Vested, Contingent and Conditional Transfer ( Section 19-29)

19. Vested interest

When property is transferred to someone without specifying when their interest in it begins, or if the
transfer states that it takes effect immediately or upon the occurrence of a certain event, the interest is
considered vested, unless the transfer indicates otherwise.

If the transferee dies before obtaining possession, their vested interest remains unaffected.

Explanation

It should not be assumed that an interest is not vested simply because its enjoyment is postponed, or
because a prior interest in the same property is given or reserved for someone else, or because income
from the property is directed to be accumulated until the time of enjoyment, or because the interest will
pass to another person if a specific event occurs.

20. Unborn person

If property is transferred with the intention to benefit a person who is not yet born, that person acquires
a vested interest in the property upon their birth, unless the terms of the transfer indicate otherwise.
However, they may not be entitled to enjoy the benefits immediately upon birth.

21. Contingent interest

If a transfer of property creates an interest that will only take effect upon the occurrence of a specified
uncertain event, or if the event specified does not occur, then the person in whose favor the interest is
created has a contingent interest in the property. This contingent interest becomes a vested interest if
the specified event happens or if it becomes impossible for the event to occur.

Explanation

However, there is an exception. If a transfer of property entitles a person to an interest upon reaching a
certain age, and the transferor also grants them the absolute income generated by that interest before
they reach that age, or directs that the income or a portion of it be used for their benefit, then the
interest is not considered contingent.

22. Transfer to members of a class who attain a particular age

If property is transferred with the condition that only members of a particular class who reach a specific
age will have an interest in it, then the interest does not belong to any member of the class who has not
yet reached that age.

23. Transfer contingent on happening of specified uncertain event.

If property is transferred with the condition that a particular person will receive an interest in it only if a
specified uncertain event occurs, and no timeframe is mentioned for the event's occurrence, then the
interest will not be granted unless the event happens before or at the same time as the intermediate or
preceding interest ceases to exist.

24. Transfer to such of certain persons as survive at some period not specified
If property is transferred with the condition that an interest in it will be given to certain individuals who
are alive at an unspecified future period, then the interest will be given to those individuals who are
alive when the intermediate or preceding interest ends, unless the terms of the transfer indicate
otherwise.

Illustration

A transfers property to B for life, and after his death to C and D, equally to be divided between them, or
to the survivor, of them. C dies during the life of B. D survives B. At B’s death the property passes to D.

25. Conditional transfer.

If an interest in property is created with a condition attached to it, that interest will fail if the condition
cannot be fulfilled because it is impossible, prohibited by law, would violate legal provisions, is
fraudulent, involves harm to another person or their property, or if the court deems it immoral or
against public policy.

Illustrations

(a) A lets a farm to B on condition that he shall walk a hundred miles in an hour. The lease is void.

(b) A gives Rs.500 to B on condition that he shall marry A’s daughter C. At the date of the transfer C
was dead. The transfer is void.

(c) A transfers Rs.500 to B on condition that she shall murder C. The transfer is void.

(d) A transfers Rs.500 to his niece C if she will desert her husband. The transfer is void.

26. Fulfilment of condition precedent.

If the terms of a property transfer require a condition to be met before a person can have an interest in
the property, the condition will be considered fulfilled if there has been substantial compliance with it.

Illustrations

(a) A transfers Rs.5,000 to B on condition that he shall marry with the consent of C, D and E. E dies. B
marries with the consent of C and D. B is deemed to have fulfilled the condition.

(b) A transfers Rs.5,000 to B on condition that he shall marry with the consent of C, D and E. B
marries without the consent of C, D and E, but obtains their consent after the marriage. B has not
fulfilled the condition.

27. Conditional transfer to one person coupled with transfer to another on failure of prior disposition

If property is transferred to one person, and at the same time, there is another provision in the same
transaction that transfers the same interest to another person in case the first transfer fails, the second
transfer will take effect when the first transfer fails, even if the failure does not happen as expected by
the person making the transfer.

