Mortgage Types and Concepts

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.

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.