Transfer of Property Study Material

Rights of the Mortgagor

1. Right of the mortgagor to redeem (Section 60)

The mortgagor on the payment of the due mortgage money, with reasonable notification
and on specified time and place has right to:
a. Require the mortgagee to deliver the mortgage deed and the mortgaged property
documents in his possession or under his power.
b. To recover the possession of the mortgaged property from the mortgagee
c. To get his property retransferred at his own cost to him or to a third party and to get
an acknowledgment registered by the mortgagee extinguishing his right over the
property.

2. Right to transfer to third party (Section 60A)

The mortgagor has the right o ask the mortgagee to transfer the mortgaged deed and
property to a third party at the mortgagor’s desire. If the mortgagor has paid the mortgage
money, the mortgagee is bound to do so.

3. Right to redeem separately or simultaneously (Section 61)

On the execution of more than one mortgages favoring the same mortgagee, in the
absence of a contract, the mortgagor can on the payment of the due either wholly or
partly redeem the properties separately or together at the same time.

4. Right of usufructuary mortgagor to recover possession (Section 62)

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Madhulekha Bhowmik
Assistant Professor
Amity University Kolkata
 In a usufructuary mortgage, the mortgagor has the right to recover possession of the
mortgaged property from the mortgagee, when the mortgagee has received the mortgaged
money from the properties profits and rents or has received the balance payment from the
mortgagor.

5. Right to inspection and production of documents (Section 60 B)

The mortgagor can request the mortgagee at all reasonable times at his own cost to
inspect and make a copy or extract of the documents of the mortgaged property and the
mortgaged deed under the possession of the mortgagee.

6. Right to accession (Section 63)

It means that the mortgagor is entitled to the additions which are made in the mortgaged
property when it was in the custody of the mortgagee. There are two types of accession:
• Artificial accession – means when some extra efforts or additions are made by
the mortgagee to upgrade the value of the land.
• Natural accession – means addition done without any externa efforts in the
property.

When the accession is made by the mortgagee is inseparable, then the mortgagor is
entitled to such accession but he need to pay the expenses spent by the mortgagee
while acquiring the accession.

7. Right to Improvements (Section 63A)

If the mortgaged property is improved by the mortgagee, the mortgagor is entitled to such
improvement and is not liable to pay for the improvement unless the improvement was
made by the mortgagee to preserve a property from threat or destruction and where the
improvements were made with the approval of the public authority.

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 8. Right to renew lease (Section 64)

In case the mortgagor has entitled a leasehold property and during the mortgage the lease
is renewed, then on redemption of the property, the mortgagor is eligible for the benefits
of the renewed lease.

9. Right to grant lease (Section 65A)

The right was introduced in the amendment act 1929. Post the amendment the mortgagor
is allowed to grant a lease of the mortgaged property if he is in possession and subject to
the following conditions:
• The lease should be as per the local laws and customs.
• No rent or premium taken in advance.
• Contract should not contain provisions on renewal of lease.
• Lease should be enforced within 6 months.

Liabilities/ Duties of the mortgagor

1. Liability to avoid waste (Section 66)

The mortgagor must not commit such an act which might lead to the waste of the
property that is detrimental to the value of the mortgaged property. There are two kinds of
waste: Active waste (intentionally destroying the property) ad permissive waste (minor
waste/ subject to natural decay)

2. Liability to compensate the mortgagee [Section 65 (c)]

It is the duty of the mortgagor to compensate the mortgagee who is paying all taxes and
public charges till the property is redeemed back to the mortgagor. But in case the

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Assistant Professor
Amity University Kolkata
 property is in possession of the mortgagor, then the mortgagor is liable to pay all the
public taxes and charges levied on the property and not the mortgagee.

3. Liability to indemnify for defective title of property (Section 65)

If the title to the property is found defective in which a third party is claiming over the
mortgaged property, the mortgagor will be liable to pay damages to the mortgagee for the
expenses incurred by the mortgagee in preserving the title of the property.

4. Liability to direct rent of the lease to the mortgagee. (Section 65)

When the property is leased by the mortgagor then it would be the duty of the mortgagor
to direct the rents and profits of the lease to the mortgagee till the property is not
redeemed back by the mortgagor.

Rights of the Mortgagee

1. Right to foreclosure (section 67)

The right of foreclosure is usually invoked when the mortgagor fails to pay the debt amount in
the given time period and his right to redeem the property has also expired due to default in his
payment. Thus, the mortgagee can file a suit of decree to debar the mortgagor from his
redemption rights.

2. Right to sue (section 68)

The mortgagee has the right to sue the mortgagor in the following cases to retrieve his mortgage
money-

• Where the mortgagor is personally bound himself to pay the debt

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Assistant Professor
Amity University Kolkata
 • In case where the mortgaged property is completely or partially destroyed without any fault
of them mortgagee
• In case where the mortgagee is destituted from the whole or part of the security by any
faulty act of the mortgagor
• In specific mortgage, where the mortgagee is entitled to possession of the security but the
mortgagor fails to do so.

