A mortgage is another method of charging. This type of charging is done in case of immovable property. Immovable property includes land and things attached to the earth like trees, buildings, and fixed machinery.
Machinery which is not so installed and which can be shifted from one place to another is not considered immovable property.
The property mortgaged must be specified by the mortgagee in the mortgage deed for the purpose of securing a debt or obligation, i.e., the property must be capable of identification by description, such as, by location, area, boundaries, etc. Bank mortgages definition is provided below:
Advances against immovable property are not self-liquidating. It is difficult to ascertain the title of the borrower to the property and correctly assess its value. Fluctuations in value are generally wide. The security may often be difficult to be realized because of limited marketability.
Further, a court decree would ordinarily process before the property could be sold. Mortgage, however, serves a purpose when taken as additional security to cover an advance or to secure an advance on a hypothecation basis.
Bank Mortgages Definition
Section 58 of the transfer of Property Act 1882 defines a mortgage as: “A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or, to be advanced by way of loan, existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.”
The borrower who transfers the interest in the property is called ‘Mortgagor’. The banker who acquires interest in the property so transferred is called “Mortgagee”, the principal money and interest of which payment is secured for the time being are called the “Mortgage Money” and the instrument (if any) by which the transfer is effected are called the “Mortgage Deed”.
In a mortgage, a special interest in the property passes conditionally to the mortgagee, who has also a right of sale but not necessarily the possession of the property which remains with the mortgagor although in certain forms of mortgage the creditor does, as a matter of fact, gain possession of the mortgaged property.
The mortgagee does not become the absolute owner of the property charged to him and the mortgagor is entitled to have the property reconveyed to him on repayment of the debt.
The mortgagor is said to possess “the right of redemption” and he cannot be deprived of this right in any way.
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