Usufructuary mortgage - short questions

[csarengarajan]

 Usufructuary mortgage:

 

Brief note on Usfructuary mortgage: In this mortgage charge will be created in favour of mortgagee and also the said property possession also to be delivered to him. In simple mortgage only  charge will be created. The possession will be retained with mortgagor.

 

Regards

 

 

Banks always insists on mortgage of the house/property for which the loan is being availed of  by the borrower. For securing loan, adequate security be provided in order to reduce its risk exposure.

 

Accoring to Section 58 of the Transfer of Property Act, a  mortgage is the transfer of an interest in a specific  property for the purpose of securing payment of money advanced or to be advanced by way of loan , an existing or future debt or performance of an engagement which may give rise to a pecuniary liability.

 

 

Mortgagor:The person who transfers the property is called the mortgagor. In other words, the person who signs the deed of mortgage by offering his property as security for loan taken is known as mortgagor

 

Mortgagee:The person who advances money on the security of immovable property is called the mortgagee.

 

The transferor is called a mortgagor, the transferee a mortgagee, the principal money and interest which are secured are called mortgage money, and the instrument by which the transfer is effected is called a mortgage deed. Mortgage of property gives the lender a right to acquire and sell the property in case of default by the borrower in repayment of the loan and other dues as per the agreed terms and conditions. It creates a legally binding contract between the parties.

The execution of mortgage documentation is done simultaneously with the loan documentation. The bank has the first right on the property for which they provide a loan. In case of more than one lender, a pari passu charge is created in favour of all the lenders. 

 

The different types of mortgages are: 1) Simple mortgage, 2) Mortgage by conditional sale, 3) English mortgage, 4) Mortgage by deposit of title deeds, 5) Anomalous mortgage

 

 

Usufructuary mortgage

 

 In case of usufructuary mortgage, the mortgagor delivers possession, or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain possession until payment of the mortgage money. The mortgagee is also authorised to receive rent and profits accruing from the property, and to adjust them against the mortgage money due.

 

 

 

The main characteristics of this mortgage are as follows: Possession of the mortgaged property is delivered to the mortgagee  The latter is entitled to get and retain the rents and profits arising out of the mortgaged property for the repayment of interest or principal or both. No personal liability is incurred by the mortgagor