3. Right to sell (section 69)

As per this section, the mortgagee has the right to sell the mortgaged property without getting a
decree or order from the Court.

But there are only certain conditions under which the mortgagee has this right to sell the property
without the permission of Court. They are-

• Where the mortgage is an English Mortgage and the mortgagor and mortgagee are not
Hindus, Muhammadan, Buddhist or a member of any race, sect, tribe or as stated by the
office al gazette of the State government.
• Where this power of mortgagee is explicitly stated by the mortgagee in the mortgage deed
and the mortgagee is itself government and the property is located in specified towns i.e.
Calcutta, Madras or Bombay originally

4. Right to accession (section 70)

If any additions are made to the property, then even the mortgagee shall have rights over those
accessions for the purpose of its security of his mortgage money.

5. Right to renewal of lease of the mortgaged property (section 71)

As per this section, when the mortgaged property is under lease and the mortgagor has renewed
the lease of the property, then even the mortgagee shall be entitled to the benefits of the renewed

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Assistant Professor
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lease and consider it as part of security only unless anything contrary has been stated in the
contract.

6. Right of mortgagee to spend money (section 72)

The following conditions are mentioned where the mortgagee can spend money-

• In case of destruction, forfeiture of property, the mortgagee may spend money to

protect it
• To support the title of the mortgaged property
• For defending his own title over the mortgaged property against the title of the
mortgagor
• The mortgagee can also spend money to renew the lease of the mortgaged property
• He can also insure the property if it is of insurable nature

Liabilities of the mortgagee

Duty of mortgagee when the property is in his possession (Section 76)

When the mortgaged property is in the possession of the mortgagee and during the continuation
of the mortgage, the mortgagee is bound by the following liabilities-

• To manage the property well in manner of ordinary prudence

• Duty to collect rents and profits of the property to his best endeavour
• To pay the government dues duly while the property is in his possession
• To make the necessary repairs of the property unless it is contrary to the contract
• To not commit any act which may damage or deteriorate the value of the property
permanently
• Duty to apply for insurance money for reinstating the property

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Assistant Professor
Amity University Kolkata
 • To keep proper accounts of all the sums received and spent by him over the mortgaged
property.

CHARGE AND MORTGAGE: DISTINCTION

Charge is defined in Section 100 and Mortgage is defined in Section 58 of the Transfer of
Property Act 1882.

The broad distinction between a mortgage and a charge is this: that whereas a charge only gives a
right to payment out of a particular fund or particular property without transferring that fund or
property, a mortgage is, in essence, a transfer of an interest in specific immovable property.”

Thus, the main distinction between charge and mortgage is that there is some sort of transfer of
an interest in the property in case of mortgage which makes the ownership of the property
limited. But there is no transfer of an interest in the case of charge but there is the only creation
of the right to payment from a specific immovable property without transfer of any interest in
property or property.

Another distinction that distinguishes both of them is that a mortgage is always created by the act
of parties, but charge, in addition, to be created by the act of the parties is also created by the
operation of law.

Furthermore, mortgage to subsist there must be a presence of debt but the same is not the case
with charge.

There also exist some technical differences between the two such as that the mortgage needs to
be usually for a specific time period but the charge may be for perpetuity, registration of
mortgage is usually compulsory whereas for charge created by operation of law is not
compulsory.

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Assistant Professor
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 RULE OF MARSHALLING

SECTION 56- Marshalling by Subsequent Purchaser

1. There must be an owner of two or more properties,

2. He must mortgage two or more of his properties to any person,

3. Thereafter, he must sell one or more of these properties to any person other than the
one to whom he mortgages the properties to. The sale must include at least one
property that has been mortgaged by the owner,

4. The buyer of such properties is entitled to have the owner satisfy the mortgage-debt
out of the property or the properties not sold to him.

5. The rule of marshalling should not be so exercised so as to prejudice the rights of the
mortgagee or any persons claiming under the mortgagee.

Illustration: If the owner of a property mortgages three of his properties X, Y and Z to A and
then sells property X to B, B is entitled to have the owner satisfy the mortgage debt out of
property Y and Z which are not sold to B and if the owner cannot recover the whole mortgaged
debt from property Y and Z, then for such shortage he can later on proceed against property X
which is sold to B. B is entitled to recover such amount from the owner.

