Mortgaging a Leased Property

Swarna (Querist) 12 November 2009 This query is : Resolved
Please explain the procedures involved in mortgaging a lease premises by a lessee.

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adv. rajeev ( rajoo ) (Expert) 12 November 2009
lessee cannot morgage the leased property.

Raj Kumar Makkad (Expert) 12 November 2009
A lessee can not legally mortgage the leased property as he is not the absolute owner of that property hence no legal procedure lies.

R.R. KRISHNAA (Expert) 12 November 2009
I disagree with the above learned experts opinion.

As per the provisions of the transfer of property act:-

The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. In such cases, the lessee will not cease to be subject to any of the liabilities attached to the lease.

As regards the procedure for mortgaging, the lessee shall simple execute a mortgage deed to the effect creating a mortgage of his leasehold interests. But for all the above rights to accrue the lease deed should have express covenant entitling the lessee to mortgage his interest.

Y V Vishweshwar Rao (Expert) 12 November 2009
I agree withe the opinion of MR Krishna !

In the cases of lease hold for period of 30 years and more- Some Banks and FI are accepting the Mortgage of Lessee's interest to advance loan for industries !

Anish goyal (Expert) 12 November 2009
Both of above views are correct. A lessee can't mortgage the property but he can mortgage his interest in the property that is lease.

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