Mortgage is the transfer of immovable property for the purpose of securing the payment of a loan or any debt in existence or future debt. Possession of the property is given to the mortgagee rather than ownership and when the taken money in terms of loan or debt is returned, the property itself is taken out of the possession.
In many cases, the property is not even in possession because the property is taken for security in case of default by mortgagor.
Who is a mortgagor & mortgagee?
The person who transfers the property for the money (transferor) is called a mortgagor while the person who takes the property of the mortgagor as a security (transferee) is called a mortgagee.
Rights of Mortgagor
Right to redemption
Section 60 of the Transfer of Property Act talks about the right to redemption as the right of mortg age to get back or to recover the property from the mortgagee after paying the loan or debt.
Right to redemption is further divided into three parts-
- Right to terminate the mortgage deal
- Right to transfer mortgaged property on their behalf
- Right to get the Property withdrawn from the possession of the mortgagee.
For instance – If A, a mortgagor mortgaged his property with bank B, a mortgagee would lend a loan of amount 20 lakhs. A paid the due amount & he has the right to redemption.
However, there is some exceptions to this right –
- Right can be waived of by act of parties
- or by operation of law,
- or decree of the court
Right to transfer mortgage property to a third party instead of pledging
Section 60 A of Transfer of Property Act states that a mortgagor has a right to directly transfer the property from mortgagee to the thord party for taking loan from him. This section has been inserted by Amendment Act, 1929
For instance – A took loan from B (mortgagee) & gave him his property as a security. He paid the loan & directly transferred the property to C (third party) for taking loan from him too.
Right to inspection & production of documents
Right to inspection & production of documents is mentioned under Section 60 B of Transfer of Property Act which is added by Amendment Act, 1929.
Right to accession
Accession means the addition to the property which could be artificial as well as natural.
Section 63 of Transfer of Property Act states that Mortgagor has the right over the accession if his property.
For instance – A gave his land as a immovable property to B for mortgage, but due to flood extra land gets attached to his property by natural accession. Here, A will get whole of his land including the accession.
Right to improvement
Right to improvement is mentioned under section 63 A of Transfer of Property Act which means mortgage has the right to improvement, whereby mortgagee will improve the property of required.
Mortgagor is not liable to pay the expense for improvement of property except in the case –
- Improvement made to protect the property or prior permission is taken from by mortgagor
- Mortgagee has taken permission from the public authority.
There are two more rights which can be exercised by the mortgagor & they are Right to renewed lease & Right to grant a lease.