Hypothecation

Pledge
 Features of a Hire-purchase agreement

• The buyer takes the possession of the goods immediately and agrees to
pay the price of the goods in installment.
• Initially, the hirer ( the person who takes the goods under hire, Mr. X in
the above example), only gets the rights to use the goods (in legal
terminology, hirer gets the possession of goods only.) After the total
price is paid in installments, the goods finally are transferred to the
hirer. In legal terminology, transfer of ownership.
• It is only after paying off the full price of the goods, the hirer becomes
the owner of the goods under a Hire-purchase agreement.
• Furthermore, the seller has the right to repossess the goods in case of
default by the hirer.
• Most noteworthy, the seller has the option to return the goods. In this
case, he need not pay installments falling due after that.
 Definition of Lease
• The term “lease” is defined under Section 105 of The
Transfer of Property Act, 1882 and it states that-
• “A lease of immovable property is a transfer of a
right to enjoy such property, made for a certain time,
express or implied, or in perpetuity, in consideration
of a price paid or promised, or of money, a share of
crops, service or any other thing of value, to be
rendered periodically or on specific occasions to the
transferor by the transferee, who accepts the
transfer on such terms”.
 Primary distinctions between Lease and Licence:

1. A lease is a transfer of an interest in a specific immovable property, while licence is a bare permission, without any transfer of
an interest.

2. A lease creates an interest in favour of the leassee with respect of the property, but a licence does not create such an interest.

3. A lease is both transferable and heritable, a sub tenancy can be created by the tenant and on the death of the tenant, the
tenancy can be inherited by his/her legal heir, whereas, licence is neither transferable nor heritable.

4. A licence comes to an end with the death of either the grantor or the garantee, since it is a personal contract, but a lease does
not comes to an end on either the death of the grantor or grantee.

5. A licence can be withdrawn at any time at the pleasure of the grantor but the lease can come to an end only in accordance
with the terms and condition stipulated in the contract of tenancy agreement.

6. A lease is unaffected by the transfer of the property by sale in favour of a third party. It continues and the purchaser has to
wait till the time period for which the tenancy was created is over before he can get the possession, whereas, in case of a
licence, if the property is sold to a third party, it comes to n end immediately.

7. A lessee has a right to protect the possession in his own right. Whereas, a licencee cannot defend his possession in his own
name as he does not have any proprietary right in the property.

8. A lessee in possession of the property is entitled to any improvements or accessions made to the property, while a licencee is
not.
 Mortgage.
• Mortgage is a transfer of interest in specific immovable
property as a security for the repayment of debt.
• Such an interest is in itself an immovable property.
• Depending on the nature of interest the mortgages are
classified broadly in to 6 groups under T.P.Act.

• Simple mortgage.
• Mortgage by conditional sale.
• Usfructuary Mortgage.
• English Mortgage.
• Mortgage by deposit of title deed.
• Anomalous Mortgage.
 Simple mortgage
• Simple mortgage consists of (a) a personal
obligation either express or implied to pay the
mortgage money. (b) transfer of right to cause
the property to be sold.
• The right transferred to the mortgagee is not
the ownership.
• No possession is given to the mortgagee.
• Binds the mortgagor or his legal
representatives personally to pay the loan
amount.
 Mortgage by conditional sale
• This is a type of mortgage where there would be a
condition of sale if the mortgage money is not paid, and if
the same is paid then the mortgage would be void.
• This type of mortgage was popular in India even earlier to
the enactment of transfer of property act.
• The condition shall be there in the deed itself and not in a
separate deed.
• If the condition is incorporated in a separate agreement
then it is not a conditional sale but a sale absolute, and the
existence of the agreement to be treated as an
independent document or a contract.
 Usfructuary Mortgage
• Mortgagee is placed in possession of the property with a
right to enjoy.
• The mortgagee would be entitled to enjoy the rent and
profits until the debt is repaid.
• Appropriation of rents and profits, as per the agreement
between the parties.
• The profits and rents may be adjusted towards the
interest, or
principle, or
principle and interest.
• No specific time limit will be there as the mortgagee retains
the property till the debt is repaid.
• No personal liability as the creditor will have the property
with him as a security.
 English Mortgage
• Mortgagor binds himself to repay the mortgage money on a
certain date.
• The mortgagor transfers the property absolutely to the
mortgagee with a reservation
• The reservation would be in the form of retransfer of the
property to the mortgagor upon payment of the mortgage
money.
• The English mortgage differs from usfructuary mortgage
• The English mortgage differs from conditional sale.
• The English mortgage differs from simple mortgage
 Distinction between mortgage and charge,
As to security: 1. mortgage is a security for the
payment debt.
2, the mortgage may be a security for the
performance of an engagement giving rise to a
pecuniary liability.
Covenant to pay. There may be a covenant to
pay.
Transfer of interest: mortgage involves a transfer
of interest in a specified immovable property.
Creation: the mortgage could be created only on
account of the act of parties.
Reg right: mortgage is a right in rem.
A mortgagee can follow his security in to what so personnem. however it be comes a right in rem
ever hand it goes.
Defense of purchase without notice is not
available.
Charge is a security for the payment of money
(the said money may be a debt or may not be
so.
2. Such is not the case in case of a charge.
There would be no covenant to pay.
Charge does not involves a transfer of interest
in a specified immovable property. It merely
gives charge holder a right to have a claim
satisfied out of a particular property, without
transferring that property.
the charge could be created not only on account
of the act of parties but also by operation of law..
Charge is not a right in rem, but right in
on obtaining a decree.
A charge holder can not do so.
Defense of purchase without notice is available.
 Charge and lien.
Charge may be created by the lien may be created by
act of parties and law. operation law and not by the act
of the parties
• .
Charge can exists on lien can exists on both movable
immovable property alone and immovable property.

Charge holder can satisfy his Lien holder can satisfy his claim
claim by selling the property by private sale or by retaining
subject to charge. the possession of the property.

Charge is not possessory in Lien is possessory in nature

nature