However, if the intention of the parties involved is that the second transfer will only take effect if the
first transfer fails in a specific manner, then the second transfer will not take effect unless the first
transfer fails in that particular manner.
 Illustrations

(a) A transfers Rs.500 to B on condition that he shall execute a certain lease within three months
after A’s death, and, if he should neglect to do so, to C. B dies in A’s lifetime. The disposition in favour of
C takes effect.

(b) A transfers property to his wife; but, in case she should die in his lifetime, transfers to B that
which he had transferred to her. A and his wife perish together, under circumstances which make it
impossible to prove that she died before him. The disposition in favour of B does not take effect.

28. Ulterior transfer conditional on happening or not happening of specified event

When property is transferred, an interest can be created for a person with the additional condition that
if a specified uncertain event occurs, the interest will pass to another person, or if the specified event
does not occur, the interest will pass to another person. In both cases, the dispositions are subject to
the rules outlined in sections 10, 12, 21, 22, 23, 24, 25, and 27.

29. Fulfillment of condition subsequent

An ulterior disposition, as mentioned in the previous section, cannot be valid unless the condition is
strictly fulfilled.

Illustration

A transfers Rs.500 to B, to be paid to him on his attaining his majority or marrying, with a proviso
that, if B dies a minor or marries without C’s consent, the Rs.500 shall go to D. B marries when only 17
years of age, without C’s consent. The transfer to D takes effect.

Transfer by different types of owners/ ownerships (Section 38-53A)

38. Transfer by person authorised only under certain circumstances to transfer

If a person is authorized to dispose of immovable property only under certain variable circumstances,
and they transfer the property for consideration by claiming that those circumstances exist, then,
regarding the transfer between the transferee and the transferor (and any other affected person), it will
be assumed that the circumstances indeed existed if the transferee acted in good faith after making
reasonable efforts to confirm their existence.

Illustration

A, a Hindu widow, whose husband has left collateral heirs, alleging that the property held by her as
such is insufficient for her maintenance, agrees, for purposes neither religious nor charitable, to sell a
field, part of such property, to B. B satisfies himself by reasonable enquiry that the income of the
property is insufficient for A’s maintenance, and that the sale of the field is necessary, and, acting in
good faith, buys the field from A. As between B on the one part and A and the collateral heirs on the
other part, necessity for the sale shall he deemed to have existed.

39. Transfer where third person is entitled to maintenance

If a third person is entitled to receive maintenance, an advancement, or a provision for marriage from
the profits of immovable property, and that property is transferred, the right of the third person can be
enforced against the transferee if the transferee has notice of the right or if the transfer is made without
any payment. However, the right cannot be enforced against a transferee who acquired the property for
consideration and without notice of the right, nor against the property itself in the hands of such a
transferee.

40. Burden of obligation imposing restriction on use of land, or of obligation annexed to ownership
but not amounting to interest or easement

If a third person has a right to restrict the use of another person's immovable property in order to
enhance the enjoyment of their own property, without having any interest or easement over the latter
property, or

If a third person is entitled to the benefits of an obligation arising from a contract, which is linked to the
ownership of immovable property but does not constitute an interest or easement in the property,

Then, such right or obligation can be enforced against a transferee who has notice of it or against a
transferee who acquired the property without payment. However, it cannot be enforced against a
transferee who acquired the property for consideration and without notice of the right or obligation, nor
against the property itself in the hands of such a transferee.

Illustration

A contracts to sell [37][Diwanpur] to B. While the contract is still in force, he sells [38][Diwanpur] to
C, who has notice of the contract. B may enforce the contract against C to the same extent as against A.

41. Transfer by ostensible owner

If, with the consent (express or implied) of the individuals who have an interest in immovable property,
a person is considered the apparent owner of that property and transfers it for a price, the transfer
cannot be invalidated on the basis that the transferor lacked the authority to make the transfer.

However, this provision applies only if the transferee, after taking reasonable care to confirm that the
transferor had the power to make the transfer, acted in good faith.

