Mortgage in Transfer of Property Act, 1882
Mortgage is a loan taken by buyer from the loan giver against his or her property. Generally, a mortgage is the transfer of an interest in property to a lender as a security for a debt “usually a loan of money”. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in property from the buyer to the mortgage lender, on the condition that this interest of property will be returned to the giver/buyer when the terms of the mortgage have been satisfied or performed. Section 58(a) of The Transfer of Property Act, 1882 defines, “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. 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 by which the transfer is affected is called a mortgage- deed”. Therefore, it means that the following essential attributes should be confirmed to make a valid mortgage:
Transfer of interest on specific immoveable property
Consideration, or
Security either to pay loan advanced/ to be advanced ,or
Must be a debt creates at present or will be in future, or
Give rise to a pecuniary liability
Transfer of interest on specific immoveable property:
The transfer of property act deals only the immoveable property and must be specific but there have certain exceptions where moveable property can be a part of mortgage property, like in the modes of hypothecation (Co-operative Hindustan Bank Vs Surendra Nath,1932,CAL 426). Therefore, it cannot be said that the mortgage of moveable property is forbidden (Halim, 2006)
Consideration/Security either to pay loan advanced or to be advanced:
There must be some consideration to secure the performance of a contract .the consideration may be either by money advanced or to be advanced by way of loan, or in consideration of an existing debt or further debt which going to create, or in consideration of performance or an engagement giving rise to monetary liability.
There are six types of mortgage as mentioned under section 58(b-g) of T.P Act, 1882 but first four types of mortgage, instruments are commonly used in the mortgage term in Bangladesh.
1) Simple mortgage
2) Mortgage by conditional sale
3) Usufructuary mortgage
4) English mortgage
5) Mortgage by deposit of title- deeds.-
6) Anomalous mortgage
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. Therefore, the essential attributes of simple mortgage are:
No transfer of possession
Mortgagor binds himself to pay the mortgage money
In case of failure by mortgagor, the mortgagee will have the right to sell
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 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. Therefore the essential attributes of mortgage by conditional sale are:
Mortgagor seems to sells the mortgaged property with a simple condition of default
Deemed a mortgage, except the condition is embodied in the document, which effects or purports to affect the sale
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 authorizes 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. Therefore the essential attributes of usufructuary mortgage are:
Mortgagee has absolute right to enjoy the rents and profits until loan is paid through enjoyment
No forfeiture,
No foreclosure and
Not allowed to sale
English mortgage
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 retransfer it to the mortgagor upon payment of the mortgage, money as agreed, the transaction is called an English mortgage. Therefore the essential attributes of English Mortgage are
Mortgagor binds himself to pay mortgaged money on certain day
Mortgage property is absolutely transferred to the mortgagee
Mortgagor entitled to reconveyance on payment of debt.
Mortgage by deposit of title- deeds.
Where a person in the town of Dhaka, Narayangonj and Chittagong and in any other town which the Government 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. Essential attributes of Mortgage by deposit of title are:
Mortgagor transfer his/her title deeds
Interest on property is transferred to the mortgagee
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. Essential attributes of Anomalous Mortgage are
Mortgage should not be fallen on any one of the above mentioned criteria
Some features may be combined but not the same of anyone of this above mentioned
References:
Bindras.N.S. Conveyancing, Delhi Law House,1953(Re Print 2012)
Halim, Md Abdul. A Guide to Conveyancing and Legal Drafting, CCB Foundation, 2006
http://www.economywatch.com/mortgagehttp://www.lawyersnjurists.com/resource/articles-and-assignment/official-definitionhttp://www.mgiworld.com/content/pdfs/doing_business/2012http://www.bangladesh-bank.org/mediaroom/circulars/fid/jan1008dfiml01tg.pdf
