DELHI: While all of us have heard about mortgage, little is known to a common man about it and its implications. Chapter IV of the Transfer of Property Act, 1882, defines various types of mortgages, rights and liabilities of mortgagor and mortgagee, its redemption and charges etc. There are at least six main mortgage types.
1. Simple Mortgage: Where, without delivering possession of mortgage property, the mortgagor binds himself personally to pay the mortgage money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have the right to cause the mortgaged property to be sold and the proceeds of the sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage. Essential feature of this mortgage is that mortgagor binds himself personally for the repayment of loan. Besides, in simple mortgage possession of property is not given to the mortgagee.
2. Mortgage by conditional sale: Where the mortgagor ostensibly sells the mortgaged property – on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to seller; the transaction is called a mortgage by conditional sale.
The law mandates that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects the sale.
3. Usufructuary mortgage: Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorizes him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property and to appropriate the same in lieu of interest, or in payment of the mortgage money, the transaction is called an usufructuary mortgage. The essential elements of usufructuary mortgage entails delivery of possession of the mortgaged property, use of the property by mortgagee, no personal liability of the mortgagor and that mortgagee cannot foreclose or sue for sale of mortgage-property.
4. English mortgage: Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage. An essential feature of the English mortgage is that mortgagor binds himself to repay the loan by transferring the property absolutely.
5. Mortgage by deposit of title-deeds: Where a person in any of the following towns, namely, the towns of Kolkata, Chennai and Mumbai, and in any other town which the state Government concerned may, by notification, specify in this behalf, delivers to a creditor, documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds. In this kind of mortgage execution of mortgage-deed is not necessary. It is also known as equitable mortgage under English law and is popular and preferred mode of mortgage with banks advancing loans to borrowers. For a valid equitable mortgage it is not compulsory that all the documents of the title should be deposited with the creditor.
6. Anomalous mortgage: As the name suggests it is an irregular mortgage not covered by any of the above types of mortgage.