CHAPTER 6: OF MORTGAGES OF IMMOVABLE PROPERTY AND CHARGES

SECTION 58: Mortgage,” “mortgagor,” mortgagee,” “mortgagemoney” and

“mortgagedeed” defined.

A mortgage is when someone gives part of their rights in a property (usually land or a building)
to another person to get a loan. The loan can be for something already borrowed or to be
borrowed in the future.

 The person giving the property as security is called the mortgagor.

 The person giving the loan is called the mortgagee.
 The loan amount (principal amount) with interest is called the mortgage-money.
 The written agreement is called the mortgage-deed.

Types of Mortgages:

1. Simple Mortgage

 The mortgagor does not give possession of the property.

 He promises to pay back the loan.
 If he fails to pay, the mortgagee can ask the court to sell the property to recover the
money.
 Example: A gives property documents to B and signs an agreement to repay the loan. If
A fails, B can sell the property through court.
 Theres no remedy

2. Mortgage by Conditional Sale

 The mortgagor pretends(ostensibly) to sell the property to the mortgagee but adds a
condition:
o If he *fails to pay, the sale becomes *final.
o If he *pays on time, the sale becomes *void (cancelled).
o Or, if he pays, the buyer (mortgagee) must give the property back.
 This is only a mortgage if the condition is clearly written in the same document.
 Remedy: foreclosure

3. Usufructuary Mortgage

 The mortgagor gives possession of the property to the mortgagee.

 The mortgagee can use the property or take rent/profit from it.
 These earnings are used to cover the interest or loan amount.
 Example: A gives a house to B. B lives there or rents it and uses the income to adjust the
loan.
 Registration is mandatory if the value is above 100rs.
  No Remedy

4. English Mortgage

 The mortgagor agrees to repay on a specific date.

 The property is fully transferred to the mortgagee.
 Once the loan is repaid, the property will be given back to the mortgagor.
 This is more like a temporary sale with a promise to return the property when the loan
is paid.
 Remedy: can sale the property but out of court, not done through foreclosure.

5. Mortgage by Deposit of Title-Deeds

 If a person living in Karachi or any other town officially notified by the Provincial
Government wants to create a mortgage, they can do so by giving their property’s title
documents (papers proving ownership) to the lender or the lender’s agent.
 This act of depositing the title documents as security for a loan is called a mortgage by
deposit of title-deeds.
 Special rule for banks:
If the mortgage is with a banking company, the mortgage can also be created by making
an *entry in the official land records (called the record-of-right) against the property
instead of handing over physical documents."
 Remedy: Suit for Sale (through court)

6. Anomalous Mortgage

 Any mortgage that doesn’t fit into the above five types is called an anomalous
mortgage.
 It can be a mix of two or more types or have unique conditions.

Section 59 – When Must a Mortgage Be in Writing and Registered?

✅ If the loan is ₹100 or more:

 The mortgage must be in writing.

 It must be done through a registered document.
 The document must be:
o Signed by the person giving the mortgage (mortgagor), and
o Witnessed by at least two people.

❌ Exception: This rule does not apply to a mortgage by deposit of title-deeds (where
documents are just handed over).
✅ If the loan is less than ₹100:

 The mortgage can be done in two ways:

1. By a registered document (signed and witnessed), or
2. By handing over the property (but this does not apply to simple mortgages).

SECTION 59A – WHO IS INCLUDED IN “MORTGAGOR” AND “MORTGAGEE”?

 Whenever the law mentions mortgagor or mortgagee, it also includes:

o Anyone who gets ownership or rights from them (like through inheritance or
sale).
 This rule applies unless the law says otherwise.

Rights and Liabilities of Mortgagor

RIGHT OF MORTGAGOR TO REDEEM (SECTION 60)

✅ What is the “Right to Redeem”?

 After the loan (principal money) becomes due, the person who gave the mortgage
(mortgagor) has the right to get back their property.
 This can happen when the mortgagor pays or offers to pay (tenders) the full mortgage
money at the right time and place.