SECTION 81- Marshalling Securities

Section 81 also adopts the Rule of Marshalling but in cases of Mortgages. Section 81 may be
understood in the following manner:

1. There must be an owner of two or more properties. He must mortgage two or more of
these properties to any person,
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Assistant Professor
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 2. He must then mortgage one or more of these properties to another person,

3. The subsequent mortgagee is entitled to have the mortgage-debt of the prior

mortgagee satisfied out of the properties not mortgaged to him. This can be subject to
a contract stating the contrary too.

4. Similar to Section 56, the rule of marshalling here too should not be so exercised so as
to prejudice the rights of the mortgagee or any person who has acquired an interest
with consideration in any of the properties.

Illustration: Marshalling, in this context, may be explained by an illustration. If the mortgagor

mortgages three of his properties X, Y and Z to A and then mortgages X to B, B is entitled to
have the mortgagor satisfy his debt from the sale proceeds of the properties Y and Z and only if
the said sale proceeds fall short, he can proceed against property X and recover the amount.

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Assistant Professor
Amity University Kolkata
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Madhulekha Bhowmik
Assistant Professor
Amity University Kolkata
 RULE OF CONTRIBUTION

Section 82, Contribution to Mortgage-Debt

Contribution means providing money for the common fund. Section 82 of the transfer of property
act deals with the rules relating to the contribution of money towards mortgaged debt. It is the
right of a person who has discharged a common liability to recover proportionate share from
others. The doctrine of contribution requires that the persons under common liabilities are liable
equitably.

Section 82 ( 1st paragraph)

Section 82 contemplates a situation in which there are two or more than two mortgagors who
take a common debt by mortgaging property to one person. Each mortgagor having separate or
distinct rights of ownership. The nature of the doctrine of contribution is based on the principles
of equity, justice and good faith or good conscience. Each mortgagor or debtor must be liable to
contribute to such common debt. When two or more properties of different persons are
mortgaged to secure a loan, the mortgagee has the right to recover the debt from the property of
any one person. Such person (mortgagor) who acts on behalf of others (co- mortgagors) is
entitled to be contributed by the other mortgagors (co mortgagors) for the common debt in
proportion to their respective shares in the property.

Illustration: A, B and C together have mortgaged a property in which they have separate
ownership. The value of A’s share in the property is Rs 30 lakhs, the value of B’s share in the
property is Rs 20 lakhs and the value of C’s share in the property is Rs 10 Lakhs. By mortgaging
the whole property for a debt of Rs 6 lakhs from K. Now, if A has redeemed all the whole
property by paying the entire amount which is 6 lakhs to K. A is entitled to be contributed by B
and C in respect of their shares in the property proportionately to the debt which was secured by
the mortgage. Therefore, A is supposed to pay Rs 3 lakhs to the debt amount, B must pay Rs 2

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Madhulekha Bhowmik
Assistant Professor
Amity University Kolkata
lakhs and C must pay Rs 1 lakh. So if A has paid the whole amount on behalf of the co
mortgagors (B and C), he is entitled to get the contribution of B and C.

Section 81 (2nd paragraph)

When the mortgagor has two properties and he mortgages one to secure one debt and then
mortgages both to secure another debt, if the former debt is paid out of the former property, each
property is then liable to contribute to the latter debt after deducting the amount of the former
debt from the value of the property from which it has been paid.

Illustration: A the owner of two properties (Property R and Property M). Value of Property R is
Rs 300, and value of Property M is Rs 900 which is 1:3. A mortgages Property R to Ramesh for a
debt of Rs 100. A again mortgages both the properties R and M together to Suresh for a debt of
Rs 800. Now the first mortgage which is made to Ramesh to be cleared out of the first property
which is Property R. after deducting the amount of Rs 100 and paid to Ramesh, Rs 200 remains
from that property. Now for the second debt which is Rs 800 from Suresh is to paid to Suresh by
contribution proportionately from both the properties. So here, since Rs 200 is remaining from
property R after clearing the first debt, and the rest amount which is Rs 600 is to be paid from
Property M. Therefore, we can say that the second debt which is Rs 800 is contributed from both
the properties in respect of their shares which is 1:3.

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Madhulekha Bhowmik
Assistant Professor
Amity University Kolkata
 Doctrine of Subrogation (Section 91-95)

Section 92 of the Act

Right of Subrogation

The term subrogation literally means substitution. It is the right of a person to stand in place of
the creditor.

This provision of the Act states that any person other than the mortgagee who has any interest or
charge upon the mortgaged property or right of redemption of the mortgaged property or any
surety for the payment of mortgaged debt or a creditor of the mortgagor or any co-mortgagor, on
redeeming the property subject to the mortgage will have the same rights as that of the mortgagee
whose mortgage he redeems may have against the mortgagor or any other mortgagee. Hence the
essence of this doctrine is that the party who pays off the mortgage debt gets clothed with all the
rights of the mortgagee.

