TYPES OF MORTGAGE

Definition of Mortgage

Section 58 of the Transfer of Property Act, 1882 defines a mortgage as follows:

“A mortgage is the 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 a pecuniary liability.”

This definition is authoritative and exhaustive for the purposes of the Act.

Explanation of the Definition

(a) Transfer of an Interest

A mortgage involves transfer of an interest, not transfer of ownership.

Ownership remains with the mortgagor
Mortgagee acquires a limited interest as security

This distinguishes a mortgage from a sale.

(b) Specific Immovable Property

The property mortgaged must be:

Immovable
Clearly identifiable

General or unspecified property cannot be the subject of a valid mortgage.

(c) Purpose of the Transfer

The transfer must be for securing:

Money advanced or to be advanced by way of loan
An existing or future debt
Performance of an engagement giving rise to pecuniary liability

If the transfer is not intended as security, it is not a mortgage.

(d) Debt or Pecuniary Liability

The obligation secured may be:

Present or future
Certain or contingent
Arising from contract or engagement

Thus, a mortgage can secure more than a simple loan.

Parties to a Mortgage

Party	Meaning
Mortgagor	Person who transfers the interest
Mortgagee	Person to whom the interest is transferred
Mortgage-money	Principal, interest and costs secured
Mortgage-deed	Instrument creating the mortgage

Essential Elements of a Mortgage
Transfer of interest (not ownership)
Specific immovable property
Purpose of security
Existence of a debt or pecuniary liability

Absence of any of these elements means no mortgage in law.

Nature of a Mortgage

Mortgage is a security transaction
It is accessory to the debt
It continues until redemption or foreclosure
Governed by the doctrine: “Once a mortgage, always a mortgage”

Kinds of Mortgages

Section 58 recognises various kinds of mortgages, such as:

Simple mortgage
Mortgage by conditional sale
Usufructuary mortgage
English mortgage
Mortgage by deposit of title deeds
Anomalous mortgage

Each has distinct legal incidents but all fall within the same statutory definition.

Final Note:

Under Section 58 of the Transfer of Property Act, 1882, a mortgage is a transfer of an interest in specific immovable property solely for the purpose of securing a pecuniary obligation. Ownership remains with the mortgagor, while the mortgagee acquires enforceable rights against the property as security for the debt.

UNDERSTANDING EACH TYPE OF MORTGAGE WITH ITS KEY FEATURES AND REGISTRATION REQUIREMENTS

TYPE OF MORTGAGE	DEFINITION (AS PER SECTION 58, TPA, 1882)	KEY FEATURES	REGISTRATION
SIMPLE MORTGAGE	Section 58(b): Simple mortgage.—Where, without delivering possession of the mortgaged 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 a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.	1. Mortgagor binds himself personally for the repayment of loan. Such personal liability may be express or implied. 2. no delivery of possession. 3. In case of non payment of loan the mortgagee has right to have the mortgage property sold. But the mortgagee himself has no power to sell the property. He has to get the decree from the court for the sale. 4. The mortgagee may sue the mortgagor personally for recovery of money i.e. simple money decree.	it must be made through a registered deed irrespective of the amount of debt.
MORTGAGE BY CONDITIONAL SALE	Section 58(c): 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 the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: 1 [Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.	1. There is an ostensible sale of immovable property i.e. it looks like sale but in reality, it is intended to secure a debt. It is not sale because of existence of debt. 2. The sale may subject to any of the following conditions: a) on non-payment of mortgage money the sale would become absolute. b) on payment of mortgage money, the sale shall become void or buyer shall retransfer the property to the seller.	optional (only if sum assured is more then Rs. 100/-
USUFRUCTUARY MORTGAGE	Section 58(d): 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 authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest, or in payment of the mortgage -money, or partly in lieu of interest [or] partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee.	1. Delivery of possession of the immovable property or an express or implied undertaking by mortgagor to deliver such possession on future date. 2. Mortgagee has right to use the property until the debt is fully paid. 3. No personal liability of the mortgagor. 4. Mortgagor cannot foreclose or sue for sale of mortgage property. 5. Under mortgage deed parties may agree that rents and profits are: a) in lieu of interest b) in lieu of principle money c) in lieu of principle money and interest both.	optional (only if sum assured is more than Rs. 100/-
ENGLISH MORTGAGE	Section 58(e): English mortgage.—Where the mortgagor binds himself to re-pay 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.	1. The mortgagor binds himself to repay the debt on a certain date and mortgagor is personally liable. 2. Mortgage property is transferred absolutely to the mortgagee subject to the provisio that mortgagee will retransfer the property to mortgagor on payment of mortgage money on the said date. 3. What really passes to the mortgagee under this mortgage is only an interest in the property which is liable to be redeemed by the mortgagor u/s 60, TPA. 4. It is necessary that specific date be mentioned upto which the mortgagor must repay the debt.	optional (only if sum assured is more than Rs. 100/-
MORTGAGE BY DEPOSIT OF TITLE DEEDS (EQUITABLE MORTGAGE)	Section 58(f): Where a person in any of the following towns, namely, the towns of Calcutta, Madras, [and Bombay], and in any other town which the [State Government concerned] may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immoveable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.	1. Existence of debt: the title deed must be delivered only for securing a debt. Debt may be existing debt or future debt. 2. Deeds must be deposited with the creditors or his agents. 3. Possession of such title deeds by the mortgagee or his agent is the only security for repayment of money. It is not necessary that all the documents of title should be deposited. 4. The title deeds must be deposited by the debtor with the intention of creating security for a debt.	not required
ANOMALOUS MORTGAGE	Section 58(g): Anomalous mortgage.— A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an english mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage.	1. Mortgage given in this section is not exhaustive. These transactions in their vary nature a mortgage without any specific name. 2. If there is an existence of debt and security of an immovable property for repayment of that debt but an agreement between debtor and creditor is of such nature that it can be included in any specific category of mortgage, the transaction is anonymous mortgage like: a) Simple mortgage usufructuary. b) mortgage usufructuary by conditional sale. c) customary form of mortgage.	depends on type