42. Transfer by person having authority to revoke former transfer

If a person transfers immovable property while reserving the power to revoke the transfer, and later
transfers the same property to another transferee for consideration, the second transfer effectively
revokes the previous transfer to the extent of the power (subject to any conditions attached to the
exercise of that power).

Illustration

A lets a house to B, and reserves power to revoke the lease if, in the opinion of a specified surveyor,
B should make a use of it detrimental to its value. Afterwards A, thinking that such a use has been made,
lets the house to C. This operates as a revocation of B’s lease subject to the opinion of the surveyor as to
B’s use of the house having been detrimental to its value.

43. Transfer by unauthorized person who subsequently acquires interest in property transferred.
If a person deceitfully or mistakenly claims to be authorized to transfer specific immovable property and
proceeds to transfer that property for consideration, the transfer, at the choice of the transferee, will be
valid on any interest that the transferor obtains in the property while the transfer agreement is in effect.

This provision does not diminish the rights of transferees who acted in good faith, paid consideration,
and were unaware of the option mentioned above.

Illustration

A, a Hindu, who has separated from his father B, sell to C three fields, X, Y and Z, representing that A
is authorised to transfer the same. Of these fields Z does not belong to A, it having been retained by B
on the partition; but on B’s dying A as heir obtains Z. C, not having rescinded the contract of sale, may
require A to deliver z to him.

44. Transfer by one co-owner

If one of the co-owners of immovable property, who has the legal authority to do so, transfers their
share or any interest in the property, the recipient of the transfer acquires the transferor's right to joint
possession or other common enjoyment of the property, as necessary to give effect to the transfer. The
recipient also has the right to enforce a partition of the property. However, these rights are subject to
any existing conditions and liabilities that affect the share or interest being transferred at the time of the
transfer.

In the case where the recipient of a share of a dwelling-house, which belongs to an undivided family, is
not a member of that family, this section does not grant them the right to joint possession or other
common enjoyment of the house.

45. Joint transfer for consideration

When immovable property is transferred to two or more persons for consideration, and that
consideration is paid from a shared fund they own, unless there is a different agreement, each person is
entitled to interests in the property that are similar to their respective shares in the fund. If the
consideration is paid from separate funds belonging to each person, unless there is a different
agreement, each person is entitled to a share in the property proportional to the amount of
consideration they individually contributed.

If there is no evidence regarding their respective shares in the fund or the amounts they contributed, it
is presumed that each person has an equal interest in the property.

46. Transfer for consideration by persons having distinct interests.

When immovable property is transferred for consideration by individuals who have distinct interests in
the property, unless there is a different agreement, the transferors are entitled to an equal share in the
consideration if their interests in the property were of equal value. If their interests were of unequal
value, they are entitled to a share in the consideration proportionate to the value of their respective
interests.

Illustrations
 (a) A, owning a moiety, and B and C each a quarter share, of mauza [40][Diwanpur], exchange an
eighth share of that mauza for a quarter share of a mauza [41][Pinanwal]. There being no agreement to
the contrary, A is entitled to an eighth share in [42][Pinanwal], and B and C each to a sixteenth share in
that mauza.

(b) A, being entitled to a life-interest in mauza [43][Chak Shadi] and B and C to the reversion, sell the
mauza for Rs.1,000. A’s life-interest is ascertained to be worth Rs.600, the reversion Rs.400. A is entitled
to receive Rs.600 out of the purchase-money, B and C to receive Rs.400.

47. Transfer by co-owners of share in common property

When multiple co-owners of immovable property transfer a share of the property without specifying
which shares of the transferors are being transferred, the transfer, among the transferors themselves, is
deemed to affect their shares equally if the shares were equal. If the shares were unequal, the transfer
affects the shares proportionately based on the extent of each share.

Illustration

A, the owner of an eight-anna share, and B and C, each the owner of a four-anna share, in the mauza
[44][Diwanpur], transfer a two-anna share in the mauza to D, without specifying from which of their
several shares the transfer is made. To give effect to the transfer one-anna share is taken from the share
of A, and half an anna share from each of the shares of B and C.

