DELHI: While all of us have heard about mortgage, little is known to a common 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.
Section 58 of the Act defines mortgage “… transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to pecuniary liability.” In simple words, mortgage can be understood as the owner of an immovable property transferring his interest in immovable property in favour of another person/entity to secure a payment of money or a loan. The purpose of transfer of interest is to give security for repayment of loan. It is very common for banks to take property on mortgage for securing loans given to borrowers. Hence, the word mortgage is closely associated with bank loans for a common person.
The transferor of interest in immovable property is known as ‘mortgagor’ and the transferee as ‘mortgagee’. The instrument by which the transfer is affected is known as mortgage-deed. There are at least six main mortgage types. Implications of each type of mortgage are different although not all types of mortgage are commonly used. The six major types of mortgages are-Simple Mortgage, Mortgage by conditional sale, Usufructuary mortgage, English mortgage, Mortgage by deposit of title-deeds and Anomalous mortgage.
Registration of mortgage: All kinds of mortgages are not necessary to be registered. However, in case of equitable mortgage which is created through deposit of title deeds; The Registration Act, 1908 mandates compulsory registration of “…non-testamentary instruments, which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees, and upwards, to or in immovable property.” Hence, other than equitable mortgage, registration of mortgage is necessary if the value of debt secured is more than Rs.100/-.
Right of redemption: Right to redeem is the right of the mortgagor to recover or get back the property after payment of loan. Since in a mortgage an interest in immovable property is transferred by the mortgagor, the interest so transferred has to revert back once the loan is paid back. Right of redemption in England is known as mortgagor’s equity of redemption and holds that once a mortgage, always a mortgage. This doctrine holds good in India too.