REDEMPTION UNDER SECTION 60

Mortgagors right of redemption means right to recover back the property after making the payment of loan. Mortgage is a transfer of an interest in immovable property for security of loan. Thus, by Making payment of the loan with its interest the mortgagor becomes entitled to get back the property. Mortgagor neither intends nor desires that the property should go absolutely to the mortgagee. Therefore, if the mortgagor could not repay the loan on a fixed date and there is some delay the law must extend his right of Redemption up to a reasonable time. Mortgagors right of redemption has been incorporated in section 60 of transfer Property Act, hence, it is a statutory right in India.

ONCE A MORTGAGE ALWAYS A MORTGAGE.

the maxim once a mortgage always a mortgage simply means that the transaction which at one time is mortgage could not cease to be so by having any stipulation in the mortgage deed calculated to prevent the right of redemption.

No contract between the mortgagor and the mortgagee which was entered into at the time of mortgage was valid if it prevented the mortgagors right of getting back his property on payment of the loan.

Application:

the maxim once a mortgage always a mortgage his applicable on two situations:

Firstly, where in essence a transaction is mortgage but maybe given the form of sale it’s nature of mortgage cannot be converted to that of a sale merely because of any stipulation in the mortgage deed that after expiry of due date mortgagor has no right of redemption and the property shell belong to mortgagee.
Secondly, equity does not permit any clog to Redemption.

CLOG ON REDEMPTION:

Clog on redemption means conditions or stipulation which prevents the mortgagor from redeeming the mortgaged property on payment of loan. In India mortgages right of redemption is a statutory right under section 60. Therefore, Clog on mortgagors right of Redemption is void.

Exercise of right of redemption by mortgagor:

mortgagor May exercise his right of redemption in any of the following manners:

1)By paying or tendering the mortgage money to mortgagee.

2)By depositing the mortgage money in courts.

3)By filing a suit for Redemption.

INSTANCES OR CIRCUMSTANCES OF CLOG ON REDEMPTION:

1) Condition of sale in default: a condition which makes mortgage a sale in default is clog on redemption.

2) Postponement of redemption for long term:

The postponement of right of redemption for a long period is not necessarily a clog on redemption.

3) Condition postponing redemption in default on a certain date:

The condition or stipulation which postpones the mortgagors right of redemption in case of default in payment on a certain date is regarded as a clog on redemption.

4) restraint on alienation:

A condition which restraints the mortgagor from transferring mortgage property is clog. Mortgagor continues to be the owner of the property and he has every right to transfer the property, even he can affect another mortgage of that property.

