Mortgage Flashcards
What is a mortgage?
Conveyance of land or other immovable or other property as security for payment of money. In common law, a mortgage is “an estate upon condition” which is, the estate is forfeited upon the breach of the condition.
Why did equity interfere in mortgage?
Equity gives relief against strict construction of a mortgage. It was first given in cases of failure to pay at the appointed time either by accident or of some trifling default. This was later extended to all cases of forfeiture.
What is the mortgagor’s equity of redemption?
If the borrower paid the principal amount with interest and costs within a reasonable time even after he had lost his legal right to redeem, equity gave him an equitable right to redeem. The right to redeem cannot be fettered even by express agreement of the parties.
How was the mortgagor’s right counterbalanced?
Equity courts were required to set limits to their own generosity because the one-sided concession granted to a mortgagor could not be allowed to continue indefinitely. Therefore, the mortgagee was also allowed to foreclose the right of redemption of a mortgagor if the mortgagor lost both his legal right and his equitable right to redeem.
Mortgage in TOPA
Section 58 which defines as:
i) Transfer in interest
ii) In the specific immovable property
iii) For the purpose of:
a) Securing the payment of money advanced by way of loan
b) An existing or future debt
c) The performance of an engagement which might give rise to a pecuniary liability
Basic property rights
Right to possession, Right of enjoyment, Right to sell. In a transfer, all three of these are transferred to someone else. In a mortgage, only one of these is.
Difference between mortgage and pledge
In a pledge, the ownership of the goods or personal chattels (not immovable property) remains with the pledgor, what is transferred is the possession. In a mortgage, what is transferred is an interest in specific immovable property (not goods or personal chattels). The ownership and possession remain with the mortgagor except in the case of a usufructuary mortgage.
What are the six mortgages?
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1. Simple
2. Conditional
3. Usufructuary
4. Equitable
5. Title deed (mortgage by deposit of)
6. Anomalous
Simple Mortgage
- Possession and enjoyment of property remains with mortgagor
- Mortgagor binds himself personally to pay the mortgage money
- In the event of failing to pay, the mortgagee has the right to put property to sale only THROUGH COURT to recover money
- Such a mortgage must be effected by registered document
Difference between simple mortgage and charge
Mortgage: 1. Conveyance of property
Charge: 1. Merely gives the chargee certain rights over the property as security
2. Amount is to be realised, say from the income of a definite item of the property is a charge.
3. No rights such as putting the property to sale etc.
Conditional Mortgage
- Ostensible sale of the mortgaged property
- Condition: In case of failure to pay the money on a certain date, the sale shall become absolute. On such payment being made, the sale shall become void, and the mortgagee is to retransfer the property to the mortgagor.
- Condition to be embodied in the same document.
- Remedy of the mortgagee is a suit for foreclosure
- If the consideration exceeds Rs. 100, registration is compulsory
Usufructuary Mortgage
- Delivery of possession of property to mortgagee
- Till the amount is repaid, such possession is authorised to be retained
- Rents and profits accruing from the property to be appropriated in lieu of interest on the principal amount. On realisation of the amount, the property is redeemed.
- Mortgagor has no personal liability
- Mortgagee has no power of sale or foreclosure
- Registration compulsory if consideration exceeds Rs. 100
English Mortgage
- Mortgagor binds himself personally to repay the money on a certain date
- Transfer of property to the mortgage
- Possession also delivered
- Property is to be retransferred to the mortgagor when there is payment
- Mortgagee’s remedy is only a sale, can be done out of court.
Difference between English mortgage and conditional mortgage
There is a personal undertaking in English mortgage, not in conditional mortgage. Also, transfer is absolute in English Mortgage, while ostensible in Conditional Mortgage.
Mortgage by deposit of Title deeds
Limited to Madras, Calcutta, and Bombay to help the mercantile community raise quick money:
1. Delivery of documents of title to the creditor. Property can be situated anywhere
2. Registration not necessary, except that a memorandum evidencing the title is required.
3. No possession
4. Remedy available is a suit for sale
5. Provisions in respect of simple mortgage applicable here
