What is a Mortgage Deed?
Section 55(2) of the Transfer of Property Act, 1882, talks about some relevant covenants or
agreements which the parties are required to enter into for the conveyance of immovable
property such as lease, sale, Mortgage, gifts etc. The mortgage deed is an instrument or a legal
document containing terms and conditions relating to the Mortgage. The deed provides the
lender with the interest and legal rights over the property. All the rights and interests over the
property that the borrower has pledged as collateral are legalized in the Mortgage Deed. In case
of any default or failure to pay the loan amount, the lender can claim his legal rights over the
property.
Registration of Mortgage Deed
Registration of mortgage deed is essential to give legal validity to the document. In case of
Mortgage by Delivery of Title Deed, registration is not required. Following are the conditions
which need to be fulfilled for a valid registration:
The deed must be signed by the Mortgage.
At least two witnesses must attest to the deed.
Stamp duty must be paid accordingly; otherwise, the document is not enforceable.
When is the Mortgage Deed required?
It is generally required when you are loaning money from another person or business and want to
transfer the interest of the property to another person.
When you want to borrow money and are required to mortgage your property as a collateral. The
deed helps you secure your rights and interest over the property.
Essential elements of Mortgage Deed
I hope now you have understood the basics of a mortgage and mortgage deed by now. Being a
layman, you might not understand the legal language used in a contract. You might leave such
things on your legal representative, but you should at least have the basic understanding of the
clauses and terms in a Mortgage Deed. Following are the clauses in the Mortgage Deed which
you must understand:
1. A thorough investigation of title upto 60 years and preparation of an abstract on title and a
thorough search in all the places as required in the case of sale.
2. Recitals: a short history of the property right upto its vesting in the mortgagor and the object
of the loan—Amount and rate of interest.
3. Parties to the deed: Mortgagor first and thereafter the mortgagee.
4. Operative words: in the case of a simple mortgage, the property is charged and assured as
security for repayment of the mortgage debt. In case of English mortgage, it is out and out sold to
the mortgagee subject to the convenant as to re-conveyance upon repayment of the debt with
interest. (Sec 58 (e) of Transfer of Property Act).
5. Possession: An English mortgagee has the right to take possession of the property. Such a
mortgage should contain a clause as to the appointment of a Receiver who may be a nominee of
the mortgagee. Sec 69A of Transfer of Property Act.
6. Execution and Attestation: Attestation is compulsory to every mortgage. In case where the
mortgagor doest not know the language, the deed must be explained to him by some cpmpetent
person.
7. Registration: Compulsory in case of mortgage of value above Rs 100/-, and in all cases under
the West Bengal Land Reforms Act (Vide section.7).
8. Delivery of title deed: A mortgagee is entitiled to all the title deeds of the mortgaged property.
If for any reason they are left with the mortgagor through inadvertence or negligence, he can
manipulate a prior equitable mortgage by depositing the same elsewhere.
9. Redemption: Period is fixed by agreement between the parties. Under Article 61 of The
Limitation Act,1963, a suit for redemption may be brought within 30 years from when the right
to redeem accrues according to the agreement. In case where the property has been transfered by
the mortgagee for valuable consideration the period of limitation is 12 years for the date of
knowledge.