5) Right of pre-emption in favour of the mortgagee:

Pre-emption is the legal right to purchase something before it is offered to others. Often giving co-owners or adjacent owners the first opportunity to buy property that is being sold. But in mortgage the right of pre-emption could operate as a clog on the right of redemption of the transferee in interest of the mortgagor.

6) Collateral benefits to mortgagee:

These are the benefits or advantages which are given to a mortgagor in addition to above mentioned benefits i.e. mortgage money with interest is collateral benefit. These benefits are generally clog to redemption but depends on circumstances in each case. It is clog on redemption if:

1) If unfair or unconscionable

2) If not an independent benefit.

Persons who may redeem under section 91.

1) Mortgagor himself, his heirs, legal representative or assignees, etc.

2) Charge holders or others having any interest in security or mortgage property. Or

3) sureties

4) any creditor of the mortgagor

Extinguishment of right of redemption:

1) by act of parties.

a) Redemption of mortgage by mortgagor.
b) sale by mortgagor of his equity of redemption.
c) foreclosure of mortgage by mortgagee under section 67.
d) Sale by Mortgagee under section 68.
e) Lapse of time i.e. the exercise of right becomes barred by limitation.

2) By degree of court final degree in a suit foreclosure by mortgagee or suit for sale by mortgagor.

3) By operation of law

RIGHTS AND LIABILITIES OF MORTGAGOR

(Sections 60 to 66, Transfer of Property Act, 1882)

INTRODUCTION

A mortgagor is the person who transfers an interest in specific immovable property as security for a debt. Although ownership remains with the mortgagor, his rights are restricted during the subsistence of the mortgage.

The Transfer of Property Act, 1882 safeguards the mortgagor by conferring several statutory rights under Sections 60 to 65-A, and imposes certain liabilities (duties) under Sections 65 and 66.

RIGHTS OF MORTGAGOR

(Sections 60 to 65-A)

(i) Right to Redeem the Mortgage

(Section 60)

This is the most important and fundamental right of the mortgagor.

The mortgagor has a right to redeem the property on payment or tender of:
- Mortgage money
- Interest and costs, if any
Redemption extinguishes the mortgage
This right continues until it is lawfully extinguished

The right of redemption is statutory and cannot be clogged.

(ii) Right of Inspection and Production of Documents

Section 60-A

The mortgagor has the right to:

Inspect documents relating to the mortgage which are in the possession or power of the mortgagee.
Take copies of documents relating to the mortgage which are in the possession or power of the mortgagee.
Require production of documents relating to the mortgage which are in the possession or power of the mortgagee.

(iii) Right to Redeem Separately or Simultaneously

Section 61

Where a mortgagor has executed several mortgages, he may:

Redeem them separately, or
Redeem them simultaneously

unless a contract provides otherwise.

(iv) Right to Accession

Section 63

Any accession made to the mortgaged property during the continuance of the mortgage:

Belongs to the mortgagor
Becomes available to him upon redemption

Example: Additional construction, natural increase.

(v) Right to Improvements

Section 63-A

Improvements made by the mortgagee:

Belong to the mortgagor upon redemption
Mortgagee is entitled to compensation only if:
- Improvement was necessary to preserve property, or
- Made with mortgagor’s consent

(vi) Right to Renewal of Lease

Section 64

Where mortgaged property is leasehold and the mortgagee renews the lease:

Renewal ensures for the benefit of the mortgagor
Mortgagor can claim benefit upon redemption

(vii) Right to Lease the Mortgaged Property

Section 65-A

While in lawful possession, the mortgagor has the right to:

Grant leases of the mortgaged property
Such leases must:
- Be in ordinary course of management
- Reserve best rent
- Not exceed statutory limits

LIABILITIES (DUTIES) OF MORTGAGOR

(Sections 65 and 66)

Nature of Liabilities

Section 65 → Liabilities arising out of covenants
Section 66 → A liability imposed by law, not by contract

(i) Liability to Guarantee Title

Section 65(a)

Mortgagor is deemed to covenant that:

He has a good and marketable title
He has authority to mortgage the property

(ii) Liability to Defend Title

Section 65(b)

If mortgagor’s title is endangered, he must:

Take reasonable steps to defend it
Protect mortgagee’s interest

(iii) Liability to Pay Public Charges

Section 65(c)

If property is in mortgagor’s possession, he must pay:

Land revenue
Municipal taxes
Other public charges

unless there is a contract to the contrary.

