Concept of

Mortgage
Specific Focus on
Equitable & Simple
Mortgage
 Contents
Features of
Equitable
Features of Mortgage
Simple
Types of Mortgage
Mortgage
Key Aspects
of Mortgage
Introduction
 Introduction
Creditor
Mortgagee
Mortgage A mortgage is a way to use one's real property as a
guarantee for a loan to get money.

When the mortgage transaction is made, the debtor

gets the money with the loan and promises to pay the
loan.

The creditor will receive money back with interest over

time (usually in payments made each month by the
debtor).

If the debtor does not pay the loan, the creditor may
take the mortgaged property in place of the loan.

In case of a mortgage, the security is to be first utilised

for the claim of the mortgagee. Any other debt including Debtor
Govt. dues cannot take precedence over the same.
Mortgagor
 Key Aspects of Mortgage
Transfer of Interest
Transfer of some interest in property and not its ownership
• Interest may relate to the right of enjoying gains / income out of the property, right to sell the property (on default),
right to appoint receiver (on default) or any such right.

Transfer of Possession
Not a prerequisite for all types of mortgages
• In usufructuary mortgage, transfer of possession is a must.

Immovable Property
Only immovable properties can be given in mortgage
• There is no provision to mortgage movables.
• Immovable property is defined as land, benefit arising out of land and things attached / permanently fastened to
earth.
• Specific in nature i.e. it should be capable of being distinctly and clearly described.
 Key Aspects of Mortgage
Date of Mortgage
Mortgage can be created to secure an existing or future debt
• Can be validly created on the date of loan, prior to the date of loan or subsequent to the date of loan.
• For a valid mortgage, there must be an existing debt or an antecedent or an agreement for a future debt when the
title deeds are handed over to the bank.
• Mere handing over the title deeds will not constitute a mortgage.

Right of Redemption
Right to get back (redeem) the mortgaged property on repaying debt
• The mortgagor has this right to redeem.
• This right can be exercised at any time before the decree for sale or foreclosure has been passed by the court.

Sub-Mortgage &
Second Mortgage Second level of mortgage
• When the mortgagee, mortgages the immovable property already mortgaged to him, it is called sub-mortgage.
• Where the mortgagor is need of further loan against the security of immovable property already mortgaged by him
creates another mortgage on the same property, it is call second mortgage.
• The second mortgage can be made in favour of the existing mortgagee or any other person.
 Types of Mortgage
• Mortgagor binds himself personally to repay the loan.
Simple Mortgage • Transfers to mortgagee the right to sell the immovable in the event of default.
• Possession of the property is not delivered to creditor.
• Mortgagor ostensibly sells the immovable property to mortgagee, provided on
Mortgage by default of payment of the mortgage money (loan) on a certain date the sale
Conditional Sale shall become absolute, Or, in case such payment being made the sale shall
Mortgage

become void, Or, on such repayment the mortgagee shall retransfer the
• Possession of the property is delivered to the mortgagee.
Usufructuary property. 
• Mortgagee is to get rents and profits in lieu of the interest or principal or both.
Mortgage • No personal liability is incurred by the mortgagor.
• Mortgagee cannot foreclose or sue for sale.
• The mortgagor transfers the property absolutely to the mortgagee.
English Mortgage • The mortgagor binds himself to repay the borrowed money before a certain
date.
• Such transfer is subject to the condition that the mortgagee will retransfer the
• Also known as Equitable Mortgage.
Mortgage by Deposit • Deposit ofontitle
property repayment before the agreed date.
deeds with a creditor with intention for securing a debt, from
of Title Deeds that creditor, with those title deeds.
• Any mortgage which is not of any other category is anomalous mortgage.
Anomalous Mortgage
Features of Simple Mortgage

The
A deed should
registered be submitted
mortgage tocover
does not the office of the limits
additional Sub-Registrar within
sanctioned to
Mortgage deed must be stamped as per the duty applicable in the
The
whose
the mortgagor
borrower. makes
jurisdiction,
Any the himself
whole / apersonally
enhancement
state where the deed is registered.
portion liable
beyondofthe to pay
theamount ofthe
property, to debt.
which
the deedthe
is
deednot
also relates to, isbysituated.
covered the mortgage.

Agrees that on default, the mortgagee can cause the

However
extendbeathe
It must
To registrar
existing/can
attested register by
witnessed
mortgage aadditional
document which
at least limits
two might be
independent
mortgaged
registered byproperty to be soldtothrough
any Sub-Registrar the / enhanced
intervention of
witnesses.
limit a supplemental registrationsubordinate
deed must beto him.
executed.
court.

Registrars of
Registered Mumbai,
mortgage is aKolkata,
one-shotChennai and Once
transaction. Delhi the
districts
debt
Neither
The deedthe
canfully
accept
canownership
be executed
documents
norinpossession
any centreofnot
for registration
thenecessarily
property
irrespective
isa
is liquidated the deed becomes useless. Anyoffresh
the
notified centre
transferred to or
thethe place of registration.
mortgagee.
location of
advance willthe
notproperty.
be covered by this mortgage deed.

Theismortgage
It necessary deed
to will not bethe
register accepted for(with
registration unless
A deed once registered becomes charge
operative fromRegistrar
its date of
of
The mortgagee
it is presented
Companies) in tocannot
proper
case the exercise
authoritythe
property right
within
given in of
four foreclosure.
monthsmortgage
registered
execution as per Sec 47 of Indian Registration Act.
from its
date of execution
belongs as per Sec 34 of Indian Registration Act.
to a company.

