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From the point of view of transfer of title to the mortgaged property, mortgages are divided into two categories:

legal
mortgage and equitable mortgage.

Legal Mortgage:

In the case of legal mortgage, the mortgagor transfers legal title to the mortgaged property in favor of the mortgagee
by a deed. In legal mortgage transfer of legal title to the mortgage involves expenses in the form of stamp duty and
registration charges.

Equitable Mortgage:
On the other hand, in case of an equitable mortgage, the mortgagor transfers the documents of title to the mortgagee
for the purpose of creating an equitable interest of the mortgagee in the property.

It means that legal title to the property is not passed on the mortgagee, but the mortgagor undertakes, through a
Memorandum of Deposit, to execute a legal mortgage in case he fails to pay the mortgage money. The mortgagee is
thus empowered to apply to the court to convert the equitable mortgage into a legal mortgage if the mortgagor fails to
pay the mortgage money on the specified date.

It is worth mentioning that a mortgage by deposit of title deeds requires three ingredients: the existence of a debt in
the present or future, the deposit of title deeds, and an intention that the title deed should be the security for the debt.
The intention is indeed the essence of the transaction. An agreement of sale by itself does not create any interest in
the property. Hence such an agreement is not deemed as Document of Title to property. For equitable mortgage, the
deeds deposited must relate to the property or as material evidence of title and must have been deposited with the
intention of creating a security thereof.

Legal Mortgage Vs. Equitable Mortgage

Equitable mortgages can be created in some other, more arcane legal situations. For instance, if the lender makes
you give it an actual deed that it holds in escrow so that it can take your property without foreclosure, a court would
probably roll it back to an equitable mortgage. Vendor and vendee liens, which are sometimes used in contract for
deed transactions, can also turn into equitable mortgages.

There are times when something goes wrong with a mortgage. For instance, the lender might have forgotten to fill in
the legal description blank on the mortgage. Alternately, you and your spouse might have signed on the wrong lines.
Technically speaking, the mortgage you signed (or forgot to sign) isn't a valid document. However, most courts will
look at your intent and decide that it's an equitable mortgage, since calling it a mortgage would be the fair (equitable)
decision based on what your intent appeared to be.

What Is a Registered Mortgage? | eHow

When a borrower purchases a new mortgage, the debt is registered with the local government by the closing agent to
record a legal debt. This lists the debt on the deed to the property. This means that the debt must be paid in full or
released by the lender before the property can be transferred.

Significance, registering a mortgage protects the current lien holder and any future owners of the property. It prevents
another buyer from purchasing the property without knowing that there is a debt secured by it.

Function, registering the mortgage also gives the lender the legal right to take the property as payment if the
mortgage should go into default.

Time Frame, the mortgage deed is usually filed the day of closing, unless it is a cash-out refinance or home equity
line of credit. In those two cases, there is a three-day waiting period, known as the "right of rescission" period, that
must pass prior to legally filing the debt.

Considerations, if a mortgage is not properly registered, it may cause legal consequences for the lender and future
property holders that could alter the ability to buy or sell the land for future uses.

Misconceptions, if the mortgage debt is procured through an individual, instead of a financial lender, the deed must
be recorded to reflect the mortgage debt.

Nowadays, bank operations are not confined within a national border. Banks are
opening branches in foreign countries. But the problem is - Is it possible for a bank to open branch in each and
every country?
Obvious answer is no. Then what is the easiest way to handle this situation?

Open an account in the foreign countries' bank!!


Here Nostro, Vostro and Loro accounts come into play. Note that all these accounts are termed as one's own
country-basis.

NOSTRO Account
Italian word 'nostro' means 'ours'. Hence, Nostro account points at - "Our account with you"
Nostro accounts are generally held in a foreign country (with a foreign bank), by a domestic bank (from our
perspective, our bank). It obviates that account is maintained in that foreign currency.

For example, SBI account with HSBC in U.K. (may be)


VOSTRO Account
Italian word 'vostro' means 'yours'. Hence, Vostro account points at - "Your account with us"
Vostro accounts are generally held by a foreign bank in our country (with a domestic bank). It generally
maintained in Indian Rupee (if we consider India)

For example, HSBC account is held with SBI in India. (may be)

LORO Account
Again, Italian word 'loro' means 'theirs'. Therefore, it points at - "Their account with them"
Loro accounts are generally held by a 3rd party bank, other than the account maintaining bank or with whom
account is maintained.

For example, BOI wants to transact with HSBC, but doesn't have any account, while SBI maintains an account
with HSBC in U.K. Then BOI could use SBI account. (again may be)

What is the difference between bill of exchange and promissory note?

Promissory Note Bill of Exchange

It is promise to pay It is an order to pay

There are only two parties the drawer, and the There are three parties, the drawer, the drawee,
payee. and the payee.

