The Hindu : Karnataka News : All about mortgages

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Saturday, Apr 25, 2009
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Karnataka

Karnataka

All about mortgages

In property transactions such as a joint development agreement, mortgages on immovable property have to be created through legal documentation. Mortgage involves the transfer of an interest in immovable property by a ‘mortgagor’ in favour of the ‘mortgagee.’

This transfer is carried out only for securing the payment of money advanced or to be advanced by way of a loan, a future debt or in relation to a transaction which may give a pecuniary liability held by the mortgagor to the mortgagee.

The property owner, who is the transferor, is called the “mortgagor.” The person in whose favour the transfer is effected is the “mortgagee.”

The loan amount due or the pecuniary liability is the amount owed by the mortgagor to the mortgagee. It is called the “mortgage money.”

The deed or instrument by which the transfer/mortgage is created is called the “mortgage deed.” The transfer is effected only for creating a security in favour of the mortgagee so as to give him the right to recover all the amounts, loans etc., due.

There are two types of mortgage in vogue i.e., Simple Mortgage and Mortgage by Deposit of Title Deeds. The term “Simple Mortgage” has been defined in Section 58B of the Transfer of Property Act, 1882. In this, the mortgagor legally binds himself personally to pay the mortgaged money to the mortgagee. The terms and conditions of the payment to be made are covered in a mortgage deed executed by the mortgagor in favour of the mortgagee.

For recovery of the money in the case of delay or default by the mortgagor, the mortgagee is given the right to sell the immovable property to any third party and/or parties.

(N.C.S. Raghavan is a chartered accountant and Arvind Raghavan, an advocate)

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