Mortgage : Meaning, Definition, Essentials and Registration of

Mortgage Deed

1) What is mortgage

The term 'Mortgage' consists of two words 'Mort' and 'Gage'. Mort which means ' a place of public sale
and 'Gage' means 'A pledge'. In this way, mortgage means a pledge made at a place of public sale.

2) Definition of mortgage -

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.

The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest
of which payment is secured for the time being are called the mortgage-money, and the instrument (if
any) by which the transfer is effected is called a mortgage-deed.

3) Essentials of mortgage -

There are three essentials of Mortgage which are as follows -

(a) There must be a transfer of interest.

There is no transfer of ownership but the transfer of interest only for the purpose of securing payment
of money by way of loan. The right of the mortgagee is only an accessory right, which is intended merely to
secure the due payment of Debt. A mortgage is simply a transfer of the interest in the immovable property
while the ownership still remains with the mortgagor.
(b) 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.

(c) The transfer must be made to secure the payment of a loan or to secure the performance of a contract.
an existing or future debt or the performance of an engagement which may give rise to pecuniary liability.

4) Registration of Mortgage Deed

according to Section 59 of the Transfer of Property Act, 1882-

i) In case of Simple Mortgage, the principal money is irrelevant, and the mortgage deed must be
registered duly signed by the mortgagor (The transferor is called a mortgagor.) and attested by at least two
witnesses.

ii) 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.

iii) 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.
Kinds of mortgage
There are 6 kinds of mortgage.
1) Simple mortgage

2) Mortgage by conditional sale

3) Usufractuary mortgage

4) English mortgage

5) Mortgage by deposit of title-deeds

6) Anomalous mortgage.

A) Simple mortgage S.58(b)

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.

Essentials of simple mortgage

1) There must be a transfer of specific immovable property.

2) The position position of the property is retained by the mortgagor.

3) as the posssession of the property is not given to the mortgagee, mortgagor has right to usufruct e.g.
enjoyment of the property.

4) The title is not given to the mortgagee.

5) Mortgagor binds himself to pay mortgage money by Personal security.

6) Mortgagor has a right to sale on execution of decree against the mortgagor ,

7) Mortgagee has no right of foreclosure.

B) Mortgage by conditional sale section 58(c)

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 .
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.
Essentials of mortgaged by conditional sale -

1) Mortgagor ostensibly sells the immovable property by a sale. It is only ostensible and not real .

2) The Mortgagor has given title and possession to the mortgagee and hence mortgagee gets a right to
usufruct property.

3) on default of payment of mortgage-money the sales

Shall be absolute.

4) In case mortgagor repaid the loan , the sale shall become void .

5) that mortgagor is entitled to get the property transferred on such payment.

6) No Personal security and right to sale is given to the mortgagee.

7) Mortgagee gets a right to foreclose the property

C) Usufructuary Mortgage Sec 58(d)

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 a usufructuary
mortgage and the mortgagee a usufructuary mortgagee.

Essentials of Usufractuary mortgage

1) No title is given to the mortgagee.

2) Mortgagor has given possession and hence mortgagee enjoy a right to usufruct.

3) Mortgagor has not given any personal security a right to sale a foreclosure toy the mortgagee.

D) English Mortgage S 58 (e)

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.
Essentials of English mortgage.

1) The mortgagor has given title , possession, right to usufruct to the mortgagor ;

2) The mortgagor bind himself to repay the mortgage money on a certain day.

3) The mortgagee is not given the right to foreclosure.

E) Mortgage by deposit of title-deeds Sec .58 (e) -

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 immovable property, with intent to create
a security thereon, the transaction is called a mortgage by deposit of title-deeds.

The requisite essential -

1) Debt ;

2) Deposit of title deeds ;

3) An intention that the deed shall be security for the debt ; the documents of title to immovable property
with intend to create a security thereon . This mortgage can only be made in any of the following towns
namely Calcutta , Madras, Bombay , Lucknow, Allahabad & Kanpur and in any other town which the state
Government concern may specify on this behalf .

F) Anomalous mortgage - Sec. 58(f)

A mortgage which is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an
English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an
anomalous mortgage.

It does not fit in above five mortgages , which is a combination of two or more of above mentioned type
mortgage.

Under Section 65 of the Transfer of Property Act, 1882 the liabilities of the mortgagor are as follows -

1) A Mortgagor must have the right to mortgage such property;

2) The mortgagor must have a legal title of the property;

3) The mortgagor is liable to pay all taxes if the property is not in the possession of the mortgagee.

4) The mortgagor is liable to pay the lease rent of the mortgaged property if the mortgaged property is
under the lease. The mortgagor must comply also with the terms and conditions of the lease deed if the
mortgaged property is under lease deed; and

5) The Mortgagor is liable to comply also with the terms and condition of the previous mortgage deed if any
relating to the same property.