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Deepak   02 June 2023

Mortgage deed

1) Can a mortgage exist between 2 individuals ?

2) Can agricultural land be mortgaged between 2 individuals (CAn it be used as a collateral)

3) Should the value of the money borrowed always be more than the mortgaged property? What happens if the value of the money borrowed is much less than the mortgaged property.



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 7 Replies

bhagwat patil (Property due diligence 9422773303)     02 June 2023

1) Can a mortgage exist between 2 individuals

yes

2) Can agricultural land be mortgaged between 2 individuals (CAn it be used as a collateral)

yes

3) Should the value of the money borrowed always be more than the mortgaged property? What happens if the value of the money borrowed is much less than the mortgaged property.

no need,

on the outset of defoult if the mortgaged property auctioned the surplus money will be transferred to the borrowers account

 

Deepak   02 June 2023

Thank you for the response. I have a follow up query. If the mortgage deed is conditional and says that the mortgagee shall have absolute rights on the property if the money is not paid with in the agreed period , is such a condition valid even when the mortgaged property value is much higher than the borrowed money?

 

Thanks & Regards

T. Kalaiselvan, Advocate (Advocate)     02 June 2023

1.Yes.

2.Yes.

3. The loan amount may not be more than the value of the mortgaged property, if yes, then it will be difficult for the lender to recover the entire loan amount with interest 

Dr. J C Vashista (Advocate and Legal Consultant)     03 June 2023

Question wise reply is

Q1) Can a mortgage exist between 2 individuals ?

Ans: Yes, if value of the property under morgage is within the loan amount.

Q 2) Can agricultural land be mortgaged between 2 individuals (CAn it be used as a collateral)

Ans: Yes, collateral charge can be created on the agricultural property.

Q 3) Should the value of the money borrowed always be more than the mortgaged property? What happens if the value of the money borrowed is much less than the mortgaged property.

Ans: The money lender (financier) would (shall) not accept to take risk of money lended.

Prima facie it is an examination hall question paper, isn't it?
 

Deepak   03 June 2023

Thank you for the response. I have a follow up query. If the mortgage deed is conditional and says that the mortgagee shall have absolute rights on the property if the money is not paid with in the agreed period , is such a condition valid even when the mortgaged property value is much higher than the borrowed money?

SUBHASH MENON   04 June 2023

Hi,

Adv. Subhash Menon is answering your querry. This kind of conditional mortgage is described  as Mortgage by Conditional Sale ( U/s. 58( c) of Transfer of Property Act, 1908

                                                        &

Whereas in English Mortgage ( U/s. 58 (e) of TPA, 1908 -the mortgagor binds himself to repay the mortgage money on a certain/ specific  date, and transfers the mortgaged property absolutely to the mortgagee,  subject to a proviso that mortgagee  will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed,  is called an English Mortgage.

Deepak   04 June 2023

Thank you sir.


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