48. Priority of rights created by transfer

If a person attempts to create rights in or over the same immovable property through transfers made at
different times, and these rights cannot all coexist or be fully exercised together, each right created later
will be subordinate to the rights that were created earlier, unless there is a specific contract or
reservation that binds the earlier transferees otherwise.

49. Transferee’s right under policy.

If immovable property is transferred for consideration and that property, or a portion of it, is insured
against fire damage at the time of the transfer, the transferee has the right, unless there is a different
agreement, to request that any money received by the transferor under the insurance policy, or the
necessary portion of it, be used to reinstate or restore the property in the event of loss or damage.

50. Rent bona fide paid to holder under defective title

A person who, in good faith, pays or delivers rents or profits of immovable property to someone they
believed to be the rightful holder of that property shall not be held responsible for those payments or
deliveries, even if it later becomes apparent that the recipient had no right to receive such rents or
profits.

Illustration

A lets a field to B at a rent of Rs.50, and then transfers the field to C. B, having no notice of the
transfer in good faith pays the rent to A. B is not chargeable with the rent so paid.

51. Improvements made by bona fide holders under defective titles

If a person who acquires immovable property makes improvements on the property, believing in good
faith that they have complete ownership, but later gets evicted by someone with a superior title, the
transferee has the right to demand either:

The person causing the eviction to estimate and pay or secure the value of the improvements made, or

The person causing the eviction to sell their interest in the property to the transferee at the current
market value, regardless of the value of the improvements.

The amount to be paid or secured for the improvements will be their estimated value at the time of the
eviction.

If, under the same circumstances, the transferee has planted or sown crops on the property that are
growing at the time of eviction, they are entitled to those crops and to freely enter and exit the property
to gather and transport the crops.

52. Transfer of property pending suit relating thereto

During the ongoing proceedings of a lawsuit in a court with authority in Pakistan or established outside
Pakistan under the authority of the Federal Government, where the right to immovable property is
directly and specifically in question, none of the parties involved in the lawsuit can transfer or deal with
the property in a way that would affect the rights of other parties under any potential decree or order
that may be issued in the case, except with the authorization of the court and subject to its imposed
conditions.

Explanation: For the purpose of this section, the pendency of a lawsuit is considered to start from the
date the plaintiff presents the complaint or the proceeding is initiated in a court of competent
jurisdiction. It continues until the lawsuit is resolved through a final decree or order and complete
satisfaction or discharge of that decree or order is obtained, or if it becomes unattainable due to the
expiration of any time period specified by the applicable law for its execution.

53. Fraudulent transfer

(1) Any transfer of immovable property made with the intention to defeat or delay the creditors of the
person making the transfer can be invalidated at the choice of any creditor who is defeated or delayed
by such transfer. However, this does not affect the rights of a transferee who acquired the property in
good faith and for consideration. It also does not impact any existing laws concerning insolvency. If a
creditor files a lawsuit to challenge a transfer made with the intent to defeat or delay creditors, the
lawsuit should be brought on behalf of all the creditors.

(2) Any transfer of immovable property made without consideration and with the intent to defraud a
subsequent transferee can be invalidated at the option of that subsequent transferee. However, a
transfer made without consideration cannot be deemed fraudulent solely because a subsequent
transfer for consideration took place.

53-A. Part performance.

If a person enters into a contract, supported by consideration, to transfer immovable property through a
written agreement that contains clear and definite terms for the transfer:
And if the transferee, in part performance of the contract, takes possession of the property or a portion
of it, or if the transferee was already in possession and continues to remain in possession while carrying
out actions in furtherance of the contract,

And if the transferee has fulfilled or is willing to fulfill their part of the contract,

Then, even if the contract is required to be registered but hasn't been registered, or if the transfer hasn't
been completed as required by the law, the transferor or anyone claiming under them is prevented from
asserting any right against the transferee or those claiming under the transferee, except for rights
explicitly provided in the contract itself

However, this section does not affect the rights of a transferee who acquired the property for
consideration and had no knowledge of the contract or the part performance of the contract.

