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Mortgage (Rules, Types & Conditions) with Relevant Act

The word mortgage is derived from old French word “mart gage” which means “death pledge”. It may be explored in the meaning of “death Contract” as it really means that the agreement will be dead after the foreclosure of the property.

Its concept was derived by US congress in 1970 when they made an organization Named “Federal Home Loan Mortgage Corporation”. It was made to enhance the financial capital available to mortgage. It is the process by which a person can get the money from a financial institution or the organization to fulfill his specific requirements by giving it a previous thing as a guarantee to return the loan. The financial institution pledges such thing as a mortgage and returns it to the client after paying back the loan completely. In case of non-payment of the load amount, the thing mortgaged against the loan would be considered as in the ownership is considered as in the ownership of that financial institution.

Mortgage consists on the specific characteristics such as

1. It can be done only in case of immovable asset (such as installations, plants, lands, fixations, trees on the lands etc.

2. The interests in the specific immoveable property will also be transfer.

3. Its purpose is to secure the loan or the performance of the contract.

4. A property already transferred or liquidated will not be considerable in mortgages.

5. It must have particular size of boundaries and area.

6. The possession is not required to be transferred.

7. The mortgaged property’s interest is to be re-conveyed.

8. In case of non-payment of the loaning amount, the mortgagee has the right to recover his amount by selling such immoveable asset.

There are six types of mortgage which are described here under:

The English mortgage is the mortgage in which a person specifically promises to pay the money on a specific day and the property transferred to the mortgage, but has the possession by self. After getting the amount back, he re-transfers the property to the mortgager.

The Other type is usufractury mortgage in which the mortgager transfers the possession to the mortgagee or agrees to do so and entitles him to receive while or partial rent/profit of the property, retain such possession until the payment.

In the simple mortgage, the person do not transfer his property or possession to the mortgagee and only pledges it against the loan and allows him to sale the property in case of failure of payment of the loan. In case of failure, the property would be sold by the intervention of court.

In the anomalous mortgage, we assume the combination of two or more types of mortgage. That’s why it is known as multi-mortgage.

Another mortgage is by deposit of title deeds in which the registration is required. The banks usually deal with such method. In this method the documents of title of immoveable property is provided by the creditor as security.

Another type is known as mortgage by conditional sale. In this method the property is sold on the following conditions.

1. If the money will not be paid on the promised date, the sale of property would be made absolutely.

2. If the payment is made, the sale will not be done.

3. On made of payment, the buyer will transfer the property to the seller.

In our country, the Punjab Redemption and Restitution of Mortgaged Lands Act, 1964 does exist for such acts and deeds. It consists of four (4) chapters. Chapter one (1) consists in title and definitions; Chapter two (2) is based on redemption of mortgages. The restitution of Mortgage is described in Chapter Three (3) and Chapter four (4) is supplemental. As we know that, in our society, one’s responsibilities are considered as the rights of other. So, to fulfill the rights and responsibilities of the citizens of the society, such loans are made up. That’s their implementation is guaranteed the fair dealings regarding the mortgage.