The priority ofofcharge

On payment penaltyover
maya property
allow thegiven in registered
document mortgagefor
to be accepted to
The
A mortgagee
registered
more than one
is
mortgagenot entitled
becomes
bank / the
creditor
to the
time income
barred /
afterrent
12 derived
years from from
the
registration provided delayisdoes
to benot
determined on the
exceed four basis beyond
months of date
the
dateproperty
of execution
the stipulatedoftowards
when mortgage
period. satisfaction
money
the deeds andbecomes
not the ofdue.
the of
date debt.
registration.
Features of Equitable Mortgage
Where
In
It order
can a to
bemortgagor
extend
made gives
an
anywhere theinsame
existing property
mortgage
India; forinanEquitable
additionalMortgage
be /to
/ new one Bank
enhanced
A
andletter
in confirming
Constructive Delivery
registered deposit
of title
mortgage to of titlehowever,
deeds
another deeds
by
it
shouldshould
the mortgagor
bank, the be /not
priorityobtained made
his charge
of
in a
agentonwill
tonext
the
be
limit, thelocated
branch mortgagorin should reportarea
cantonment to theunless
notified thebranch
state (where title deeds
government has
day (or any
creditor
determined subsequent
or his
withagent.
reference to date)
datetoof the dateofof
deposit mortgage.
title deed (in equitable mortgage)
are deposited)
expressly
and the date
andthis
included supplemental
of execution area under
of the
recital (narration)
the jurisdiction
mortgage deed (registeredof should be recorded.
themortgage).
notified place.

The recital should be recorded in a fresh page in the title deed

Where
If
depositis adated
company
Theit delivery
registeron gives
(not
should the the
same
in the
be donesame
same property
date
page
orally. inbe
itIt where
can
should mortgage
presumed
the
not to two
original
be put / more
inthat
recital the
was
writing,
The
banks,delivery
mortgage
recorded). is must
the priority be
of with
charge
in writing
Besides an
willintention
& therefore
recital, to
be determined
the mortgagor create
requires withmortgage.
reference to date of
registration.
should also submit a letter
by the mortgagor.
filing of charge with Registrar of Companies.
confirming the supplemental narration.

In casethe
Where
Sometimes atheof
firm advances
whose
creditor
mortgagor
finance ininpossession
isproperty
can
is provided non-notified
prove is that
against mortgaged,
Agreement centre
ofhethe
had tois
title the letter
reconstituted,
deeds
delivered
Mortgage and
the ofa
the
title
as actual
confirmation
letter
deeds
mortgagefrom
debtorfor writes
issomeallshould
not the
to him
other
possible.be
incoming
to addressed
Anretain
purpose partners
and totofor
thenot
agreement same theas branch
confirming theatthere
security,
creating
mortgage aNotified
mortgage
mortgage,
creates is
thea
personal
Centre
should
obligationand
be
constructive but should
obtained
does not
delivery be
withsent
no
create
of
mortgage will be null and void. title by
need
any registered
to
charge
deeds. disturb
over post.
the
the extant
property. mortgage.

Equitable
An agreementmortgage becomes
to mortgage time barredthatafter 12 years
willfrom thea
The
As
date
branch
Thethetitle
entire
when
should
deed
the
put
should
transaction
mortgage isusually
the
be to
money
provides
Received
doneDate
delivered
bebecomes due.
the
theStamp
atorally, debtor
branch
there
If no
on
is the
located
greater
time is
create
letterin of
need
fixed
a
by
mortgage
confirmationon demand
and by the the
retain creditor andtothat in the meantime he will not
Notified
to build place (place
sufficient notified
evidence bysame
to State
prove, produce
Government
in case of asdispute,
anthis
for evidence
purpose).
the in
real
the deedalienate,
transfer, for repayment,
mortgage the time the
or charge starts running property
immovable from thesodate long of
as
case of
intention
he dispute
of the on borrower’s
mortgagor.
remains liable to the creditor.
mortgage. intention to create mortgage.

Sometimes
Where
Such
In suchevidences banks
aa scenario,
the mortgagor
branch are isprefer
banks creates
built to more
in ausuallymake
non-notified
by the
than
recording
obtain evidence
acentre,
the
power stronger
one recital,
equitable
theattorney
of mortgagor by
by mortgage registering
should
obtaining
from the over the
report
letter
debtor of
to
memorandum
same property
to a branch
confirmation
create mortgage of
in
nearby deposit
by favour
atora upon notified
registering
default of
ofmade
two title
banks,
centre
the deeds
fordebtor
bymemorandum
the (MOD)
the to
bank
delivering
of the
do with
in title
whose
deposit,
so. After Registrar
favour
deeds.
though of
the
It these
creation is not
of the
Assurances.
mortgage
mortgage
legally required
formalities Such
isare
created
within the
that
not aregistration
first,
specified has
the deposit
part & parcelacts
priority
time, the as
ofbeacharge.
of mortgage
must the public
in notice.
thebecomes
nearest
mortgage. binding
notifiedonplace.
the debtor.
An equitable mortgage in no way gives inferior rights compared to a
registered mortgage.
 References
S. No. Circular / Resource Date Source

Main Sub

1. Manual of Instructions XVI – March 2020 O&M division, Indian Bank, Head Office,
Documentation 2020 Chennai - 600001
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