RIGHTS AND LIABILITIES OF MORTGAGOR AND MORTGAGEE

ABSTRACT

This paper seeks to review the Transfer of Property Act (TPA) in order to analyze the legal principles relating to mortgagors and mortgagees with respect to their rights and responsibilities. Mortgages occupy an important place in property law, defining the legal relationship between the cooperating parties while securing loans. The TPA categorizes mortgages into several types, each with specific rights and responsibilities for both the mortgagor and the mortgagee. This paper focuses on the mortgagee’s rights, including the right to redeem the property, transfer the mortgage to a third party, examine documents, and make improvements or additions. It also discusses mortgage liabilities such as repaying the loan, property upkeep, and payment of related taxes.

The paper further examines the rights of the mortgagee, such as the right to sell or foreclose on the property in case of default, take possession of the property, and manage it. The mortgagee’s obligations include managing the property profitably, returning it to the mortgagor upon repayment or sale, and accounting for any revenues accrued. These legal provisions aim to balance the interests of both parties, ensuring fairness in mortgage transactions. Through a clear differentiation of rights and responsibilities between mortgagors and mortgagees, the TPA establishes a fair framework that protects stakeholders in property dealings.

Keywords: TPA, Legal Principles, Mortgagors, Mortgagees, Mortgages, Property Law, Rights, Responsibilities, Foreclosure, Balance

INTRODUCTION

The Transfer of Property Act, 1882 (TPA), is landmark legislation in Indian property law that governs property rights transfers. Mortgages, as defined by the TPA, are a common method of securing loans against immovable property, involving the transfer of an interest in property for debt payment or obligation performance. The person transferring the interest is the mortgagor, while the transferee is the mortgagee. Mortgages are critical in financial transactions as they allow individuals and businesses to access funds using property as collateral. The TPA defines these transactions and outlines the rights and liabilities of mortgagors and mortgagees, ensuring protection for both parties. By categorizing mortgages into distinct types, the Act facilitates clarity, transparency, and fairness in property transactions.

TYPES OF MORTGAGES UNDER THE TRANSFER OF PROPERTY ACT, 1882

1. Simple Mortgage:

   • The mortgagor retains possession and promises to pay the mortgage money. If he defaults, the mortgagee can cause the property to be sold to recover the debt.

2. Mortgage by Conditional Sale:

   • The mortgagor conveys property to the mortgagee with the condition that the sale becomes void upon repayment, or absolute upon default.

3. Usufructuary Mortgage:

   • The mortgagor cedes possession, allowing the mortgagee to receive rents and profits from the property as interest. The debt is secured solely by the property’s earnings.

4. English Mortgage:

   • The mortgagor agrees to repay by a named date, conveying property to the mortgagee absolutely, with a condition of reconveyance upon repayment.

5. Mortgage by Deposit of Title Deeds (Equitable Mortgage):

   • The mortgagee receives title deeds as security without a formal deed, commonly found in urban settings.

6. Anomalous Mortgage:

   • Any mortgage that does not fit into the above categories, governed by unique terms set in the contract.

These categories provide flexibility in property exchanges, allowing parties to choose mortgage types that suit their needs. Legal provisions for each mortgage type establish the rights and responsibilities of mortgagors and mortgagees, contributing to market stability.

RIGHTS OF THE MORTGAGOR

1. Right to Redeem (Section 60):

   • The mortgagor can reclaim the property after the mortgage money is due by paying the agreed amount before foreclosure or sale.

2. Right to Transfer to a Third Party (Sections 60A & 60B):

   • The mortgagor can assign the property to another who can pay the mortgage, ensuring free disposal of mortgaged property.

3. Right to Inspect and Produce Documents (Section 60B):

   • The mortgagor can inspect and make copies of mortgage-related documents.

4. Right to Accession (Section 63):

   • Additions to the property, like buildings, belong to the mortgagor upon reclaiming the property.

