Mortgage Types and Concepts

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Questions and Answers

What is the primary purpose of a mortgage?

To provide rental income

To secure the payment of a loan or debt (correct)

To establish a lease agreement

To transfer ownership of immovable property

Which of the following is NOT a party involved in a mortgage transaction?

Co-signer (correct)

Mortgagor

Mortgage Trustee

Mortgagee

In a Simple Mortgage, what type of possession is provided to the mortgagee?

Conditional possession

Partial possession

Full possession

No possession (correct)

What characteristic distinguishes a Simple Mortgage from other mortgage types?

Personal liability of the mortgagor to repay the loan Signup and view all the answers

What is the loan amount and interest in a mortgage referred to as?

Mortgage Money Signup and view all the answers

Which of the following is a remedy available to the mortgagee?

Right of Sale Signup and view all the answers

What document is primarily used to effectuate a mortgage?

Mortgage Deed Signup and view all the answers

Which of the following types of mortgages involves a personal undertaking to repay without property possession transfer?

Simple Mortgage Signup and view all the answers

What is a characteristic of Mortgage by Conditional Sale?

Sale becomes absolute on default of payment. Signup and view all the answers

Which type of mortgage involves the mortgagor delivering possession or binding themselves to do so?

Usufructuary Mortgage Signup and view all the answers

What right is NOT available to the mortgagee in a Usufructuary Mortgage?

Right to initiate foreclosure immediately Signup and view all the answers

In what scenario does the sale in a Mortgage by Conditional Sale become void?

When payment of the mortgage money is made. Signup and view all the answers

Which characteristic defines the parties involved in Usufructuary Mortgage?

Usufructuary Mortgagor and Usufructuary Mortgagee Signup and view all the answers

Which of the following is a remedy for the mortgagee in a Usufructuary Mortgage?

Right to sue for mesne profits Signup and view all the answers

What must be true for a transaction to be classified as Mortgage by Conditional Sale?

Conditions must be clearly outlined in the contract. Signup and view all the answers

What is NOT a characteristic of a Usufructuary Mortgage?

Default results in property forfeiture Signup and view all the answers

What is the contribution ratio between two parties A and B who contribute INR 1,00,000 and INR 2,00,000 respectively towards a mortgage of INR 3,00,000?

1:2 Signup and view all the answers

In the case of multiple properties mortgaged, how is the contribution to the total debt calculated after accounting for previous mortgages?

By determining the surplus value after deduction of previous debts Signup and view all the answers

What distinguishes legal subrogation from conventional subrogation?

Legal subrogation is based on a registered instrument Signup and view all the answers

Which of the following correctly describes a charge on property?

It is a security for a debt that can only be enforced by legal action Signup and view all the answers

Under which condition can a charge not be enforced against a property?

When the property is transferred for consideration without notice of charge Signup and view all the answers

What is the maximum amount Y contributes when debt of INR 400 is to be paid to C based on the ratio 3:5?

INR 250 Signup and view all the answers

Which of the following is NOT a characteristic of a charge?

A charge holder has all rights of a mortgagee Signup and view all the answers

What happens to a person's rights upon redemption of a mortgage, except for the mortgagor?

They acquire rights equivalent to those of the mortgagee Signup and view all the answers

Which case involves the issue of mortgage and charge in 2006?

Harbans vs Om Prakash Signup and view all the answers

Identify the case that was heard in the Supreme Court in the year 2011 related to mortgage issues.

Raj Kishore vs Prem Singh & Ors. Signup and view all the answers

Which of the following cases was decided in the year 1999 and focuses on mortgage law?

Vidhyadhar vs Manikrao & Anr. Signup and view all the answers

Which case pertains to the mortgage law and was ruled in the Supreme Court in 1982?

Sardar Govindrao Mahadik & Anr. vs Devi Sahai & Ors. Signup and view all the answers

In which case was the issue concerning mortgage and charge addressed in the year 2002?

Govindan Nair vs Abraham Signup and view all the answers

What must occur for a mortgagor to get back their property?

Payment at a proper place and time to a proper person Signup and view all the answers

Which of the following is considered a 'clog' on redemption?

An agreement allowing the mortgagee to keep possession indefinitely Signup and view all the answers

What type of term was determined oppressive in the Fateh Muhammad vs Ram Dayal case?

