Tuesday, 17 November 2015

REDEMPTION AND FORE-CLOSURE


What is right of redemption?
This is a very important right of the mortgagor, which the law protects. Generally law stands in favour of the weaker party and mortgagor being debtor; law safe guards his right. Section 60 of Transfer of Property act deals with Right of Redemption which is a right available to mortgagor to get back the (redeem) the property mortgaged that is after any time, the principal amount has become due, on payment of all the dues. The mortgager may demand from the mortgagee, the mortgage deed, all the documents, and if the property had been delivered, to deliver the possession of the property. The entire cost of this process to be borne by the mortgagor. He may also direct the mortgagee to deliver the deed; documents, possession of the property so any third person. If the mortgage has been effected by registered document, the redemption or re-conveyance deed also need to be registered.
This right of redemption is available before the mortgagee files a suit for enforcement of mortgage.
Whether partial redemption is allowed?
The mortgage is indivisible Section 60 of the Transfer of property act does not allow partial redemption; one of the mortgagors cannot redeem part of the mortgaged property by paying the proportionate amount. If redeemed, the entire property has to redeem. The only exception is that if the mortgagee is a creditor himself and is responsible for breaking the integrity of the mortgage by allowing the co-mortgagor to redeem partially or when he acquires the interest of one of the co-mortgagors.
What is clog on redemption?
Clog means obstruction. A mortgagor has the right to enjoy hold of the property as he was entitled before the mortgage. If that right is prevented/restricted, such conditions are called clogs. A term/condition in a mortgage transaction is treated as clog, if it is unreasonable.
What is Foreclosure?
This is a right available to the mortgagee. The relevant section is 67 of Transfer of property act. This right can be exercised if there are no contrary conditions in the mortgage deed and after the mortgaged money has become due and before the mortgagor gets decree of redemption, or mortgaged money has been paid, deposited. In simple terms the right can be enforced on failure of the mortgagor to repay the money borrowed on due date. The mortgagee may obtain a decree from the court, that the mortgagor is prohibited from right to redeem the property or property be sold. This is suit for foreclosure. However the remedy depends upon the nature of the mortgage.
In the simple mortgage the foreclosure is not available. Remedy is either proceed against the mortgagor personally or per sale of the property mortgaged, so also in care of Usufructuary mortgage, where the mortgagee is in possession of the property and continues to be so until the debris repaid on full.  In case of conditional sale, the mortgagee matures into sale on the failure of the payment of the debt, so the mortgage may foreclosure depriving the right of redemption. In English mortgage they may bring a suit for sale of the property. In case of mortgage by deposit of titles deeds. The remedy is sue for personal decrees or for sale of the property.In anomalous mortgage, the remedy depends upon the terms of mortgage.
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