Sale (Section 54-57)

54. “Sale” defined

"Sale" is the transfer of ownership in exchange for a price, whether paid, promised, or a combination of
both.

For tangible immovable property valued at one hundred rupees or more, or for intangible things like
reversion, the transfer can only be made through a registered instrument.

For tangible immovable property valued less than one hundred rupees, the transfer can be made either
through a registered instrument or by delivering the property to the buyer.

Delivery of tangible immovable property occurs when the seller puts the buyer or a person directed by
the buyer in possession of the property.

A contract for the sale of immovable property is an agreement between the parties that a sale of the
property will happen based on settled terms. However, the contract itself does not create any interest in
or charge on the property.

55. Rights and liabilities of buyer and seller

In the absence of a contrary agreement, the buyer and the seller of immovable property have certain
rights and responsibilities. These include:

(1) Responsibilities of the seller:

Disclosing any material defects in the property or the seller's title that the buyer is unaware of and
couldn't have discovered with ordinary care.

Providing all relevant documents of title to the buyer upon request.

Answering the buyer's questions regarding the property or its title to the best of their knowledge.

Executing a proper conveyance of the property upon payment of the price.

Taking care of the property and its related documents until delivery.

Giving possession of the property to the buyer upon request.

Paying public charges, rent, and discharging any existing encumbrances on the property, unless sold
subject to encumbrances.

(2) Seller's warranty:

The seller guarantees that the interest they claim to transfer to the buyer exists and that they have the
power to transfer it.

If the sale is made by someone in a fiduciary role, they guarantee that the property is unencumbered
and transferable.

(3) Seller's duty upon full payment:

Delivering all documents of title relating to the property to the buyer.

If the seller retains a part of the property, they can retain all related documents.

If multiple lots are sold to different buyers, the buyer of the most valuable lot is entitled to the
documents, and the seller must produce copies upon reasonable request.

(4) Seller's entitlements:

Entitled to rents and profits until ownership passes to the buyer.

If the buyer hasn't paid the full purchase price, entitled to a charge on the property for the unpaid
amount and interest.

(5) Responsibilities of the buyer:

Disclosing any facts about the seller's interest in the property that increase its value and of which the
seller is unaware.

Paying or tendering the purchase price at the agreed time and place.

Bearing any loss or damage to the property not caused by the seller after ownership has passed.

Paying public charges, rent, and any outstanding amounts on encumbrances after ownership has passed.

(6) Buyer's entitlements:

Entitled to the benefits of any improvements or increased value of the property, as well as rents and
profits.

Entitled to a charge on the property, to the extent of the seller's interest, for any purchase money paid
in anticipation of delivery, along with interest.

If the buyer rightfully refuses delivery, entitled to earnest money, costs, and remedies under specific
performance or rescission.

It should be noted that the omission to make required disclosures is considered fraudulent.

56. Marshalling by subsequent purchaser

If a property owner mortgages multiple properties to one person and then sells one or more of those
properties to another person, the buyer, unless stated otherwise in a contract, has the right to request
that the mortgage debt be paid from the properties that were not sold to them, to the extent that it is
possible. However, this right does not prejudice the rights of the mortgagee or anyone claiming under
them, or the rights of any other person who has acquired an interest in any of the properties for
consideration.

Discharge of Incumbrances on Sale

57. Provision by Court for incumbrance and sale freed therefrom

(a) When immovable property with an incumbrance is sold by the Court, either through a decree or out
of Court, the Court may, upon application, allow the payment into Court in the following cases:

If there is an annual or monthly sum charged on the property or a capital sum charged on a
determinable interest, the Court can direct an amount that, when invested in government securities,
will be sufficient to cover that charge.

If there is a capital sum charged on the property, the Court can direct the payment of the amount
required to meet the incumbrance and any due interest.

Additionally, the Court may require an additional amount to cover potential costs, expenses, interest,
and other contingencies, not exceeding one-tenth of the original amount, unless there are special
reasons to require a larger additional amount (which the Court must record).

