Difference b/w

Mortgage and Charge

• In case of charge, there is no transfer of
any interest in the property in favour of
charge holder, as in the case of mortgage.
• A charge if merely a security for payment
of money to be enforced against the
property charged.
• As a general rule, a charge cannot be
enforced against transferee for
consideration without notice.
 Points to Remember
• 1. A charge and a mortgage are alike in one respect
that they both serve as a security for the payment of
money.
• 2. A mortgage is a security for the payment of
money in form of a debt whereas a charge is a
security for the payment of money, such money may
or may not be a debt. There may be a covenant to
pay in a mortgage but no so in a charge. The
creation of a charge does not necessarily imply the
existence of a debt but a mortgage does.
• 3. A mortgage may be a security for the
performance of an engagement giving rise to a
pecuniary liability but that is not the case with a
charge.
• 4. A charge does not operate to transfer to the
charge holder any interest in specific property as
a mortgage does. It merely gives the charge
holder the right to have a claim satisfied out of a
particular property without transferring the
property or any right within to him. Charge
functions like Simple Mortgage as there is
personal liability of the charge holder to pay.
• A mortgage must be executed in respect of a
specified property; but a charge may be created
upon the wealth and property of a person.
• A mortgage can only be made by act of parties;
whereas a charge may arise either by act of
parties or by operation of law.
• A mortgage gives right in rem but a charge does
not create any such right.
• A charge is not subject to redemption or
foreclosure like mortgage.