgaged land. If there is no
accrual of rights to possess the land by the mortgagee, his right cannot be
taken away by the mere possession of that particular mortgaged land by the
adverse claimant.
If the mortgage has been declared illegal for being unregistered and the
mortgagee has been in possession of that land for more than 12 years then
after 12 years, the mortgage becomes valid.
characteristic that must be kept in mind that there is only a partial transfer
of interest from the mortgagor to the mortgagee on transfer of property.
Edited by Neerja Gurnani
[1] Section 58(b), Transfer of Property Act, 1882
[2] Section 58(b), Transfer of Property Act, 1882
[3] Essentials of mortgage available
at http://www.lawyersclubindia.com/forum/Types-of-Mortgage8944.asp#.Uyc18c6adFx (last visited on 15/3/2014)
[4]Rights of Mortgagor available at
sjecnotes.weebly.com/uploads/5/2/5/1/5251788/mortgage.doc (Last Visited
on 16/3/2014)
[5] Rights of Mortgagor available at
sjecnotes.weebly.com/uploads/5/2/5/1/5251788/mortgage.doc (Last Visited
on 16/3/2014)
[6] Sub Mortgage available at
sjecnotes.weebly.com/uploads/5/2/5/1/5251788/mortgage.doc(Last Visited
on 16/3/2014)
[7] Tacking available at
sjecnotes.weebly.com/uploads/5/2/5/1/5251788/mortgage.doc (Last Visited
on 16/3/2014)
[8] Dr. Poonam Saxena, Property Law, Pg.410 412,
[9] Simple Mortgage is used to notify all mortgage deeds where the debtors
binds himself through a personal covenant and gives his property as security
to the creditor. See Jangi Singh v chander (1908) ILR 30 All 390
[10] In a deed of simple mortgage, the transfer of right signifies the right to
liquidate the property. There is no rule stating that such right be expressly
mentioned in the mortgage deed. See dalip Singh v Bahadur ram (1912) 34
All 446.
[11] Fundamental Characteristics of Simple Mortgage available at
sjecnotes.weebly.com/uploads/5/2/5/1/5251788/mortgage.doc (Last Visited
on 16/3/2014)
[12] Wahidunnia v Gobardhan (1900) ILR 22 All 453