(b) Upon payment and after notice to the incumbrancer (unless the Court decides to dispense with such
notice), the Court can declare the property free from the incumbrance and make orders for conveyance
or vesting to effect the sale. The Court can also give directions for the retention and investment of the
money in Court.

(c) After serving notice to the interested parties, the Court can direct the payment or transfer of the
money or fund in Court to the entitled persons and provide instructions for its application or
distribution.

(d) An appeal can be made against any declaration, order, or direction under this section as if it were a
decree.

(e) In this section, "Court" refers to:

The Lahore High Court in its ordinary or extraordinary original civil jurisdiction,

The Court of a District Judge within the jurisdiction where the property is located,

Any other Court that the Government may declare competent to exercise jurisdiction through an official
Gazette notification.

Mortgage ( Section 58-78)

OF MORTGAGES OF IMMOVABLE PROPERTY AND CHARGES
58. (a) “Mortgage”, “mortgagor”, “mortgagee,” “mortgage-money” and “mortgage-deed” defined

(a) A mortgage is the transfer of an interest in specific immovable property to secure the payment of
money advanced or to be advanced as a loan, an existing or future debt, or the performance of an
engagement that may result in a financial liability.

The person transferring the property is the mortgagor.

The person receiving the property is the mortgagee.

The principal money and interest being secured are called the mortgage-money.

The instrument used for the transfer is called a mortgage-deed.

(b) A simple mortgage occurs when the mortgagor personally agrees to pay the mortgage money and
allows the mortgagee to sell the property if the payment is not made, using the proceeds to cover the
mortgage-money.

(c) A mortgage by conditional sale occurs when the mortgagor sells the property with certain conditions:

If the mortgage money is not paid by a specific date, the sale becomes absolute.

If the payment is not made, the sale becomes void.

If the payment is made, the buyer transfers the property back to the seller.

(Note: These conditions must be mentioned in the document that effectuates the sale.)

(d) A usufructuary mortgage occurs when the mortgagor gives possession of the property to the
mortgagee, who retains it until the mortgage-money is paid. The mortgagee receives the rents and
profits from the property as interest or payment towards the mortgage-money.

(e) An English mortgage occurs when the mortgagor agrees to repay the mortgage-money on a specific
date and transfers the property to the mortgagee. However, the property will be re-transferred to the
mortgagor upon payment of the mortgage-money.

(f) A mortgage by deposit of title-deeds occurs when a person delivers documents of title to immovable
property to a creditor, intending to create security. It is also possible for a banking company to create
this type of mortgage through an entry in the record of rights.

(g) An anomalous mortgage refers to any mortgage that does not fall into the categories of a simple
mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage, or a mortgage
by deposit of title-deeds.

59. Mortgage when to be by assurance

If the principal money secured by a mortgage is one hundred rupees or more, the mortgage can only be
created through a registered instrument signed by the mortgagor and attested by at least two
witnesses.
If the principal money secured is less than one hundred rupees, the mortgage can be created either by a
registered instrument signed and attested as mentioned above or, except in the case of a simple
mortgage, by delivering the property.

59A. References to mortgagors and mortgagees to include persons deriving title from them

Unless expressly stated otherwise, references in this Chapter to mortgagors and mortgagees shall be
considered to include references to persons who obtain title from them.

Rights and Liabilities of Mortgagor

60. Right of mortgagor to redeem

The mortgagor has the right to redeem the mortgage at any time after the principal money becomes
due. To exercise this right, the mortgagor must pay or tender the mortgage money at the appropriate
time and place. Upon such payment, the mortgagee is required to (a) deliver the mortgage-deed and all
related documents to the mortgagor,

(b) hand over possession of the mortgaged property if the mortgagee is in possession, and

(c) either re-transfer the property to the mortgagor or execute a written acknowledgment of
extinguishing any rights transferred to the mortgagee.

