Duties/liabilities of a mortgagor

Along with the rights given to a mortgagor, the Transfer of Property Act has
also conferred some duties on him. Following are the duties of a mortgagor:

1. Duty to avoid waste

2. Duty to indemnify for defective title
3. Duty to compensate mortgagee
4. Duty to direct rent of a lease to mortgagee

Duty to avoid waste (section-66)

This section imposes a duty on the mortgagor to not to commit any act which
leads to the waste of property or any act which reduces the value of the
mortgaged property. Waste is divided into two categories:

 Permissive waste– A mortgagor who is in possession of the

mortgaged property is not liable to the mortgagee for any minor
waste.
 Active waste– When an act is done which causes major waste of
the property or leads to the reduction in the value of mortgaged
property, then the mortgagor will be liable to the mortgagee.

Duty to indemnify for defective title

It is the duty of a mortgagor to compensate the mortgagee for a defective
title in the mortgaged property. A defective title refers to a situation when a
third party starts claiming or interferes with mortgaged property. It is a
liability for the mortgagor to compensate for the expenses incurred by
mortgagee for protecting the title of that property.

Duty to compensate mortgagee

If the mortgaged property is in possession of mortgagee who is paying all the
taxes and other public charges, then it is the duty of mortgagor to
compensate mortgagee for incurring such expenses. Similarly, when there is
no delivery of possession i.e. the mortgaged property is still in possession of
mortgagor, then it is his duty to pay all public charges and taxes levied on
it. 

Duty to direct rent of a lease to mortgagee

Where the mortgaged property is leased by mortgagor then it is his duty to
direct lessee to pay the rent, etc. to the mortgagee.  

Liabilities of Mortgagor – 
Under Section 65 of the Transfer of Property Act, 1882 the liabilities of the
mortgagor are as follows –

1) A Mortgagor must have the right to mortgage such property;

2)  The mortgagor must have a legal title of the property;

3) The mortgagor is liable to pay all taxes if the property is not in the
possession of the mortgagee.

4) The mortgagor is liable to pay the lease rent of the mortgaged property if
the mortgaged property is under the lease. The mortgagor must comply
also with the terms and conditions of the lease deed if the mortgaged
property is under lease deed; and

5) The Mortgagor is liable to comply also with the terms and condition of
the previous mortgage deed if any relating with the same property.

B. Liabilities
1. Covenant for the title (S. 65)

The mortgagor is deemed to contract with the mortgagee that the interest which the mortgagor
professes to transfer to the mortgagee subsists and that the mortgagor has the power to transfer to the
same. There is implied warranty of title by the mortgagor in the property mortgaged to him.

If the title of the mortgagor turns out to be defective the mortgagee can sue for the principal money as
well as for damages even before the stipulated period.

2. Covenant for the defence of title (S. 65(b))

The mortgagor is deemed to contract with the mortgagee that he will defend, of if the mortgagee be in
possession of the mortgaged property, enable him to defend, the mortgagor’s title thereto. The
mortgagee has a right to protect the title of the mortgagor because he is entitled to the full benefit of
the security.

3. Covenant for payment of public charges (S. 65(c))

The mortgagor is deemed to contract with the mortgagee that the mortgagor will so, long as the
mortgagee is not in possession of the mortgaged property, pay all the public charges accruing due in
respect of the property.

If the mortgagor fails to pay and the property is sold for arrears and revenue, and he again purchases
that property, the property will remain under the mortgage, for he cannot take advantage of his own
wrong in order to better his position.[vii]

4. Covenant for payment of rents (S. 65(d)) –

Where the mortgaged property is a lease, the mortgagor is deemed to contract with the mortgagee that
the rent payable under the lease, the conditions contained therein, and the contracts binding on the
lease, have been paid, performed and observed, down to the commencement fo the mortgage; and will
pay the rent reserved by the lease and perform the conditions contained therein, and observe the
contracts binding on the lesee, and indemnifying the mortgagee agasint all claims, sustained by reason
of the non-payment of the said rent or the non-performance or non-observance of the said conditions
and contracts.

5. Covenant for the discharge of prior mortgage (S. 65(e)) –

Where the mortgage is a second or subsequent encumbrance on the property, the mortgagor is deemed
to have contract that the mortgagor will pay the interest from time to time accruing due on each prior
encumbrances as and when it becomes due, and will at the proper time discharge the principal money
due on such prior encumbrances.
implied Contracts
Section 65 and 66 provide for the liabilities of a mortgagor under The Transfer of
Property Act, 1882. According section 65 of The Transfer of Property Act, 1882 it
states the implied contracts by the mortgagor. This provides with the liabilities of a
mortgagor which are implied in every mortgage, these liabilities are deemed to be
in every mortgage except when the parties have agreed to do so.

Not To Anything Which Is Destructive Or Injurious In Nature

At last, section 66 of The Transfer of Property Act, 1882 states the Waste by
mortgagor in possession, this article imposes a liability on a mortgagor as in not to
do anything which is destructive or injurious in nature or can prove to be fatal to
the mortgaged property. In all this section provides that mortgagee should not
actively do anything on the property which is in his possession or deals with it in
such a manner which ultimately reduces the market value of the mortgaged
property.

6. Liabilities of the mortgagor:

Following are the liabilities of the mortgagor.
(i) Liability to transfer valid interest:
The mortgagor is liable to transfer valid interest to the mortgagee in respect of the mortgage property.
(ii) Liability to defend title:
The mortgagor is under liability to defend his own title if he is in possession of mortgage property and if
mortgagee is in possession he must enable him to defend his property.
(iii) Liability to pay public charges:
It is liability of the mortgagor to pay the public charges so long as the mortgagee is not in possession.
(iv) Liability to pay rents:
Where the mortgage property is a lease it is liability of mortgagor to pay the rent.
(v) Liability to pay interest and other encumbrances:
It is liability to pay interest on the prior mortgage and discharge of such encumbrances at the proper
time where the mortgagee is a subsequent of second mortgage.
7. Conclusion: