UNSFRUCTUARY MORTGAGE

A mortgage is a type of security provided by a borrower who is a borrower (mortgagor) to repay a loan to a lender who is a lender (mortgagee). The object of a mortgage is to secure a debt or other obligation. It is a transfer of a limited share of the property. A mortgage is a transfer of an interest in immovable property Section 58 of the Transfer of Property Act and Section 2(17) of the Indian Stamp Act define mortgage. A mortgage is defined as: A mortgage deed includes any instrument by which, for the purpose of securing money advanced or intended to be advanced by means of a loan or an existing or future debt or the performance of an obligation, one person transfers or creates a right to or for the benefit of another. over or in relation to certain property.

In usufructuary real estate is given as security to the mortgagor, who is released into possession and is allowed to be repaid from the rents and profits of such property. Possession is transferred to the mortgagor or the mortgagor must expressly or impliedly undertake to issue possession. The mortgagor will not be personally liable unless there is a clear agreement to the contrary. The basic conditions of a usufructuary mortgage are: Delivery of possession or an express or implied undertaking by the mortgagor to deliver it. The enjoyment of the usufructuary right by the mortgagor until the payment of all his obligations according to the mortgagor; The mortgagor bears no personal responsibility for the repayment of the money; There is no personal liability to pay, there is no forfeiture, and remedies in the form of foreclosure or sale are not available to the mortgagor. No time is fixed for repayment under section 58 (d), because the mortgagor is entitled to remain in possession until the mortgage money is paid, and no one can say with any certainty when such payment will be fully made. If the parties agree that the mortgage is for a fixed period, it is no longer a usufructuary mortgage, but becomes anomalous. There cannot be two different liens on the same property at the same time, as possession can only be given to one. With a usufructuary mortgage, the mortgagor has the advantage of making the repayments himself. But with a conditional sale mortgage, no transfer of ownership is provided. Section 58(d) of the transfer of property act defines the Usufructuary mortgage, “Where the mortgagor delivers possession 1[or expressly or by implication binds himself to deliver possession] of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property 2[or any part of such rents and profits and to appropriate the same] in lieu of interest, or in payment of the mortgage-money, or partly in lieu of interest 3[or] partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee.” Essentially, this mortgage allows the mortgagor to receive the rents and profits from the mortgaged property and to cover the amount of interest from the related benefits of the property. Under this mortgage, the mortgagor transfers possession of the property to the mortgagor, and because the property is in possession of the lien, he is entitled to rents and profits from the mortgaged property instead of interest on the principal deposit. to him. Once the debt is paid off, the mortgagor regains ownership of the property and is no longer entitled to its rents and benefits. The features of usufruct are as follows: Title to the mortgaged property is transferred to the mortgagee. This may be an express or implied obligation of the mortgage lender to transfer ownership. Fees are paid by the mortgage lender. The mortgagee is liable under this mortgage, which is not personal, unlike a simple mortgage. Certain property interests, such as property. The mortgagee has no right to pledge the property or to sue its sale. The biggest feature of this mortgage is that there is no repayment deadline.

IMPORTANT JUDGMENTS

Hikmatullah v. Imam ali (1890) 12 All 203

Usufruct mortgages state that the mortgagor can retain ownership of the property until dues and interest are paid, as there is no specific time limit for mortgages., you cannot set a specific period. If it has a time limit, it will not count as usufructuary.

Butto Kristo v. Govindram, A.R. (1939) Pat 540,

Court held that if the mortgaged property is a rental property, the only viable way to transfer ownership of the property is to transfer the right to rent the property and it was ruled that it was a method of recovering the property and offsetting the debt cumulatively.

Usufructuary Mortgage [Section 58(d)] Clause (d) of Section 58 reads :-

Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest, or payment of the mortgage-money, or partly in lieu of interest partly in payment of the mortgage money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee.

The basic elements of usufructuary mortgage are:

• The mortgagor either delivers possession or expressly or impliedly binds himself to deliver possession of the mortgaged property to the mortgagee. The mortgagor authorises the mortgagee till the payment of the mortgage money is satisfy

• to retain similar possession;

• to admit the rents and gains or

• any part of similar rents and gains arising from the property; and

• To applicable similar rents and gains in lieu of interest, or payment of the mortgage money or incompletely in payment of the mortgage money

Delivery of Possession

Possession of the mortgaged property is issued by the mortgagor as security for the payment of the mortgage money. The mortgagee is entitled to retain title to the property until the debt is satisfied. Physical delivery of possession need not be made at the time of execution of the deed and the mortgagor may give possession by express or implied undertaking. Rent and Profits The mortgagor is entitled to rent and profits from the mortgaged property until the money is repaid. How the rents and profits are to be appropriated depends on the terms of the mortgage agreement. Such rents and profits or part of the rents and profits may be appropriated:

1. place of interest,

2. instead of principal, or

3. instead of principal and interest. In the first case, the mortgagor regains possession at the time of repayment of the principal. In the latter case, the mortgagor continues to pay interest and is entitled to repossession once the rents and profits earned by the mortgagor equal the principal amount. In the latter case, the mortgagor does not recover possession until the principal and interest from the rents and profits are paid.

No Personal Liability of the Mortgagor

1. The mortgagor has been authorized to pay the amount of the mortgage loan from the rents and profits of the property, and the mortgage loan is paid,

2. The mortgagor is entitled to be paid from the rents and profits and the time limits set for the payment of the mortgage money have expired and the mortgagor pays the mortgage money or the balance thereof to the mortgagor or deposits it in court.

CONCLUSION

A mortgage is thus defined as the express transfer of a share in real estate as security for a loan. The most important feature of a mortgage is that it is a transfer of legal interest in real estate with a redemption clause, which means that the transfer will lapse or the interest will be remitted when the debt is repaid.

REFERENCES

https://indiankanoon.org/doc/63739/

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