✅ What can the mortgagor ask for?

When the mortgagor pays the full amount, they can ask the mortgagee (the lender) to:

1. Return all documents related to the mortgage, including the mortgage deed.
2. Return possession of the property (if the mortgagee had taken control of it).
3. Transfer the property back to the mortgagor (or to someone the mortgagor chooses).
4. If the mortgage was registered, the mortgagee must also register a written
acknowledgment that the mortgage has ended.

⚠️Conditions:

 This right to redeem cannot be taken away, unless:

o Both parties agree to give it up, or
 o A court orders that the right is no longer valid.

🔹 What is a “Suit for Redemption”?

 If the mortgagee refuses to return the property after full payment, the mortgagor can
file a case in court.
 This is called a suit for redemption.

🔹 Reasonable Notice:

 If there is no fixed date for repayment, or the time has already passed, the mortgagor
must give the mortgagee reasonable notice before paying.

🔸 Redemption of Part of the Property

 If the mortgagor owns only part of the property, they can’t redeem just their share by
paying only a part of the loan — unless:
o The mortgagee (or all mortgagees, if more than one) has also bought or taken
over the rest of the property.

✅ Simple Example:

Suppose you mortgaged your house for 5 lakh taka.

 After the repayment date arrives, you go to the lender and pay the full 5 lakh taka.
 You can now demand:
o The original documents back,
o The keys to your house (if they had possession),
o And a registered document saying the mortgage is finished.
 If the lender refuses, you can go to court and file a suit for redemption.
SECTION 60A – OBLIGATION TO TRANSFER TO THIRD PARTY INSTEAD OF BACK TO
MORTGAGOR

Sometimes, instead of asking the lender to give the property back to the borrower (mortgagor),
the borrower may want the property to be transferred to someone else — like a buyer or
another lender.

✅ What does it say?

1. Mortgagor’s Right to Redirect the Property:

If the borrower has the right to get the property back (redeem), then he can ask the
mortgagee to:

o Transfer the mortgage debt and

o Transfer the mortgaged property to a third person (someone else) that the
mortgagor chooses.

👉 The lender must do this — they have to follow the borrower’s direction.

2. If Other Lenders (Encumbrancers) Are Involved:

o If there are other lenders who have a claim on the property (called
encumbrancers), they can also ask for the mortgage to be transferred to them.
o Their request will have more power than the original borrower’s.

➤ If there’s more than one encumbrancer:

o The first one (older claim) will have priority over newer ones.

3. Exception – If the lender is in possession:

This rule does not apply if the lender is in possession of the property (i.e., they are living
in it or using it).

🔹 Example:

Ali mortgaged his land to Bank A. Later, he decides to sell this land to Ahmed.

Now, instead of asking Bank A to transfer the land back to him after repaying the loan, Ali tells
Bank A to transfer the property directly to Ahmed (the buyer) and also assign the mortgage to
him.

👉 Bank A must do this because Ali has the right to redeem and requested the transfer to a third
party (Ahmed).
🔸 If there’s another lender:

Suppose Bank B also gave Ali a second loan on the same land (after Bank A). Now Bank B is an
encumbrancer.

If Bank B wants the property and mortgage transferred to itself, its request will be stronger
than Ali’s — and Bank A must transfer the mortgage to Bank B, not to Ahmed.

But if there’s a Bank C with a newer loan than Bank B, then Bank B's request will take priority
over Bank C’s.

SECTION 60B (RIGHT TO INSPECTION):

The mortgagor can inspect and copy property documents held by the mortgagee, as long as
the right to get the property back still exists — but only at a reasonable time and at their own
cost (including any costs of the mortgagee).

SECTION 61 RIGHT TO REDEEM SEPARATELY OR SIMULTANEOUSLY

When a mortgagor takes two or more loans by mortgaging different properties to the same mortgagee,
and the time has come to repay those loans, the mortgagor has the right to pay off (redeem) any one of
those mortgages separately or more than one at the same time. This means he doesn’t have to repay all
the mortgages together unless there was a special agreement (contract) made that says otherwise.