5. Right to Improvements (Section 63A):

   • The mortgagor can claim improvements made by the mortgagee on the property.

6. Right to Sue for Redemption (Section 91):

   • The mortgagor can initiate a legal action to redeem the property if the mortgagee refuses.

7. Right to Lease (Section 65A):

   • In usufructuary or English mortgages, the mortgagor may lease the property, provided it does not affect the mortgagee’s interests.

LIABILITIES OF THE MORTGAGOR

1. Liability to Pay Principal and Interest:

   • The mortgagor must repay the principal and interest as agreed.

2. Liability to Indemnify the Mortgagee (Section 59A):

   • The mortgagor must compensate for losses due to any defective title of the property.

3. Liability to Maintain the Property (Section 66):

   • The mortgagor is responsible for property upkeep and preventing deterioration.

4. Liability to Pay Taxes and Other Charges (Section 65):

   • The mortgagor bears property taxes and other charges; failure allows the mortgagee to pay and add to the debt.

RIGHTS OF THE MORTGAGEE

1. Right to Sell (Section 67):

   • The mortgagee may propose the property’s sale if the mortgagor defaults, especially in simple or English mortgages.

2. Right to Foreclosure (Section 67):

   • If the mortgagor fails to redeem, the mortgagee can obtain a foreclosure decree.

3. Right to Possession (Section 67):

   • The mortgagee in usufructuary mortgages can possess the property and earn revenues until repayment.

4. Right to Sue for Mortgage Money (Section 68):

   • The mortgagee can sue for the mortgage money if the security is inadequate.

5. Right to Accession (Section 70):

   • The mortgagee can charge any accessions to the mortgaged property.

6. Right to Spend for Preservation (Section 72):

   • The mortgagee may spend on necessary repairs or preservation, adding such expenses to the mortgage debt.

LIABILITIES OF THE MORTGAGEE

1. Liability to Return the Property (Section 60):

   • Upon repayment, the mortgagee must reconvey the interest in the property.

2. Liability to Manage Property (Section 76):

   • The mortgagee in possession must manage the property responsibly and account for profits.

3. Liability to Account for Income (Section 76):

   • Any income exceeding the mortgage debt must be returned to the mortgagor.

4. Liability to Avoid Waste (Section 66):

   • The mortgagee should prevent any actions that damage the property.

CONCLUSION

The Transfer of Property Act, 1882, balances the rights and liabilities of both the mortgagor and the mortgagee. The mortgagor can redeem, transfer, and maintain the property, while bearing financial obligations. The mortgagee’s rights include foreclosure, sale, and possession but must act responsibly, returning the property upon repayment. This balance is essential for fair mortgage agreements, ensuring justice in property transactions and supporting a stable mortgage system.

REFERENCES

• “Rights and Liabilities of Mortgagor and Mortgagee” – Legal Raj. Available at: https://legalraj.com/articles-details/rights-and-liabilities-of-mortgagor-and-mortgagee

• “Know About the Rights and Liabilities of Mortgagee” – Jyoti Judiciary. Available at: https://www.jyotijudiciary.com/know-about-the-rights-and-liabilities-of-mortgagee/

• “Rights and Liabilities of Mortgagor and Mortgagee” – Law Bhoomi. Available at: https://lawbhoomi.com/rights-and-liabilities-of-mortgagor-and-mortgagee/

• “Rights and Liabilities of Mortgagor in India” – iPleaders Blog. Available at: https://blog.ipleaders.in/rights-liabilities-mortgagor-india/

• “Kinds of Mortgages under the Transfer of Property Act” – Lawctopus. Available at: https://lawctopus.com/clatalogue/clat-pg/kinds-of-mortgage-transfer-property-act/

• “Mortgagor vs. Mortgagee: What’s the Difference?” – Forbes Advisor. Available at: https://www.forbes.com/advisor/mortgages/mortgagor-vs-mortgagee/