MORTGAGE & PLEDGING

TP7005 REAL ESTATE MANAGEMENT

RAMPRASATH K J
M.PLAN III sem, SAP,ANNA UNIVERSITY
INTRODUCTION

Indian mortgage industry is the horizon for great opportunities

residential properties, malls, commercial centers and IT hubs

development of special economic zones.

basics of mortgage and pledging

DEFENITION

Sec. 58 of the Transfer of Property Act, 1882

A mortgage is the transfer of an interest in specific immoveable property

for the purpose of securing the payment of money advanced or to be
advanced by way of loan, an existing or future debt, or the performance of
an engagement which may give rise to a pecuniary liability.

Mortgagor- transferor; borrower

Mortgagee- transferee; lender

principal money and interest of which payment is secured- mortgage-

money
Types of Mortgages in India

Simple Mortgage

Mortgage by Conditional Sale

Usufructuary Mortgage

English Mortgage

Mortgage by deposit of title of deeds

Anomalous mortgage
 Simple no transfer of property, failed in repayment right to sell

Conditions-sells the property with condition

Usufructuary possession by mortgagee get interest, profit, rent until repayment

English absolute transfer of property

Most Common Forms Of Mortgages

Simple Mortgage(Registered mortgage)

Mortgage by Deposit Of Title Documents

Simple Or Registered Mortgage

A property can be mortgaged by execution and registration of mortgage

deed after payment of requisite stamp duty etc. thereon. Any property can
be mortgaged in this manner.

Delhi Land Reforms Act, 1954 Permits Mortgage in case of agricultural

land.

mortgage deed is registered with the concerned Sub Registrar of

Assurances.

title documents are retained by the mortgagee to prevent further interest

or encumbrance in the property by mortgagor
Mortgage By Deposit Of Title
Documents
Any person in any of the notified towns can deliver to the Bank documents
of title to the immovable property with intent to create security thereon.

Title documents are as follows, Allotment Letter, Receipts evidencing

Payments made, Possession Letter, if applicable, Share Certificate, revenue
records, Lease Deed, Conveyance Deed, Sale deed / Gift deed /
Exchange deed, Relinquishment Deed, Will.
Inherent Risk In The Mortgage
Non-availability of chain documents in original.

Impossible to detect legal disputes which are pending the Court with respect to
the property which disclosure is concealed by the borrower.

Non-disclosure of outstanding under the Income-Tax Act or House-Tax Act.

Mortgage in favour of more than one bank by forging various copies of title
documents.

Title arising out of

transaction within a family.

Share of a minor in the property

Mortgage of HUF property for purpose other than the permitted one.

Construction of property without sanctioned building plan or in violation thereof.

Central Registry

To avoid fraudulent transactions by a borrower, the Government has

established a Central Registry under Section 20 of the Securitization Act.

All charges created on immovable property whether by individual or HUF

or partnership firm or trust or a company is to be registered with such
Central Registry within 30 days of creation of charge. Any person can
inspect the records of Central Registry to check if the property proposed to
be mortgaged has been previously mortgaged with any other bank or not.
Reverse Mortgage

reverse mortgage is a type of mortgage in which a homeowner can

borrow money against the value of his or her home, receiving funds in the
form of a fixed monthly payment or a line of credit.

No repayment of the mortgage (principal or interest), is required until the

borrower dies, moves away permanently or sells the home.

The transaction is structured so that the loan amount will not exceed the
value of the home over the life of the loan.
PLEDGING

A pledge, also called a pawn or a security interest, is a piece of property

(chattel) used to secure financing.

A pledge can be any physical thing with liquid value, although the type of
property that a lender requires typically relates to the reason for the loan.

Pledges can also be used to secure short-term personal financing

Implication & Comparison
many arrangements include a pledge that ignorantly exceeds the value of
the loan

A borrower can also secure a loan using a pledge that he does not yet
own; for example, a borrower can obtain financing for a piece of land and
offer the financed land as a pledge to secure the loan.

COMPARISON

a mortgage is a security interest secured against the property, which is the

pledge. Therefore, mortgages and pledges are not necessarily
comparable, but rather, co-dependent