Mortgage Deed

What is a Mortgage?

Prior to plunging straight into the mortgage deed, first, we want to get what a mortgage is?

In India, Mortgage is represented under Section 58 to 104 of the Transfer of Property Act, 1882. A Mortgage can be characterized as the exchange of interests in a particular property to get the credit progressed or to be progressed later on. At the end of the day, we can say that when any individual takes a credit from anybody, some security is expected to be kept with the moneylender to have the affirmation that if there should be an occurrence of default in the reimbursement of the advance, the loan specialist can recuperate his cash from that security.

The individual who contracts his property against the credit is classified “Mortgagor.” Whereas the individual to whom the property is sold is referred to Mortgagee as” and the agreements connected with contracts are contained in the “Mortgage Deed”.

Registration of Mortgage Deed

Registration of mortgage deed is essential to give legal validity to the document. In case of Mortgage by Delivery of Title Deed, registration is not required. Following are the conditions which need to be fulfilled for a valid registration:

Deed must be signed

The deed must be signed by the Mortgage.

Witnesses Attest

At least two witnesses must attest to the deed.

Power in Packaging.

Stamp duty must be paid accordingly; otherwise, the document is not enforceable.

Other Mortgages

In English Law, a mortgage of this type is known as “Equitable Mortgage” as opposed to a legal mortgage because in this kind of Mortgage there is simply a deposit of document of the title without writing or any other legal formalities. This Mortgage, therefore, does not require any writing and being an oral transaction, is not affected by the law of registration. 

Section 58(f) of the Act says that in the notified towns specified by the State Government in the official gazette, any person can deliver his title deeds of immovable property to the banks with the intent to create security. 

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Mortgage by Conditional Sale

The Mortgage is an ostensible sale with the condition that property would go back to the real owner after the repayment of the mortgaged money. 

Usufructuary Mortgage

Here, the possession of the property is transferred to the mortgagee. The mortgagee can even earn the income from the given property.

English Mortgage:

After the transfer of the property, the mortgagor personally binds himself to pay the money on a specified date as per the agreement.

Usufructuary Mortgage

any other kind of Mortgage or combination of the above-defined mortgages come under the category of Anomalous Mortgage.

Essential elements of

Mortgage Deed

Parties

It is essential to specify the name of the mortgagor and the mortgagee in the mortgage deed. The person who transfers the interest of his property as collateral to take a loan is called mortgagor, whereas the person to whom such interest is transferred is called the mortgagee. It must be noted that the mortgagor must be competent to enter into a contract as per under the Indian Contract Act, 1872 whereas the mortgagee may be a minor. He may not be competent as per the Contract Law.

Details of the property

In this clause, all the material description of the mortgaged property should be specified. For e.g.: the location of the property, the value of the property, its specification and all the material facts which need to be disclosed should be mentioned. 

Recital

Recitals in a contract are the introductory statements disclosing the intention of the parties to enter into the Contract. The recital is also called the preamble containing a few characteristics of the agreement. It usually starts with a sentence like “Whereas the mortgagor has agreed” or “whereby the mortgagor has the rights”

Habendum

This particular clause determines the quality or extent of the interest of the mortgagee and the mortgagor over the mortgaged property. The provision defines the rights that the mortgagee is going to enjoy over the property. It also restricts the rights of the mortgagee as per the agreement.

Covenant for repayment

This clause specifies the modes and conditions for the repayment of the loan amount. The clause also recites the consideration and tenure for the repayment of the mortgaged money. It also specifies what are the conditions when the mortgagor wants to pay the loan before the stipulated time period.

Description of the Deed

It is essential to specify the title of the deed in capital letters for example “THE DEED OF MORTGAGE.”

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