In the context of the Transfer of Property Act, 1882, mortgages are classified into various types based on the nature of the transaction and the rights they confer on the parties involved. Here are the main types of mortgages under the Indian Transfer of Property Act, 1882, along with brief differentiations:
1. Simple Mortgage (Section 58(b)):
- Nature: The mortgagor binds himself to repay the borrowed money and agrees that, in the event of his failure to repay, the mortgagee shall have the right to sell the mortgaged property.
- Possession: The possession of the property remains with the mortgagor.
- Transfer: No transfer of ownership takes place unless there is a default in repayment.
2. Mortgage by Conditional Sale (Section 58(c)):
- Nature: The mortgagor ostensibly sells the mortgaged property on the condition that the sale shall be void if the mortgagor repays the mortgage money on a certain date.
- Transfer: If the mortgagor fails to repay, the transfer becomes absolute.
3. Usufructuary Mortgage (Section 58(d)):
- Nature: The possession of the mortgaged property is given to the mortgagee, who receives rents and profits to satisfy the mortgage debt.
- Possession: Possession is transferred to the mortgagee.
- Transfer: No transfer of ownership unless there is default in repayment.
4. English Mortgage (Section 58(e)):
- Nature: Similar to a simple mortgage, but there is an express or implied agreement that the mortgaged property will be re-transferred to the mortgagor on repayment.
- Possession: Generally, the possession remains with the mortgagor.
5. Mortgage by Exchange (Section 58(f)):
- Nature: The mortgagor delivers possession of the mortgaged property to the mortgagee with the intention that it should extinguish the mortgage money.
- Possession: Possession is transferred to the mortgagee.
6. Mortgage by Deposit of Title Deeds (Equitable Mortgage) (Section 58(fa)):
- Nature: The borrower delivers the title deeds of immovable property to the lender with the intention of creating a security.
- Possession: Possession of the property does not change hands.
- Formality: The mortgage is created by depositing the title deeds, and there is no need for a separate document.
7. Anomalous Mortgage (Section 58(g)):
- Nature: Any mortgage that does not fall within the categories mentioned above.
- Customization: Parties can customize the terms and conditions according to their agreement.
Differentiation:
- Possession: In a simple mortgage, possession remains with the mortgagor. In a usufructuary mortgage, possession is given to the mortgagee. In an English mortgage, possession generally remains with the mortgagor unless otherwise agreed.
- Transfer of Ownership: In a conditional sale mortgage, the transfer becomes absolute on default. In other types, transfer of ownership is conditional upon default.
- Mode of Creation: A mortgage by deposit of title deeds is created by delivering the title deeds to the lender. Other mortgages may require a formal mortgage deed.
Understanding the nuances of each type of mortgage is essential for both lenders and borrowers to choose the appropriate mode based on their needs and preferences. It's advisable to seek legal advice when dealing with mortgage transactions.