(iv) Liability to Pay Rent

Section 65(d)

If the mortgaged property is leasehold, mortgagor must:

Pay rent due to lessor
Prevent forfeiture of lease

(v) Liability to Discharge Prior Encumbrances

Section 65(e)

Mortgagor must clear:

Prior mortgages
Existing charges

if any, affecting the mortgaged property.

(vi) Liability Not to Commit Waste

Section 66

Mortgagor must not:

Commit destructive or permanent waste
Act in a manner prejudicial to mortgagee’s security

This liability exists independently of the contract.

CONCEPTUAL SUMMARY

Aspect	Explanation
Ownership	Remains with mortgagor
Dominant right	Right of redemption
Limitations	Restricted enjoyment during mortgage
Nature of duties	Contractual and statutory
Purpose	Protection of mortgagee’s security

TO BE NOTED

The Transfer of Property Act, 1882 ensures a balanced mortgage relationship by:

Preserving the mortgagor’s equity of redemption
Imposing duties to protect the mortgagee’s interest
Preventing misuse or deterioration of security

Thus, the mortgagor remains the real owner, subject only to the mortgagee’s security interest.

RIGHTS AND LIABILITIES OF MORTGAGEE

(Sections 67 to 73 and Section 76, Transfer of Property Act, 1882)

INTRODUCTION

A mortgagee is a person in whose favour an interest in specific immovable property is transferred as security for repayment of a debt. The Transfer of Property Act, 1882 lays down:

Rights of the mortgagee in Sections 67 to 73
Liabilities (duties) of the mortgagee in possession in Section 76

These rights and liabilities arise from the contract of mortgage and operate inter se between mortgagor and mortgagee.

RIGHTS OF MORTGAGEE (SECTIONS 67 TO 73)

(i) Right of Foreclosure or Sale

(Section 67)

If the mortgagor defaults in payment of mortgage money, the mortgagee has the right to:

Foreclose the mortgagor’s right of redemption (in certain types of mortgage), or
Cause the mortgaged property to be sold through court

This right is subject to:

Nature of mortgage
Terms of mortgage deed
Statutory restrictions

(ii) Right to Sue for Mortgage Money

(Section 68)

The mortgagee may institute a suit for recovery of mortgage money in cases such as:

Mortgagor binds himself personally to repay
Mortgage security is destroyed or rendered insufficient
Mortgagor fails to deliver possession when required

This is a personal remedy against the mortgagor.

(iii) Right to Exercise Power of Sale

(Section 69)

A mortgagee may sell the mortgaged property without court intervention if:

Such power is expressly conferred by mortgage deed, or
Mortgage falls within statutory exceptions (e.g., English mortgage)

This right is strictly construed.

(iv) Right to Appointment of Receiver

(Section 69A)

The mortgagee may seek appointment of a receiver to:

Manage the property
Collect rents and profits
Preserve the security

This ensures protection of the mortgagee’s interest.

(v) Right to Accession to Mortgaged Property

(Section 70)

Any accession to the mortgaged property during the continuance of mortgage:

Becomes part of mortgage security
Benefits the mortgagee

Example: Additional construction on mortgaged land.

(vi) Right to Renewed Lease

(Section 71)

If the mortgaged property is leasehold and the mortgagor renews the lease:

The mortgagee gets the benefit of renewed lease
Mortgage continues on renewed interest

(vii) Right to Spend Money for Preservation

(Section 72)

Mortgagee may spend money for:

Preservation of property
Defending mortgagor’s title
Renewal of lease (if property in possession)

Such expenditure becomes added to mortgage money.

(viii) Right to Receive Compensation or Sale Proceeds

(Section 73)

If mortgaged property is:

Sold for arrears of revenue, or
Acquired under law

The mortgagee is entitled to:

Proceeds of sale, or
Compensation money, in priority

LIABILITIES OF MORTGAGEE IN POSSESSION

(Section 76)

These liabilities arise only when the mortgagee is in possession of the mortgaged property.