EXAMPLE: suppose Ahmed borrows money from Bilal by mortgaging his house and later borrows more
by mortgaging his shop — both to the same person. When the time comes to repay, Ahmed can choose
to repay only the loan on the house and take back the house, or he can repay both loans at the same
time and get back both the house and the shop. It depends on what he wants — unless they had agreed
earlier that he must pay all at once.

Section 62: Right Of Usufructuary Mortgagor To Recover Possession

If a usufructuary mortgage is created (where the mortgagee/lender takes possession of the

property and earns rent or profits from it), the mortgagor (borrower) has the right to take back
the property when certain conditions are met.

📌 The mortgagor can recover:

 The property
 The mortgage deed
 All related documents

🟢 Two situations when this right arises:

(a) If the mortgagee is allowed to recover the full loan amount from the rent/profits:
➡️The mortgagor can take the property back once the full loan is recovered from rent/profits.

(b) If the mortgagee is allowed to recover only part of the loan from rent/profits:

➡️After the loan period ends, the mortgagor can take back the property by:

 Paying or offering to pay the remaining loan amount, or

 Depositing the remaining loan amount in court.

✅ Simple Example:

Zara gives her shop to a mortgagee as a usufructuary mortgage.

The mortgagee earns rent from the shop as repayment.

 If the mortgagee is to recover the full loan from rent: Zara can reclaim the shop once the
full amount is recovered.
 If the mortgagee is to recover only part from rent: Zara can reclaim the shop after paying
the remaining loan when the loan period ends.

SECTION 63 – ACCESSION TO MORTGAGED PROPERTY

If a mortgaged property is with the mortgagee (lender), and during the time of the mortgage
something is added to the property (called accession), then when the mortgagor (borrower) pays
back the loan and wants to get the property back, they are also entitled to that added part—unless
there is an agreement that says otherwise.

Now, if the mortgagee (lender) has spent their own money to add or improve something to the
property, and that new part can be separated and used on its own without damaging the main
property, then the mortgagor has to pay the cost of that added part if they want to take it.

If the added part cannot be separated and must go with the main property, then the mortgagor
must take it with the property and pay the cost only if:

 The addition was necessary to save the property from being destroyed, sold, or forfeited,
or
 The mortgagor agreed to it.

In such cases, the cost becomes part of the loan and interest is added—either at the same rate as
the original loan or 9% per year if no rate was fixed. Any profits made from this added part must
be credited (given) to the mortgagor.

In case of a usufructuary mortgage (where the mortgagee uses the property or takes its
rent/profits), if the mortgagee spent money for the accession, then any profit from that accession
will be adjusted against the interest due on the amount spent by the mortgagee.
🔹 Example:

A gives his land to B as a mortgage and takes a loan.

While B (the mortgagee) has the land, he builds a small room on it using his own money.

Now, after some time, A repays the loan and wants his land back.

There are two possibilities:

1. If the room can be separated without damaging the land, and A wants to keep the room,
then A must pay B the cost of building that room.
2. If the room cannot be separated from the land, then it must be returned with the land. But
A has to pay B the cost of the room only if:
o It was built to protect the land from damage or loss, or
o A gave permission to build it.

Also, any income/profit earned from the room (like rent) must be given to A, the original owner.

In a usufructuary mortgage (where B is allowed to use the land or take its rent), if he earns
money from the room he built, that income will be used to reduce the interest or loan he spent on
building it.

SECTION 63A : IMPROVEMENTS TO MORTGAGED PROPERTY

(1) If the mortgagee (lender) makes any improvements to the mortgaged property while the
mortgage is ongoing (like building a wall or planting trees), and the property is in their
possession, then:

 When the mortgagor (borrower) pays back the loan and takes back the property (this is
called redemption),
 The Mortgagor is entitled to keep the improvements.
 The Mortgagor doesn’t have to pay for those improvements unless it falls under the
special cases in subsection (2).