There is no necessity of acceptance It must be accepted

The maker is primarily liable The drawer is not primarily liable.

It is never drawn in sets Foreign bills are specially drawn in sets.

Protesting is not necessary after dishonour A foreign bill must be protested upon dishonor.

Types of Bill of Exchange on the Basis of Period:

On the basis of period bills are of two types:

1. Demand bills
2. Term bills

Demand Bills of Exchange:

There is no fixed date for the payment of such bill. They become payable at ay time, when they are presented before
payee by the holder.

Tem Bills of Exchange:

These bills are payable after specified period of time. The period after which these bill become due for payment is
called tenor.

Types of Bill of Exchange on the Basis of Object:

On the basis of purpose of writing the bills, the bills can be classified as:

1. Trade Bills
2. Accommodation Bills
Trade Bills:

These bills are drawn and accepted against the sale and purchase of goods on credit. These are drawn by the seller
(creditor) and accepted by the buyer (debtor).

Accommodation Bills:

Such bills do not involve any sale and purchase of goods, rather they are drawn without any consideration. The
purpose of such bills is to help one party or both the parties financially.

Classification of Bills of Exchange:

The bills can be classified into two classes given as under:

Inland Bill:

These bills are drawn in a country upon person living in the same country or made payable in the same country. Both
drawer and the drawee reside in the same country.

Foreign Bills:

These bills are drawn in one country and accepted and payable in another country, e.g. a bill drawn in England and
accepted and payable in India.

Promissory Note:

"A promissory note is instrument in writing (not being a bank note and a currency note) containing an unconditional
undertaking signed by the maker to pay a certain sum of money only to or the the order of a certain person or to the
bearer of the instrument."

The definition means that when a person gives a promise in writing to pay a certain sum of money unconditionally to
another person of according to creditor's instructions, this document is called a promissory note. It is generally used
for loan purposes.

Specimen/Format of Promissory Note:

The accounting treatment for promissory notes is almost the same as that of bills of exchange.

Characteristics of a Promissory Note:

1. It should be in writing.
2. It is a promise by a debtor to pay.
3. The promise is always for payment of money.
4. It is always unconditional.
5. Acceptance is not essential.
6. It can be endorsed.

No business wants to sell goods on credit to his customers who may prove unable or unwilling to pay their debts.
Today, however, in every field of retail trade it appears that sales and profits can be increased by selling goods on
credit basis. The manufacturers and the wholesalers sell goods mostly on credit. Credit is a very powerful instrument
to promote sales, so most of the business transactions, in most business concerns, are carried on credit basis. A bill
of exchange is a method of payment used between businessmen which has certain advantages over other methods
of payment.
Definition and Explanation of Bill of Exchange:

"An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the
person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to
or to the order of a specified person, or to the bearer".

You should keep in mind the following points to understand the definition:

1. The person who writes out the order to pay is called the drawer.
2. The person upon whom the bill of exchange is drawn (who is ordered to pay) is called the drawee.
3. The drawee may "accept" the bill. This is a special use of the word accept because it means that he accepts
to pay the amount payable expressed in the bill, i.e. if he accepts the obligation to pay he writes "accepted"
across the face of the bill and signs it. From that time on he is know as the "acceptor" of the bill and has
absolute liability to honor the bill on the due date.
4. The amount of money must be mentioned clearly. For example, I cannot make out a bill requiring someone
to pay the value of my car or house. That is an uncertain sum. It must say "five thousand dollars or ten
thousand dollars" etc.
5. The time must be fixed or at least be determinable. For example, "sixty days after date" is quite easily
determinable. If the bill is made out on first July, it will be 29th august.
6. The person who is entitled to receive the money from the acceptor is called the "payee". It is usually the
drawer who is supplying goods to the value of the bill, and wants to be paid for them. If the drawer decides,
the bill can be made payable to someone else by endorsing it. That is why the definition says, to pay..... to,
or the the order of, a specified person.
7. A bill can be made payable to a bearer, but it is risky, since any finder of the bill or any thief, can claim the
money from the acceptor.

Format of Bill of Exchange:

Now read the definition again and see the format of the bill of exchange below:

Important Points:

1. This bill is drawn by the peter & Co., so the drawer of the bill is peter & Co.
2. The bill is drawn upon William & Co., so they are drawee of the bill. They have not yet accepted the bill, and
so are not liable to pay it at maturity.
3. The bill is an unconditional order in writing. It says "pay ten thousand dollars to Peter & Co." it does not say
"provided you are in funds". It just says "pay!".
4. It is addressed by one person (Peter & Co.) to another (William & Co.) and is signed by the person giving it
(Peter & Co.).
5. The date is easily determinable it is 90 days after first July, which is 29 September, 20....
6. The sum of money is very certain, ten thousand US dollars.
7. The bill is payable to, or to the order of, Peter &