Kevin Moses Paul
11 February 2021
As per your query, I would like to inform you that such a situation would constitute an usufructuary mortgage,about which I've illustrated down below, so have a look for.more input.
An USUFRUCTUARY MORTGAGE is a type of mortgage where the mortgagor delivers the possession and right to enjoy an income of and from the property to the mortgagee.
Therefore, if the mortgagor is not in a position to give immediate possession, it is sufficient if he gives the right to possession.
However, if a mortgagor expressly or by any sort of implications binds himself to deliver possession of the mortgaged property to the mortgagee, the transaction is a usufructuary mortgage despite the fact that the actual possession has not been delivered.
Instead of giving actual possession, the mortgagor may direct the tenants of the mortgaged property to pay the rent to the mortgagee.
A usufructuary mortgage is one where the mortgagor delivers or agrees to deliver the possession of the mortgaged property to the mortgagee and authorizes him –
1.) To retain such possession until payment of the mortgage money,
2.) To receive the whole or any part of the rents and profits accruing from the property, and
3.) To appropriate such rents or profits;
(i) in lieu of interest, or
(ii) in payment of the mortgage money, or
(iii) partly in lieu of interest and partly in lieu of the mortgage money.