Therefore, when a co mortgagor or any surety of the mortgagor pays the mortgage debt on behalf
of the mortgagor, they stand in the shoes of the mortgagee and shall have all the rights that are
there with the mortgagee. The same is applicable to any creditor of the mortgagor or any person
who is having any interest of charge on the mortgaged property, can stand in the shoes of the
mortgagee. The same right of subrogation is there with a subsequent mortgagee too.

(a) Puisne mortgagee:

Where the same property is mortgaged successively in favour of several persons, all such persons
are entitled to redeem their respective prior mortgage. A puisne or subsequent mortgagee is
entitled to redeem his prior mortgage by making payments. When he does so he takes the place
of that prior mortgagee. In other words, in between the mortgagees of the same property, every
subsequent mortgagee has right to be substituted in place of prior mortgagee by discharging the
debt due to such prior mortgagee.
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Assistant Professor
Amity University Kolkata
Illustrations
(i) A mortgages X to B for Rs. 5000.
(ii) A mortgages X to C for Rs. 3000.
(iii) A mortgages X to D for Rs. 2000.

In this illustration B is first mortgagee and C and D are the subsequent mortgagees. For C, B is
prior mortgagee. For D, B and C both are prior mortgagee. Under Section 92, D who is third
mortgagee, can redeem mortgage (i) by making payment of Rs. 5000 to B. When D pays Rs.
5000 to B he (D) shall be subrogated for all purposes of redemption, foreclosure or sale in place
of B. In other words, D shall step into the shoes of B, i.e., become first mortgagee instead of the
third mortgagee. However, it is to be kept in mind that the two cannot be merged as per Section
93 of Transfer of Property Act 1882 where there is a prohibition of tacking. This means that D
after taking the position of B, will get the right of foreclosure and will recover first Rs 5000 and
not Rs 7000. After recovering Rs 5000, C will recover is Rs 3000 and then D can recover his Rs
2000.
There are two effects of such subrogation. First, as against mortgagor (A), D shall be treated as
first mortgagee and A would enforce redemption against D. Secondly, as against C, D shall get
priority over C. Accordingly, if C wants to enforce his mortgage he (C) must pay Rs. 5000 to D.

(b) Co-mortgagor:
Co-mortgagor is co-debtor. In the debt secured by a mortgage, he is a sharer of the debt and his
property is a part of the whole mortgaged property. Hence, he would only be liable to the extent
of his own share of debt. But, if apart from redeeming his own share, he pays off also the share
of other mortgagor, he would be entitled to be subrogated in the shoes of the mortgagee and
recover such amount from the other mortgagor.

(c) Surety:
In a mortgage, there may be an individual who stands as surety for repayment of loan in case
mortgagor defaults to do so. Such surety would be liable to redeem the mortgage under Section

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Assistant Professor
Amity University Kolkata
91. Under Section 92, when the surety of mortgagor redeems the mortgage, he is substituted to
the rights of the creditor. That is to say, where surety pays off the debt to the creditor (mortgagee)
the surety stands in the shoes of that creditor and can recover such amount from the mortgagor.

(d) Any creditor of the mortgagor or any person who is having any interest of charge on the
mortgaged property

Who is the mesne mortgagee and what are the rights of mesne mortgagee? (Section 94) (i)
A mortgages X to B for Rs. 5000.
(ii) A mortgages X to C for Rs. 3000.
(iii) A mortgages X to D for Rs. 2000.
Here C is the mesne mortgagee who has the same rights against mortgagees posterior to
himself as he has against the mortgagor. To justify, C is having the right to recover Rs 3000
from the mortgagor. At the same time, D the subsequent mortgagee can also take the place of C
by paying Rs 3000 to C.

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Amity University Kolkata
 Difference between Lease and License

Lease (Section 105- 117 T.P Act 1882) License (Section 52 – 64 The Indian
Easements Act, 1882.)
1. Transfer of an interest in favor of lessee. No transfer of interest. It is a bare permission
with no interest created in favor of grantee.

2. Lease is both transferable and heritable. Neither transferable, nor heritable.

On the death of the tenant, tenancy can
be inherited by his/her legal heir. Sub
tenancy can be created in lease.

3. Lease does not come to an end on the License is of a personal character. It comes to
death of lessor or lessee. an end on the death of either the grantor or
grantee.

4. Lessee entitled to any improvements or Licensee not entitled to such improvements or

accessions made to the property leased. accession.

5. A lease is unaffected by the transfer of For license, once a property is sold to a third
the property in favor of a third person. person, it comes to an end immediately.
However, such third person/ purchaser
need to wait until time period for which
tenancy is created is over, before he can
get the possession.

6. Lessee has the right to protect the Licensee cannot defend his possession in his
possession in his own right. own name, as he does not have any proprietary
right in the property.

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Madhulekha Bhowmik
Assistant Professor
Amity University Kolkata