1. INTRODUCTION:
Mortgage is a security for a debt. However, mortgage in itself is not a debt. Contrary to this it is lender’s security for a debt. It is a transfer of an interest in immoveable property from owner to lender, and such transfer is made on this condition that this interest will be returned to owner after satisfaction or performance of terms of mortgagor. Thus, mortgage is a security for that loan, which lender makes to borrower.
2. DEFINITION OF MORTGAGE:
According to Black Law Dictionary: A conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and that will become void upon payment or performance according to the stipulated terms.
According to Sec # 58 of T.P.A: A mortgage is the transfer of an interest in specific immoveable 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.
3. MORTGAGOR, MORTGAGEE, MORTGAGE MONEY, AND MORTGAGE DEED DEFINED:
Following are the important term which is used in mortgage:-
3.1 MORTGAGOR: The mortgagor is called mortgagor.
3.2 MORTGAGE: The transferee is called the mortgagor.
3.3 MORTGAGE MONEY: The principle money and interest of which payment is secured for the time being is called mortgage money.
3.4 MORTGAGE DEED: The instrument if any way which the transfer is affected is called a mortgage deed.
4. ESSENTIALS OF MORTGAGE:
Following are the essentials of mortgage:
4.1 TRANSFER OF INTEREST:
The first essential of a mortgage is that there should be a transfer of an interest in immoveable property. So where there is no actual transfer of some interest there is no home loan. An unimportant consent to exchange can't make a mortgage.
4.2 SPECIFIC IMMOVEABLE PROPERTY:
Another essential the transfer of an interest must be in specific immoveable property.
4.3 SECURITY FOR A LOAN:
The third essential in the definition of a mortgage is that the interest in the property should be transferred to secure a debt.
5. KINDS OF MORTGAGE:
Following are various kinds of mortgage:
5.1 SIMPLE MORTGAGE:
Simple mortgage is a transaction in which without delivering possession of the mortgaged property, the mortgaga or ties himself actually to pay the mortgage money and agree expressly or impliedly that in the event if this failing to pay according to the contract the mortgages shall have right to cause the mortgage property to be sold the proceeds of sale to be applied in payment of mortgage money. That transaction is called simple mortgage.
5.1.1 EXAMPLE OF SIMPLE MORTGAGE:
Basher mortgages his house to Ahmad to get one lakh rupees as loan from Ahmad, however, basher does not deliver possession of his house to Ahmad, but binds himself personally to pay mortgage money, and agrees that Ahmad will have right to obtain decree of court for sale of the house for payment of mortgage money in case of basher’s failure to pay mortgage money. It is case of simple mortgage.
5.1.2 ESSENTIALS OF SIMPLE MORTGAGE:
Following are the essentials of simple mortgage:-
- Property is mortgaged.
- Possession is not delivered.
- A personal obligation to pay the debt.
- Obligation may be express or implied.
- The transfer of a right to cause the mortgage property to be sold in default of the payment.
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 might get to be outright
- On condition that on such payment being made, the sale shall become void,
- payment being made, the buyer shall transfer the property to the seller. The aforesaid condition as to payment must be embodied in the very same document which ostensibly purports to affect the sale.
Basheer apparently sells his house to Ahmad for ten lakh rupees on this condition that such sale will become absolute on certain date when there will be default of payment of mortgage money. It is case of mortgage by conditional sale.
5.2.2 ESSENTIALS OF MORTGAGE BY CONDITIONAL SALE:
Following are essentials of mortgage by conditional sale:
- This mortgage is a form of sale.
- The sale becomes absolute on the non-payment of mortgage money.
- The sale may become void on the payment of mortgage money.
- No delivery of possession is given.
- There is no personal liability on the part of the mortgagor to pay the debt.
- The remedy of the mortgage is by foreclosure only.
Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorizes him to retain such possession until payment of the mortgage money and to receive the rents and profits accruing from the property and to appropriate the same in lieu of interest and in payment of the mortgage money.
5.3.1 EXAMPLE OF USUFRUCTUARY MORTGAGE:
Basheer delivers possession or binds himself expressly or impliedly to deliver possession of mortgaged property to Ahmad, and authorizes Ahmad to retain such possession until payment of mortgage money. He also authorizes Ahmad to receive those rents and profits which accrue from mortgaged property or he also authorizes Ahmad to receive any part of such leases and benefits. Indeed he approves Ahmad to proper such rents and profits in lieu of interest or in payment of mortgage money or partly in lieu of interest or partly in payment of mortgage money. It is case of Usufructuary mortgage.
5.3.2 ESSENTIALS OF USUFRUCTUARY MORTGAGE:
Followings are essentials of Usufructuary mortgage:
- No personal liability on the mortgagor.
- Possession of property is delivered to the mortgagee.
- No time period is fixed, to pay the mortgage money.
- Mortgagee can not sale out the property.
- Mortgagee is entitled for rents and profits of the mortgage property.
English mortgage is a transaction which 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.
5.4.1 EXAMPLE OF ENGLISH MORTGAGE:
Basheer mortgages his house to Ahmad for a loan of one lakh rupees, and he binds himself to repay mortgage money on a certain date, and transfers mortgaged property absolutely to Ahmad. However such transfer is subject to this condition that Ahmad will re-transfer mortgaged property on repayment of mortgage money before agreed date. It is case of English mortgage.
5.4.2 ESSENTIALS OF ENGLISH MORTGAGE:
The three essentials conditions of an English mortgage are:-
- Mortgagor binds himself to re-pay the mortgagee on a certain date.
- The property is absolutely transferred to the mortgagee.
- Transfer of property should be subject to the proviso that the mortgagee will recover the property to the mortgagor on the payment.
This is called English law an equitable mortgage. If a person deposits his title deeds to the immoveable property with the creditor or his agent with intent to create a security thereon, the transaction is called equitable mortgage or a mortgage by deposit of title deeds.
5.5.1 EXAMPLE OF MORTGAGE BY DEPOSIT OF TITLE DEEDS:
Basheer delivers to a creditor or his/ her agent documents of title to his own house with intent to create a security on these documents to title. It is case of mortgage by deposit of title deeds.
5.5.2 ESSENTIALS OF MORTGAGE BY DEPOSIT OF TITLE DEEDS:
Followings are essentials of mortgage by deposit of title deeds:-
- Document of titled deed is deposit as security.
- There is a debt.
- On the payment of mortgage money, the title deed is returned to the mortgagor.
A mortgage which is not a simple mortgage, a mortgage by conditional sale, a Usufructuary mortgage, English or a mortgage by deposit of title deeds, is called an anomalous mortgage.
5.6.1 EXAMPLE OF ANOMALOUS MORTGAGE:
An example of anomalous mortgage is dharta. Such form of mortgage is present in Multan District. Through this mortgage, possession of mortgaged land remains with mortgagor. However, he/she pays 1/80th part of produce of mortgaged land to mortgage.
6. REMEDIES FOR MORTGAGE:
Mortgagor has following remedies.
- suit for sale
- suit for money
To conclude we can say that a mortgage is the transfer of an interest in specific immoveable property for securing the payment of money advanced or to be advanced by way of money. The different kinds are simple, conditional, and English by deposit of title deed and anomalous mortgage.
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