Mortgages Of Immovable Property And Charges MCQ Quiz - Objective Question with Answer for Mortgages Of Immovable Property And Charges - Download Free PDF

The correct answer is Option 1

Key Points

• A mortgage is called an English mortgage where:
  • The mortgagor binds himself personally to repay the mortgage money on a certain date, and
  • Transfers the property absolutely to the mortgagee,
  • With a condition that the mortgagee will re-transfer the property to the mortgagor upon payment of the mortgage money.
• Key Features of an English Mortgage:
  • Absolute transfer of property to the mortgagee (in law, though not in intent).
  • Mortgagor gives a personal covenant to repay.
  • Property is re-transferred to the mortgagor upon full repayment.
  • Usually requires registration.
  • Commonly used in England, hence the name.

The correct answer is 12 years

Key Points

• When a mortgage deed is compulsorily registrable (as per the Registration Act, 1908) but is not registered, the mortgage is not valid in law. However, if the mortgagee continues in possession of the mortgaged property for a long time adversely to the interest of the mortgagor, the mortgagee may acquire ownership rights by adverse possession under the Limitation Act, 1963.
• Unregistered mortgage deeds (where registration is compulsory) are inadmissible in evidence and do not create any legal mortgage.
• But if the mortgagee is put in possession and continues in possession openly, continuously, and hostilely for the statutory period, they may acquire ownership rights by adverse possession.
• If the mortgagee remains in continuous, uninterrupted, and hostile possession of the mortgaged property for 12 years, a valid title by adverse possession may arise in favor of the mortgagee even though the original mortgage was invalid due to lack of registration.

The correct answer is 9% PA

Key Points

• Under Section 63A(2) of the Transfer of Property Act, if a mortgagee in possession has made necessary improvements (to prevent destruction, deterioration, insufficient security, or as per lawful order), the mortgagor is liable to pay:
  • The proper cost of such improvements,
  • As an addition to the principal amount, and
  • With interest at the rate agreed for the principal,
  • Or, if no rate is fixed, then at 9% per annum.
• Section 63 deals with accession to mortgaged property, and although it talks about cost and interest, it does not prescribe a specific rate. 

The correct answer is

Key Points Section 58 of the Transfer of Property Act, 1882
Definition of Mortgage (Clause a)
A mortgage is the transfer of an interest in a specific immovable property as security for:

• A loan already given or to be given,
• An existing or future debt, or
• The performance of an obligation that may lead to financial liability.
• The person giving the mortgage is called the mortgagor.
• The person receiving the mortgage is called the mortgagee.
• The principal amount and interest secured by the mortgage is called mortgage-money.
• The document that formalizes the mortgage transaction is called a mortgage-deed.

Types of Mortgages Defined in Section 58
1. Simple Mortgage (Clause b)

• The mortgagor does not deliver possession of the property to the mortgagee.
• The mortgagor personally agrees to repay the mortgage-money.
• If the mortgagor fails to repay, the mortgagee has the right to sell the mortgaged property and recover the debt from the sale proceeds.

2. Mortgage by Conditional Sale (Clause c)

• The mortgagor sells the property to the mortgagee with conditions, such as:
• If the mortgagor fails to pay the debt, the sale becomes absolute.
• If the mortgagor pays the debt, the sale becomes void.
• If the mortgagor pays the debt, the buyer must return the property to the seller.

Important:

• A mortgage by conditional sale must be written in the same document as the sale deed; otherwise, it will not be considered a mortgage.

3. Usufructuary Mortgage (Clause d)

• The mortgagor gives possession of the property to the mortgagee.
• The mortgagee receives rent or profits from the property instead of interest or loan repayment.
• The mortgagee retains possession until the mortgage-money is fully paid.

4. English Mortgage (Clause e)

• The mortgagor promises to repay the mortgage-money on a specific date.
• The mortgaged property is transferred absolutely to the mortgagee.
• However, the mortgagee must return the property to the mortgagor once the mortgage-money is repaid.

