Section 58 (a) of the TRANSFER OF PROPERTY ACT, 1882, defines mortgage as, “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. “
Mortgaor: The transferor is called a mortgagor.
Mortgagee: The transferee is a mortgagee.
The principal money and interest of which payment is secured for the time being are called the mortgage-money.
Mortgage Deed: The instrument (if any) by which the transfer is effected is called a mortgage deed.
Essentials Of Mortgage:
Transfer Of Interest: There is no transfer of ownership but transfer of interest only for the purpose of securing payment of money by way of loan. The right of mortgagee is only an accessory right, which is intended merely to secure the due payment of Debt. Mortgage is simply a transfer of interest in the immovable property while the ownership still remains with the mortgagor.
Specific Immovable Property: There must be specific immovable property intended to be mortgaged .The immovable property must be distinctly specified. The description of the property in the mortgage deed must be sufficient to identify the property.
Securing Paymanet Of Loan: The transfer must be made to secure the payment of a loan or to secure the performance of a contract. The consideration of mortgage maybe either.
Rights Of Mortgagee: If the money is not recovered from the mortgagor in the specified time the mortgagee has the right to recover from the proceed of the property, or Mortgagee can sue the mortgagor for the recovery of the money.
Rights Of Mortgagor:
Right Of Redemption: The essential right vested with a mortgagor in a mortgage is a right of redemption, which transfers back to the mortgagor, the same right that was mortgaged. This right is incidental to every mortgage and it continues to be in existence notwithstanding the default on the part of the mortgagor to pay the debts. Sec 60 in the Transfer of Property Act, 1882 deals with the right of Redemption.
There can be three primary kind of redemption:
-Delivery of the title documents and the mortgage deed,
-Delivery of the possession back to the mortgagor,
-Reconveyance of the mortgaged property in favor of the mortgagor.
Right Of Foreclosure: Section 67 of Transfer of Property Act, 1882 defines foreclosure as “A suit to obtain a decree that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure
Right To Sale: Certain forms of mortgage provide a right to sue for sale by intervention of courts.
A mortgage deed is a legal document that gives the lender an interest in a property when you take out a loan backed by the property. A mortgage deed is a legally binding agreement, using property as collateral for a loan. When you purchase a home, you make payments on a home loan. The mortgage deed is the paperwork you sign that allows the lender to put a lien on the property until the loan is paid. When people say they make a monthly mortgage payment, they actually mean they make a monthly loan payment while the mortgage deed secures the property for the lender. If a borrower doesn't pay back a loan in accordance with the agreement, the lender can foreclose and take possession of the land or have it auctioned off.
The Mortgage Deed is the evidence of the interest transferred to the mortgage holder. Often simply referred to as the mortgage, the mortgage deed is the document transferred to the mortgage holder.
When It Is Used:
1.If you are loaning money to another person or business and want to hold an interest in certain property they own as security until they repay their debt.
2.If you are borrowing money and want to offer property you currently own as security to the lender that you will repay the debt in full or they can take claim on the property.
1.Details of the property
2.Name of the parties
3.Loan sum and Repayment
4.Reconveyance of property
6.Default in Repayment
7.Compensation received by the property
8.Leasing of property
Importance Of Mortgage Deed:
When a real estate owner secures a loan through a mortgage, it is necessary for the owner to transfer an interest in the property to secure the loan. The real estate interest transferred is the right to retain a lien on the property, and the right to foreclose upon the lien if the mortgage is not paid as agreed.
Mortgage deeds are necessary because the mortgage lender will need your permission to place a lien on the property you purchase. Thus, the lender requires all borrowers to sign a mortgage deed. The mortgage deed is typically signed at your solicitor’s office as part of the closing of the real estate transaction.
Important Clauses Of Mortgage Deed:
Parties: The person who transfers an interest in the property is called the mortgagor; the person to whom the interest is transferred is called the mortgagee. The mortgagor must be competent to transfer. Thus a minor cannot be a mortgagor but a minor can be a mortgagee.
Description Of Deed: The title of deed is to be written in capital letters like '' THE DEED OF MORTAGE''; ''THE DEED OF SALE''; THE DEED OF LEASE''. Etc.
Premises And Habendum: Habendum is a part of deed which states the interest, the purchaser is to take in the property.
Acceleration Clause: Acceleration clause is the clause in a mortgage or trust deed that stipulates the entire debt is due immediately if the mortgagee defaults under the terms of the contract.
Payment Clause: A prepayment clause allows the borrower to pay the debt before the due date. A prepayment penalty is a charge imposed on a borrower who pays off the loan early. This clause states that the borrower cannot repay a loan prior to a specified date without paying a fee. This fee goes towards compensating the lender for interest and other charges that would otherwise be lost. The prepayment penalty is based on a percentage of the loan balance.
Registration And Stamp Duty:
In case of Simple Mortgage, the principal money is irrelevant, and the mortgage deed must be registered duly signed by the mortgagor and attested by at least two witnesses.
In case of Equitable Mortgage or Mortgage by deposit of title deeds, the principal money is irrelevant, and the mortgage deed is not required to be registered. The parties have the option, for example, it may be either by registration of Deed or only by deposit of title deed.
In case of any other kind of mortgage, if the principal money is 100 rupees or more, the mortgage deed must be registered duly signed by the mortgagor and attested by at least two witnesses; and if principal money is less than 100 rupees the mortgage deed not required to be registered. The parties have the option, for example, it may be either by registration of the deed or by delivery of possession of the property.
8.Utility bill (telephone, electricity, water, gas) – less than 2 months old
10.Employment Appointment Letter: Required if the current employment is less than 1-year old.