Mortgage Under Transfer of Property Act (Types of Mortgage)

A mortgage is a legal transaction that involves transferring an interest in a specific immovable property to secure
the repayment of a loan, whether it is an existing debt or one that may arise in the future. The party who
transfers the property is the mortgagor, while the recipient of the property and lender of the loan is called the
mortgagee

The amount of money borrowed, including any accrued interest, is called the mortgage money. Property transfer
is typically formalized through a document called a mortgage deed

Types of Mortgage Under the Transfer of Property Act - Simple Mortgage [Section 58(b)]

Section 58(b) describes a type of mortgage called a simple mortgage. In a simple mortgage, the mortgagor
promises to personally repay the loan without giving possession of the property to the mortgagee.

The mortgagor also agrees that if they fail to repay, the mortgagee has the right to sell the property and use the
proceeds to pay off the loan.

Mortgage by Conditional Sale [Section 58(c)]

Section 58(c) explains the concept of a mortgage by conditional sale. In this type of mortgage, the mortgagor
appears to sell the property to the mortgagee, but there is a condition attached to the sale. If the mortgage
money is not repaid by a certain date, the sale becomes absolute, or if the payment is made, the sale becomes
void, or the buyer transfers the property back to the seller. This condition must be stated in the same document
that affects the sale.

This type of mortgage allowed them to receive the principal amount and interest while keeping their conscience
clear. 1- The mortgagor ostensibly sells the property to the mortgagee. 2- There is a condition attached to the
sale, specifying the consequences based on repayment or default. 3- The condition must be included in the same
document.

the basic elements of a mortgage by conditional sale are:

Section 58 brought about a significant change. It stated that a transaction would be deemed a mortgage by
conditional sale only if the condition is embodied in the document that affects or purports to affect the sale. In a
mortgage by conditional sale, the mortgagor has no personal liability to repay the debt, and the mortgagee
cannot include the mortgagor’s other properties in this transaction. This type of mortgage is an exception to the
general rule of “No Debt, No Mortgage.”

Usufructuary Mortgage Section 58(d) Section 58(d) explains the concept of a usufructuary
mortgagehttps. In a usufructuary mortgage, the mortgagor either delivers possession of the property to the
mortgagee or binds themselves to deliver possession. The mortgagee is authorized to retain possession until the
mortgage money is paid and to receive the rent and profits from the property

Delivery of Possession - The mortgagor provides possession of the property to the mortgagee as security for
the mortgage money. The mortgagee retains ownership of the property until the debt is paid. The actual delivery
of possession may not occur at the time of executing the mortgage deed but can be agreed upon through an
express or implied undertaking by the mortgagor.

Rent and Profits

The mortgagee is entitled to receive the rents and profits generated by the mortgaged property until the
mortgage money is repaid. The manner in which the rents and profits are appropriated depends on the terms of
the mortgage deed. The mortgagee can use the rents and profits in lieu of interest, principal, or both. The
specific terms dictate when the mortgagor can regain possession.

No Personal Liability of the Mortgagor

In a usufructuary mortgage, the mortgagor is not personally responsible for repaying the mortgage money. The
mortgagee must utilize the rents and profits from the property to satisfy the mortgage money. The duration of
the mortgage is not limited since it is difficult to predict when the debt will be fully repaid.
Mortgage Right to Redemption

A Mortgage is a kind of security given by borrower who is the debtor (mortgagor) for repayment of loan to the
lender who is the credit The object of a mortgage is to secure the debt or other obligation. It is a transfer of
limited interest in property.

Section 60- Right of mortgagor to redeem -Provided that the right conferred by this section has not been
extinguished by act of the parties or by decree of a Court. The right conferred by this section is called a right to
redeem, and a suit to enforce it is called a suit for redemption.

Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for
payment of the principal money has been allowed to pass or no such time has been fixed. The mortgagee shall be
entitled to reasonable notice before payment or tender of such money.

Redemption of portion of mortgaged property.—Nothing in this section shall entitle a person interested
in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of
the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees
than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor

it is clear that there can be no additional contract in the mortgage deed which alters the essential nature of the
mortgage contract so as to preclude the mortgagor from redeeming. A clause in a mortgage making it
irredeemable after a period is clearly repugnant to the mortgagor’s equity of redemption or equitable right to
redeem

Section 27: Extinguish the right to property. – At the determination of the period hereby limited to any
person for instituting a suit for possession of any property, his right to such property shall be extinguished.