5. Mortgage by Deposit of Title-Deeds (Clause f)

• This is also called Equitable Mortgage.
• The mortgagor delivers the title deeds (ownership documents) of the property to the mortgagee.
• This creates a security interest over the property.
• This type of mortgage is valid only in certain cities specified by the State Government through a notification.

6. Anomalous Mortgage (Clause g)

• Any mortgage that does not fit into the above five categories is called an anomalous mortgage.
• This means it could be a combination of different types of mortgages or have special conditions agreed upon by the parties.

The correct answer is Equitable mortgage

Key Points

• A mortgage by deposit of title deeds is commonly known as an Equitable Mortgage and is governed by Section 58(f) of the Transfer of Property Act, 1882.
• In an equitable mortgage, the mortgagor deposits the title deeds (ownership documents) of immovable property with the mortgagee.
• This is done with the intent to create security for a loan or debt.
• No formal registered deed is required for this mortgage, making it simpler and cost-effective.

The correct answer is Section 81.

Key Points

• Section 81 of the Transfer of Property Act, 1882, provides for the Marshalling securities.
• It states that —If the owner of two or more properties mortgages them to one person and then mortgages one or more of the properties to another person, the subsequent mortgagee is, in the absence of a contract to the contrary, entitled to have the prior mortgage debt satisfied out of the property or properties not mortgaged to him, so far as the same will extend, but not so as to prejudice the rights of the prior mortgagee or of any other person who has for consideration acquired an interest in any of the properties.

The correct answer is Option 4. 

Key Points

•  Section 58(g) of the transfer of property deals with the Anomalous mortgage.
• A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage.
• Apart from Anomalous mortgage, the Transfer of Property Act recognizes various types of mortgages, such as simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, and mortgage by deposit of title-deeds.
• Simple Mortgage: In a simple mortgage, the mortgagor (borrower) transfers the property to the mortgagee (lender) with a promise to repay the loan. If the borrower fails to repay the loan, the mortgagee can sell the property.
• Mortgage by Conditional Sale: In this type of mortgage, the mortgagor ostensibly sells the property to the mortgagee with a condition that the sale becomes absolute (final) on default of payment by the mortgagor.
• Usufructuary Mortgage: In this type of mortgage, the mortgagee receives possession of the property and is entitled to receive rents and profits from it in lieu of interest or in part payment of the mortgage money.
• English Mortgage: This is similar to a simple mortgage, but it includes an additional covenant (a formal agreement) to repay the loan on a certain date.
• Mortgage by Deposit of Title-Deeds: In this type of mortgage, the borrower delivers the title-deeds of the property to the lender as security for a loan.

The correct answer is option 1.Key Points

• Section 107 of Transfer of Property Act 1882 deals with Leases how made.
• A lease of immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
• All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
• Where a lease of immoveable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:
  • Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immoveable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.

An equitable mortgage in which the lender is secured by taking possession of all the original title documents of the property that serves as security for the mortgage. It gives the mortgagee the right to foreclose on the property, sell it, or appoint a receiver in case of non payment.

The correct answer is English Mortgage.

Key Points

• Section 58 (e) defines English Mortgage.
• It states that where the mortgagor binds himself to re-pay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage.

The correct option is Only II.