200 years Signup and view all the answers

What is the nature of the right to redeem property after a mortgage has been created?

It is a statutory and indefeasible right Signup and view all the answers

What does an impediment on redemption typically involve?

An oppressive bargain or condition Signup and view all the answers

What was one of the outcomes in the Sangar Dhula vs Shah Laxmiben Tejshi case?

99 years was deemed to be a clog Signup and view all the answers

Which of the following represents a restriction that can act as a 'clog' for a mortgagor?

A penalty for early repayment Signup and view all the answers

In the context of mortgages, what does 'once a mortgage always a mortgage' signify?

Redemption rights are everlasting and cannot be removed Signup and view all the answers

Study Notes

Mortgage

A mortgage is the transfer of an interest in a specific immovable property to secure payment of a loan.
The parties involved in a mortgage are the mortgagor (borrower) and the mortgagee (lender).
The transfer of interest in the property provides security for the lender.
The mortgage money refers to the principal amount of the loan and the interest accrued on it.
The mortgage deed is the legal document that formally creates the mortgage.

Types of Mortgages

Simple Mortgage: The mortgagor retains possession of the property and binds themselves personally to repay the loan.
Mortgage by Conditional Sale: The mortgagor appears to sell the property conditionally, with the sale becoming absolute if payment is not made on time.
Usufructuary Mortgage: The mortgagor transfers possession of the property to the mortgagee, who has the right to collect rents and profits from the property until the loan is repaid.
English Mortgage: The mortgagor transfers the property to the mortgagee, who has complete ownership until the loan is repaid and can then re-transfer ownership back to the mortgagor.
Mortgage by Deposit of Title Deeds/Equitable Mortgage: The mortgagor deposits the title deeds of the property with the mortgagee as security for the loan.
Anomalous Mortgage: A mortgage that does not fit into any of the above categories.

Simple Mortgage

The mortgagor is personally liable to repay the loan.
The mortgagee has the right, with court intervention, to sell the mortgaged property to recover the outstanding loan amount.

Mortgage by Conditional Sale

The sale of the mortgaged property is conditional on payment of the mortgage money.
The mortgagee has the right to foreclose on the property if the mortgagor defaults on payment.

Usufructuary Mortgage

The mortgagee has possession of the property and receives all rents and profits until the loan is repaid.
The mortgagee can also sue to obtain possession of the property, mesne profits (profits accrued during the period of wrongful possession), and in certain cases, sue for the mortgage money.

Clog on Redemption

A clog on redemption is a condition imposed on the mortgagor that hinders or prevents them from regaining full ownership of the property after repaying the loan.
Any provision that prevents redemption is considered void and is deemed an unfair hindrance for the mortgagor.
The principle of "once a mortgage, always a mortgage" emphasizes the inherent right to redemption in a mortgage.
Conditions that may amount to a clog on redemption include:
- An agreement with an oppressive or unconscionable bargain.
- A long redemption period (e.g., 99 years) may constitute a clog.
- Conditions postponing redemption in case of default:
  - If the mortgage is not redeemed on the due date after a certain period.
  - If the mortgagee can continue in possession for a period without the right of redemption.
- Restraint on Alienation: Restrictions imposed on the ability of the mortgagor to sell or transfer the property.

Contribution

When two or more properties are mortgaged to secure a single debt, the contribution from each property is calculated based on its value.
The contribution is determined after deducting the amount due on any previous mortgage on the property.

Subrogation

Subrogation is the substitution of one person for another in relation to a legal right or claim.
Legal subrogation arises by operation of law.
Conventional subrogation occurs through a registered agreement.
A person with the right to redeem a mortgage, other than the mortgagor, upon redemption acquires the same rights against the mortgagor as the mortgagee.

Charge

A charge is a legal claim on a property that secures payment of a debt without transferring ownership.
The person with the charge is called the charge holder.
All provisions of a simple mortgage apply to a charge, except for certain exceptions like charges held by trustees on trust property.
A charge is enforceable through a suit for sale of the property.
A charge can be extinguished by various means, including novation, merger, or release of the debt or security.

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Description

This quiz covers essential concepts related to mortgages, including the legal aspects and various types of mortgages such as simple mortgage, conditional sale mortgage, and usufructuary mortgage. Test your understanding of the roles of mortgagor and mortgagee, as well as key mortgage-related terms.