Section 3: Bar of limitation.—(1) Subject to the provisions contained in sections 4 to 24 (inclusive), every
suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although
limitation has not been set up as a defence”.

it is clear that, the legislators have put a time period upon the plaintiff is suit for possession, on its expiry, the
plaintiff, neither entitled to claim possession nor entitled to the title over the suit property. However, the
plaintiff can claim following remedies under two circumstances:

1. If mortgaged property partly/ wholly conveyed to 3rd party. – The mortgagee has conveyed the
mortgaged property either partly or wholly to the 3rd party without the concern of the mortgagor,
after the stipulation of time period is reckoned. Then the mortgagor has the right to file suit for
redemption within the period of 12 years when the date of knowledge on the transfer to the
mortgagor accrues Provided under Article 61(b) of Limitation Act, 1963. On its expiry, not only
remedy to file a suit for redemption is barred, also the right to the mortgage property is extinguished
under section 27 read with Section 3 of Limitation Act 1963.
2. If mortgaged property is not conveyed to 3rd parties. – The mortgagee has not conveyed the
mortgaged property to the 3rd party. Then the mortgagor has the right to file suit for redemption
within the period of 30 years when the date of knowledge on the transfer to the mortgagor accrues
provided under Article 61(a) of Limitation Act, 1963. On its expiry, not only remedy to file a suit for
redemption is barred, also the right to the mortgage property is extinguished under section 27 read
with Section 3 of Limitation Act 1963.
Rights of morgage

Obligation to transfer to the third party instead of transferring it to mortgagor (section-60A)

This right was added in the Act by Amendment Act of 1929. This right provides the mortgagor with authority to
ask the mortgagee to assign the mortgage debt and transfer the property to a third person directed by him. The
purpose of this right is to help the mortgagor to pay off the mortgagee by taking a loan from a third person on
the same security.

Right to inspection and production of documents (section-60B)

This section is also inserted by the Amendment Act of 1929. It is the right of mortgagor to ask mortgagee for the
production of copies of documents of the mortgaged property in his possession for inspection on notice of
reasonable time. The expenses incurred on production or copies of documents or travel expenses of a mortgagee
are to be paid by the mortgagor. This right is available to the mortgagor only as long as his right to redeem
exists.

Right to Accession (section-63)

Basically, accession means any addition to property. According to this right mortgagor is entitled to such
accession to his property which is in the custody of mortgagee. There are two types of accession:

 Artificial accession- It is when mortgagor made some efforts and it increased the value of land.
 Natural accession- The name itself defines i.e. without any man-made efforts.
In case an accession is made to the property due to the efforts of mortgagee or at his expense and such accession
is inseparable, mortgagor, in order to be entitled to such succession, needs to pay the mortgagee the expense of
acquiring such accession.

Right to Improvements (section-63A)

According to this right if the mortgaged property has been improved while it was in possession of mortgagee,
then on redemption and in the absence of any contract to the contrary mortgagor is entitled to such
improvement. The mortgagor is not liable to pay mortgagee unless:

 Improvements made by the mortgagee were to protect the property or with the prior permission of
mortgagor.
 Improvements were made by the mortgagee with the permission of the public authority.
Right to Renewed Lease (section-64)
If the mortgagor is entitled the mortgaged property is a leasehold property and during the duration of mortgage
the lease gets renewed then, on redemption the mortgagor is entitled to have the benefit of the new lease. This
right is available to the mortgagor unless he enters into any contract to the contrary with mortgagee.

Right to grant a Lease (section-65A)

This right was introduced by the Amendment Act of 1929. Prior to this right, the Transfer of Property Act did not
allow a mortgagor to lease out the mortgaged property on his own but only with the permission of mortgagee.
Now, a mortgagor has the right to lease out the mortgaged property while he is in lawful possession of that
property, subject to the following conditions:

 All conditions in the lease should be according to the local laws and customs to prevent any
fraudulent transaction.
 No rent or premium shall be paid in advance or promised by mortgagee.
 The contract shall not contain any provision for the renewal of the lease.