Key Points

• A usufructuary mortgage is a contract where the borrower transfers possession and usage rights of a property to the lender while retaining ownership.
• The borrower, known as the mortgagor, and the lender known as the mortgagee, are granted the right to enjoy the income or produce generated by the property during the mortgage period. 
• An usufructuary mortgage is a specific type of mortgage that is governed by the Transfer of Property Act of 1882.
• It allows the borrower to transfer possession and usage rights of the mortgaged property to the lender while retaining ownership.
• During the mortgage period, the mortgagee retains possession of the property and can enjoy the benefits derived from it. 
• A usufructuary mortgages are typically used in cases where the borrower needs funds and is willing to provide the lender with the income or produce from the property as security.
• This type of mortgage allows the borrower to retain ownership while providing the lender with an income stream to recover the loan amount.
• Definition:
  • A mortgage arrangement where the mortgagor transfers possession and usage rights to the mortgagee while retaining ownership. 
• Possession:
  • The Mortgagor delivers possession or undertakes to deliver possession of the property to the mortgagee. 
• Retention of Possession:
  • The Mortgagee retains possession until the mortgage money is paid or appropriated from the property’s rents and profits. 
• Personal Liability:
  • Mortgagor has no personal liability to repay the mortgage money.
• Foreclosure/Sale:
  • The Mortgagee cannot foreclose the mortgage or sue for the sale of the property. 
• Right of Redemption:
  • ​The Mortgagor has the right to redeem the property by paying the amount due or discharging the debt with rents and profits received by the mortgagee.
• Time Limit:
  • No specific time limit is set for repayment. 
• Registration Requirement:
  • If the mortgage amount is Rs. 100 or more, registration is required.
  • For amounts less than Rs. 100, it can be a registered deed or delivery of property.

The correct answer is Section 69A.

Key Points 

• The Transfer of Property Act, 1882 (TPA) deals with the appointment of a receiver in Section 69A.
• This section provides that a mortgagee who has the right to exercise the power of sale under Section 69 is entitled to appoint a receiver of the income of the mortgaged property under certain conditions.

Who can appoint a receiver:

• Only a mortgagee with the right to exercise the power of sale under Section 69 can appoint a receiver.

How to appoint a receiver:

• The appointment must be in writing signed by the mortgagee or on their behalf.
• The following order of preference applies:
  • Any person named in the mortgage deed and willing and able to act as receiver.
  • If no one is named or they are unable or unwilling, any person agreed upon by both mortgagee and mortgagor.
  • If no agreement is reached, the mortgagee can apply to the court for the appointment of a receiver.

The correct answer is Both assertion and reasoning are true, and the reasoning is the correct explanation of the assertion.

Key Points

• The assertion states that a mortgage by conditional sale is considered a mortgage under the Transfer of Property Act, 1882. The reasoning provided explains that despite being labeled as a conditional sale, this type of transaction involves the transfer of interest in immovable property to secure a loan, akin to a mortgage.
• A mortgage by conditional sale occurs when the owner of immovable property sells it to another person on the condition that if the buyer fails to repay the loan amount within a specified period, the sale becomes absolute, and the buyer becomes the absolute owner. However, until the conditions of the sale are fulfilled, the transaction operates as a mortgage, with the buyer holding the property in trust for the seller.
• In essence, while the transaction is termed as a conditional sale, its substance resembles that of a mortgage because it serves as security for a loan. Therefore, it is recognized as a mortgage under the Transfer of Property Act, 1882. This understanding is crucial in legal contexts, as it ensures that the rights and obligations of parties involved in such transactions are governed by the appropriate legal principles and safeguards provided under mortgage law.

The correct answer is Section 81.

Key Points

• Section 81 of the Transfer of Property Act, 1882, provides for the Marshalling securities.
• It states that —If the owner of two or more properties mortgages them to one person and then mortgages one or more of the properties to another person, the subsequent mortgagee is, in the absence of a contract to the contrary, entitled to have the prior mortgage debt satisfied out of the property or properties not mortgaged to him, so far as the same will extend, but not so as to prejudice the rights of the prior mortgagee or of any other person who has for consideration acquired an interest in any of the properties.

The correct answer is ​Obligation to transfer to third party instead of re -transference to mortgagor.

 Key Points

• Section 60A deals with the obligation to transfer to a third party instead of re-transfer in case of mortgage.
• It grants the mortgagor the right to have the mortgage debt assigned and the mortgaged property transferred to a third person instead of receiving a re-transfer of the property themselves.

• Section 60A provides the mortgagor and encumbrancers with additional flexibility when redeeming a mortgage. They can choose to have the mortgage debt assigned and the property transferred to a third party instead of regaining direct ownership.

This can be beneficial in various situations, such as:

• Selling the property to a third party while paying off the mortgage.
• Transferring the property to a family member while maintaining the mortgage debt.
• Avoiding the hassle of managing the property directly.