(i) Duty to Manage with Ordinary Prudence

Mortgagee must manage the property:

As a prudent owner would
Without negligence or recklessness

(ii) Duty to Collect Rents and Profits Diligently

He must:

Collect rents and profits
Use due diligence
Not allow avoidable loss

(iii) Duty to Pay Government Dues

Unless there is a contract to the contrary, the mortgagee must pay:

Land revenue
Public charges
to prevent loss of property.

(iv) Duty to Make Necessary Repairs

Mortgagee must spend money on:

Essential repairs
Maintenance necessary to preserve property

(v) Duty Not to Commit Waste

Mortgagee must not:

Destroy or deteriorate property
Use it in a manner causing permanent injury

(vi) Duty Regarding Insurance Money

If insurance money is received:

It must be applied for reinstating property
Cannot be misappropriated

(vii) Duty to Adjust Interest and Surplus

Mortgagee must:

Appropriate interest due
Apply surplus towards reduction of mortgage debt

(viii) Duty to Account After Tender of Mortgage Money

If mortgagor:

Tenders or deposits mortgage money in court

Mortgagee must:

Account for gross receipts
Restore possession if required

INTER SE RIGHTS OF MORTGAGEES

Where property is mortgaged to two or more mortgagees:

Their rights and duties are governed by:
- Priority
- Nature of mortgages
- Contractual arrangements

Each mortgagee’s rights are protected against other mortgagees as well.

CONCEPTUAL SUMMARY

Aspect	Explanation
Nature of rights	Statutory + contractual
Nature of liabilities	Fiduciary and possessory
Balance	Protects mortgagee’s security and mortgagor’s property
Applicability	Rights apply generally; liabilities apply when in possession

Final Note:

The Transfer of Property Act, 1882 creates a balanced legal framework where:

Mortgagee is given strong rights to secure repayment of debt
Mortgagee in possession is burdened with strict duties to protect the property

This ensures that the mortgage relationship functions as a security arrangement, not a means of unjust enrichment.

SUMMARY OF RIGHT AND LIABILITY OF MORTGAGOR AND MORTGAGEE

Rights of mortgagor:

(a) Right of redemption: The first and the most important right of the mortgagor is the right to redeem i.e., take back the mortgaged property by paying the mortgage money at any time after the stipulated date for repayment.
(b) Right against clog on equity of redemption: Right of redemption or equity of redemption is the essence of a mortgage, and any provision inserted in the mortgage deed to prevent, evade or hamper redemption is void.
(c) Right of partial redemption: a mortgagor who has executed two or more mortgages in favor of the same mortgagee shall, in the absence of a contract to the contrary, when the principal money of any two or more of the mortgages has become due, be entitled to redeem any one such mortgage separately or any two or more of such mortgages together.

Rights and Liability of Mortgagor :-

Redeem of Property :- As the loan is returned then a mortgagor has a right to redeem the property. All documents and the mortgage deed should be returned to the borrower.
Right To Claim Damages :- If the property is damaged during the possession of the mortgagee then the mortgagor has a right to claim the damages from the mortgagee.

Partial Redemption :- If mortgagee wants to acquire a share in the mortgaged property through inheritance or purchase the mortgagor has the right of partial redemption.

Right Of Lease :- If the possession of the property is in the hands of mortgagor then he can make lease of this property for the ordinary period.
Follow The Agreement Deed :- The mortgagor will observe all the conditions contained in the agreement deed. He will also defend the title of property if the property is in his possession.
Recovery Of Possession :- When the mortgagor returns the loan then he has a right to recover the possession of the property from the mortgagee.
Liability Of Taxes :- If property is in the possession of the mortgagor then the liability of all types of taxes will be on the mortgagor over of Modarba certificates is not impressive. Now the ratio of equity is very high in relation to debt financing.

Liability of mortgagee

When property is in the possession of the mortgagee then it has the following duties or liabilities :

Property may not be damaged.
No alteration is allowed in property.
The property must be insured.
Property must be kept secured.
Rent of the property must be collected.
Govt. Revenue must be paid.
Property must be kept clear from all dues.

Rights of mortgagee:-

If the mortgagor does not pay the mortgage money, the mortgagee may proceed to recover

(i) from the mortgaged property, or
(ii) sue for recovery from the mortgagor personally. Thus, the mortgagor has two remedies: one against the property and the other against the mortgagor personally.