However, this right to redeem is not extinguished by the parties' actions or a court decree. It is referred
to as the right to redeem, and a legal action to enforce it is called a suit for redemption. It's important to
note that any provision specifying a notice period before payment is not invalidated by this section.
Additionally, a partial owner of the mortgaged property cannot redeem only their share unless the
mortgagee has acquired the mortgagor's share, wholly or partially, either individually or with other
mortgagees

60A. Obligation to transfer to third party instead of re-transference to mortgagor

If a mortgagor has the right to redeem, they can request the mortgagee to assign the mortgage-debt
and transfer the mortgaged property to a third person designated by the mortgagor, instead of re-
transferring it to the mortgagor. The mortgagee is obligated to comply with this request.

These rights can be enforced by the mortgagor or any encumbrancer, even if there are intermediate
encumbrances. However, if there is a conflict between the mortgagor's request and that of an
encumbrancer, the encumbrancer's request takes precedence. Among encumbrancers, the request of
the earlier encumbrancer prevails over that of a subsequent encumbrancer.

These provisions do not apply if the mortgagee is or has been in possession of the mortgaged property.

60B. Right to inspection and production of documents

As long as the mortgagor's right of redemption is valid, they have the right to inspect, make copies,
abstracts, or extracts from documents of title pertaining to the mortgaged property. This right can be
exercised at reasonable times, upon the mortgagor's request and at their own expense. The mortgagor
is also responsible for covering the mortgagee's costs and expenses related to this matter. The
documents must be in the custody or possession of the mortgagee.
61. Right to redeem separately or simultaneously

A mortgagor who has given multiple mortgages to the same mortgagee has the right, unless there is an
agreement stating otherwise, to redeem any one of the mortgages separately or redeem two or more of
the mortgages together when the principal money for any two or more of the mortgages has become
due.

62. Right of usufructuary mortgagor to recover possession.

In the case of a usufructuary mortgage, the mortgagor has the right to recover possession of the
property, along with the mortgage-deed and related documents in the possession of the mortgagee,
under the following circumstances:

(a) If the mortgagee is authorized to pay himself the mortgage-money from the rents and profits of the
property, when such money is paid.

(b) If the mortgagee is authorized to pay himself from such rents and profits, or a part thereof, and the
term for payment of the mortgage-money has expired, the mortgagor can regain possession by paying
or tendering the mortgage-money or the balance thereof to the mortgagee, or by depositing it in court
as provided.

63. Accession to mortgaged property

If the mortgaged property, which is in the possession of the mortgagee, has received any additional
assets or improvements during the mortgage period, the mortgagor, upon redemption, is generally
entitled to those additions unless there is a contract stating otherwise.

If the additional assets were acquired at the expense of the mortgagee and can be separately possessed
or enjoyed without harming the main property, the mortgagor must reimburse the mortgagee for the
acquisition costs in order to claim those assets. If separate possession or enjoyment is not possible, the
additional assets must be delivered along with the property. In the case of necessary acquisitions made
with the mortgagor's consent or to preserve the property from destruction, forfeiture, or sale, the
mortgagor is liable to pay the reasonable costs, which will be added to the principal money with
interest.

Any profits arising from the additional assets will be credited to the mortgagor, except in the case of a
usufructuary mortgage where the additional assets were acquired at the expense of the mortgagee. In
such a case, the profits, if any, will be offset against any interest payable on the money expended by the
mortgagee, unless there is a contract stating otherwise.

63A. Improvements to mortgaged property

If the mortgaged property, which is in the possession of the mortgagee, has been improved during the
mortgage period, the mortgagor is generally entitled to those improvements upon redemption, unless
there is a contract stating otherwise. The mortgagor is not required to pay for the cost of the
improvements, except in certain cases.

If the improvements were made at the expense of the mortgagee and were necessary to protect the
property from destruction, deterioration, or to maintain the adequacy of the security, or if they were
made in compliance with a lawful order from a public servant or authority, the mortgagor is liable to pay
the reasonable cost of those improvements. The cost will be added to the principal money with interest
at the same rate as the principal, or at a rate of nine percent per annum if no specific rate is fixed. Any
profits resulting from the improvements will be credited to the mortgagor, unless there is a contract
stating otherwise.

