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Is your property on mortgage? Know your rights!

January 13, 2010 11:21 IST

Home mortgageAlmost everyone knows what mortgage means. Simply put it is the agreement between the lender and the borrower in a deal, in most cases a home deal.

A mortgagor is theborrower in the agreement who pledges his home for taking up a loan from the mortgagee or the lender.

When the mortgagor fails to return the money within the agreed terms and conditions it is the legal right of the mortgagee to claim the home on mortgage to recover the amount due.

But do you know the legal rights of the mortgagor or any encumbrancer during the mortgage and more importantly after pay up of the mortgage money? Let's find out.

Deed and possession

We will first consider some of the legal rights of the mortgagor after the settlement of the mortgage amount because this is where most mortgagors go wrong!

The legal rights of a mortgagor after the settlement of the mortgage amount are laid down in the Transfer of Property Act.

Once the mortgage agreement is over, the mortgagee should hand over the mortgage deed and all related documents to the mortgagor.

In the case of the mortgagee using the mortgaged property he should hand over the same to the mortgagor immediately after the settlement.

During the mortgage period when the mortgagee has the custody of the title deed of the mortgaged property, a mortgagor can during reasonable times inspect, take copies in full or extracts of the title deed.

However, all costs related to this right will be borne by the mortgagor.

Redemption

Redemption can occur only when all conditions are met by the mortgagor as agreed upon with the mortgagee at the time of mortgage and not otherwise.

For example, a person cannot claim for redemption of a share of the mortgaged property upon settlement of an amount in proportion to the full amount due on the mortgaged
property.

Property transfer

The right of the mortgagor to redeem his mortgaged property is protected by his right to redeem. Once a full settlement of the mortgage amount is made the mortgagee is legally bound to re-transfer the property on mortgage either to the mortgagor or to a third person as the mortgagor might direct.

Moreover, the transfer of the property is complete only when the mortgagee gives in writing that he does not anymore hold any legal rights on the property.

If the mortgagee for any reason fails to comply with the property transfer rules, the mortgagor can file a suit of redemption that is he can move the court and legally enforce them.

There might be circumstances where the mortgagor had mortgaged two or more properties with the same mortgagee. When the mortgage amounts of any two or more such mortgages mature, the mortgagor is free to redeem any one of such property separately.

Gains from property

In case of a mortgage property on lease and a mortgagee obtaining a lease during the mortgage tenure, the mortgagor upon redemption will be entitled to receive the benefits of the new lease.

The same rule applies to the scenario where the mortgagee received any accession to the mortgaged property in possession. The mortgagor will receive the benefits upon redemption.

However, if the mortgagee had spent money in acquiring the accession and the possession or use of the mortgaged property either claimed separately or without any damage to the principal property, the mortgagor upon redemption can acquire it only after paying the mortgagee all the expenses paid by him.

However, if the mortgaged property is not fit for a separate possession or use then the mortgagee must deliver the accession with the property.

Sometimes, a mortgagee might have renewed the living conditions of the mortgaged property during the mortgage tenure. In such cases, the mortgagor upon redemption is not liable to pay the costs for improvement carried out by the mortgagee.

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