(2) But if the improvement was necessary, for example:

 To save the property from damage or destruction,

 To protect the value of the property (security for the loan),
 Or it was done because of a legal order from a government officer,

Then:

 The Mortgagor must pay the reasonable cost of that improvement,

 This amount is added to the loan, and
  Interest is charged at the same rate as the loan, or if no rate is set, then 9% per year.

Also:

 If the improvement brought extra income or profit, like rent or crops, that profit goes to
the Mortgagor.

🔹 Simple Example:

A gives a piece of land to B as security for a loan. While B has the land, he builds a fence to
protect it from animals.

 Later, A repays the loan and takes the land back.

 A also gets the fence — but doesn’t have to pay for it, unless:
o The fence was necessary to protect the land, or
o It was built under government orders.

In that case, A must pay B the cost of the fence (plus interest), but any extra benefit (like better
crops due to protection) will go to A.

SECTION 64 : RENEWAL OF MORTGAGED LEASE

If a leased property is mortgaged and the mortgagee (lender) gets the lease renewed, then when
the mortgagor (borrower) pays back the loan and takes back the property, they will also get the
benefit of the new (renewed) lease — unless there was an agreement saying otherwise.

🔹 Easy Example:

 A mortgages a shop (on lease) to B. During the mortgage, B renews the lease of the shop
for more years.
 When A pays back the loan, he also gets the benefit of that renewed lease — i.e., he now
has the shop for the new extended time too.

Section65: Implied contracts by mortgagor

when you mortgage a property to a mortgagee, there are certain promises that are assumed
even if not written down in a contract.
 First, you promise that you actually own the property you are mortgaging and have the
legal right to transfer it to the mortgagee.
 Second, you agree to protect the ownership of that property — if the mortgagee needs
to defend their rights to the property, you will help them do so.
 Third, as long as the lender does not have possession of the property, you will pay all
public charges like taxes or utility bills related to it.
 If the property you mortgaged is a leased property, you also promise that you have paid
the rent and followed all the lease terms up to the time of mortgage. You must continue
 to pay rent and follow those lease rules until the mortgage is paid off. If the lender loses
money because you fail to pay rent or break lease conditions, you agree to cover those
losses.
 Lastly, if your mortgage is not the first loan on the property but a second or later one,
you promise to pay the interest and principal on the earlier loans on time to protect the
lender’s security.
All these promises are automatically attached to the mortgage and benefit whoever holds the
mortgage, whether the original lender or someone else the mortgage is transferred to.
Example:
Suppose you mortgage your rented-out shop to get a loan. You promise that you really own the
shop and have the right to mortgage it. You agree to pay the shop’s rent and taxes on time and
follow the lease conditions. If the shop has an earlier loan, you will also keep paying that loan’s
interest and principal on time. These promises protect the lender’s rights and the mortgage’s
value.

Here is Section 65A of the Transfer of Property Act explained in easy and simple words:

Section 65A – Power of Mortgagor to Lease the Property

(1) Power to Lease While in Possession:

If the mortgagor (the person who gives property as security for a loan) is still lawfully in
possession of the property, then he can give the property on rent (lease).
This lease will be valid and binding even on the mortgagee (the lender).

(2) Conditions for Making a Lease:

To make sure the lease is fair and in good faith, there are some rules that the mortgagor must
follow:

(a) The lease should be made like a normal person would do while managing their property, and
it should follow local laws, customs, or traditions.

(b) The lease should fix the best possible rent that can reasonably be expected.
👉 No premium (extra money) should be taken, and
👉 No advance rent should be charged.
(c) The lease cannot have a renewal clause (it shouldn't automatically get extended).

(d) The lease should start within six months from the date it was made.

(e) If the lease is for a building (whether with land or without):

 The lease period cannot be more than 3 years.

 The lease must include:
o A promise to pay rent regularly.
o A condition that the landlord can take the property back if the rent is not paid on
time.

