Meaning and Concept
A Simple Mortgage is a form of mortgage where the mortgagor personally binds himself to repay the loan and agrees that, in case of default, the mortgagee shall have the right to cause the mortgaged property to be sold. Importantly, possession of the property is not delivered to the mortgagee. This concept is clearly defined under Section 58(b) of the Transfer of Property Act, 1882. The mortgagor retains possession and enjoyment of the property, while the mortgagee gets a security interest. Simple mortgage is commonly used in financial transactions where the borrower wishes to retain control over the property.
Statutory Provision and Legal Framework
The legal framework governing simple mortgage is laid down in Section 58(b) of the Transfer of Property Act, 1882. According to this provision, two essential elements must exist: personal liability of the mortgagor and the right of the mortgagee to cause sale through court in case of default. Unlike usufructuary mortgage, there is no transfer of possession, and unlike English mortgage, ownership is not transferred. Courts have emphasized that registration is compulsory for simple mortgages involving immovable property of value exceeding ₹100, as per the Registration Act, 1908.
Essential Characteristics and Importance
The essential characteristics of a simple mortgage include personal covenant to repay, absence of delivery of possession, right of sale through court decree, and creation of a charge upon the property. Its importance lies in providing security to lenders while allowing borrowers to continue using the property. In examinations, simple mortgage is frequently compared with usufructuary, English, and anomalous mortgages. Understanding its features helps students answer problem-based questions and distinguish between different kinds of mortgages under property law.
Real-Time Example
A real-time example of a simple mortgage is when a person takes a loan from a bank by mortgaging his residential house but continues to live in it. The borrower signs an agreement promising personal repayment. If the borrower defaults, the bank can approach the court to sell the house and recover the loan amount. Many housing loans and business loans in India are structured as simple mortgages, clearly reflecting the application of Section 58(b) of the Transfer of Property Act, 1882.
Mnemonic to Remember
A simple mnemonic to remember Simple Mortgage is “PRoS”.
P – Personal liability
R – Right of sale through court
o – Ownership retained by mortgagor
S – Security without possession
This mnemonic helps students quickly recall the essential elements during exams.
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