64. Renewal of mortgaged lease

If the mortgaged property is a lease and the mortgagee renews the lease, upon redemption, the
mortgagor will generally be entitled to the benefits of the new lease, unless there is a contract stating
otherwise.

65. Implied contracts by mortgagor.

In the absence of a contract stating otherwise, the mortgagor is considered to have certain implied
contracts with the mortgagee:

(a) The mortgagor guarantees that they have the interest in the property that they claim to transfer to
the mortgagee.

(b) The mortgagor promises to defend the mortgagee's title to the property or assist the mortgagee in
defending it if the mortgagee is in possession.

(c) The mortgagor agrees to pay all public charges that arise in relation to the property, as long as the
mortgagee is not in possession.

(d) If the mortgaged property is a lease, the mortgagor assures that the rent, lease conditions, and
contracts binding on the lessee have been paid, performed, and observed up to the start of the
mortgage. The mortgagor also promises to continue paying the rent and fulfilling the lease conditions
and contracts, as long as the mortgage exists and the mortgagee is not in possession.

(e) If the mortgage is a subsequent incumbrance, the mortgagor agrees to pay the interest on each prior
incumbrance as it becomes due and discharge the principal money owed on such prior incumbrance at
the appropriate time.

The benefits of these contracts are attached to the mortgagee's interest and can be enforced by any
person in whom that interest is vested, either wholly or partly, over time.

65A. Mortgagor’s power to lease.

While lawfully in possession of the mortgaged property, the mortgagor has the power to lease the
property, and such leases will be binding on the mortgagee, subject to the following conditions:

(1) The lease should be made in the ordinary course of property management and in accordance with
any applicable local laws, customs, or usage.

(2) The lease should reserve the best rent reasonably obtainable, without any payment or promise of a
premium or advance rent.

(3) The lease should not include a covenant for renewal.

(4) The lease should take effect within six months from the date it is made.
(5) In the case of a lease involving buildings, whether leased with or without the land, the lease duration
should not exceed three years. The lease should include a covenant for rent payment and a condition for
re-entry if the rent is not paid within a specified timeframe.

These provisions apply unless the mortgage-deed expresses a contrary intention. The mortgage-deed
may also modify or extend these provisions, and any such modifications or extensions will have similar
effects and consequences as if they were included in the original provisions.

66. Waste by mortgagor in possession.

A mortgagor who is in possession of the mortgaged property is not responsible to the mortgagee for any
deterioration in the property. However, the mortgagor must not engage in any actions that would cause
permanent damage or destruction to the property if it would render the security insufficient.

Explanation: The security is considered insufficient if the value of the mortgaged property is less than
one-third more than the amount currently owed on the mortgage, or if the property consists of
buildings, less than one-half more than the amount owed on the mortgage.

Rights and Liabilities of Mortgagee

67. Right to foreclosure or sale

In the absence of a contrary agreement, the mortgagee has the right to obtain a court decree to
foreclose the mortgagor's right to redeem the property or to sell the property once the mortgage
money becomes due, but before a redemption decree has been issued or the mortgage money has been
paid or deposited as specified later.

A lawsuit seeking a decree to completely bar the mortgagor's right to redeem the property is referred to
as a foreclosure suit.

The following points should be noted:

(a) This section does not authorize any mortgagee, except a mortgagee by conditional sale or an
anomalous mortgagee with foreclosure rights, to initiate a foreclosure suit. It also does not authorize a
usufructuary mortgagee or a mortgagee by conditional sale to initiate a suit for sale.

(b) A mortgagor who holds the mortgagee's rights as a trustee or legal representative and has the ability
to sue for the sale of the property cannot file a foreclosure suit.

(c) The mortgagee of a railway, canal, or other public infrastructure project cannot initiate a foreclosure
or sale suit.

(d) A person with an interest in only a portion of the mortgage money cannot file a suit solely for that
corresponding part of the mortgaged property unless the mortgagees have, with the mortgagor's
consent, divided their interests under the mortgage.
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