(3) Exceptions and Modifications:

 If the mortgage deed (agreement) says something different, then that will apply instead.
 The rules in clause (2) can be changed or extended through the mortgage deed.
 If such changes are made, they will be treated just like they were part of the law.

SECTION 66: WASTE BY MORTGAGOR IN POSSESSION:

If the person who took the loan (the mortgagor) still has possession of the mortgaged property,
they are not responsible to the lender (mortgagee) just because the property becomes damaged
or worn out over time.

*However, the mortgagor must not do anything that damages the property badly or
permanently, especially if:

 The property is not worth much more than the loan, or

 The damage would make the property worth less than the loan amount.

Explanation:

A property is considered “insufficient security” if:

 Its value is not at least one-third more than the loan amount, or
 If it’s a building, its value is not at least one-half more than the loan amount.

✅ Simple Example:
Ali takes a loan of Rs. 100,000 and gives his land as security. The land is worth Rs. 130,000 —
which is just enough (because it’s one-third more).

Ali keeps using the land. If it gets worn out naturally, that's okay.

But if Ali cuts down all the trees or builds something illegal that reduces the land’s value, and
now it's worth less than Rs. 100,000 — that’s not allowed because it makes the security
insufficient.

Rights and Liabilities of Mortgagee

SECTION 67; What is the Right to Foreclosure or Sale?

When a person (called a mortgagee) lends money and takes property as security, they have
certain rights if the borrower (mortgagor) does not pay the loan on time.

If the loan is not paid back when it's due, the mortgagee can go to court and:

1. Ask for a decree of foreclosure, which means:

o The borrower will lose the right to get back the property.
o The mortgagee will become the absolute owner (but this only applies in certain
types of mortgages like mortgage by conditional sale).
2. Ask the court to sell the property to recover the loan amount.

🔹 When can the mortgagee do this?

 After the loan becomes due (is not paid back on time).
 Before the borrower redeems (gets back) the property or deposits the money in court.

⚠ But there are some restrictions:

This right does not apply in the following situations:

(a) Only certain types of mortgagees (like mortgage by conditional sale or specific anomalous
mortgages) can ask for foreclosure.
(b) A person who is just holding the mortgage on behalf of someone else (like a trustee or legal
representative) cannot ask for foreclosure.
(c) Mortgages on public interest properties (like railways or canals) cannot be foreclosed or sold.
(d) If only one part of the loan is owned by a mortgagee, they cannot file a case on just part of
the property, unless all parties have agreed.
📌 Simple Example:

Ali gives his house as security to Salman and takes a loan of Rs. 10 lakhs. The loan was
supposed to be repaid in 5 years, but Ali does not pay even after the time is up.

Now Salman (the mortgagee) can go to court and ask:

 Either for foreclosure, so Ali loses his right to get back the house; or
 For a sale of the house to recover the money.

However, if Salman is a usufructuary mortgagee (who just takes the rent), he cannot ask for
foreclosure or sale.

SECTION 67A "Mortgagee when bound to bring one suit on several mortgages

If a lender (mortgagee) has given two or more loans to the same person (mortgagor) and has
taken mortgages (separate property securities) for each loan, then:

👉 If the lender wants to go to court to recover money from one of the mortgages,
➡ They must include all the other mortgages too (if the money is also due on them).

This rule applies only when the lender has the same type of right (like right to sale or
foreclosure) under all mortgages.

📌 *Unless there is an agreement saying otherwise, the lender *must file one single case for all the
mortgages instead of filing multiple separate cases.

🧾 Simple Example:

Suppose Ahmed borrows money twice from Bilal and gives two different properties as mortgage
for each loan.

 First mortgage: Rs. 5 lakh (loan due)

 Second mortgage: Rs. 3 lakh (also due)

Now Bilal wants to go to court to sell the first property because Ahmed hasn’t paid.

Under Section 67A, Bilal *must also include the second mortgage in the same case, because:

 Both mortgages are by the same borrower (Ahmed),

 The same type of decree (sale) applies to both, and
 Both loans are due.
This helps the court handle everything together and avoids multiple suits.