Mortgage by Deposit of Title Deed

Hello Everyone,

What is Mortgage by deposit of title deeds?

Section 58(f) of Transfer of Property Act 1882 talks about Mortgage by deposit of title deed. The towns like calcutta, Madras and Bombay can deliver to a creditor or his agent documents of title to immovable property, with intent to create a security the transaction shall be known as Mortgage by deposit of Title Deed.

The deed is executed between Mortgagor, Mortgagee and Borrower. In whereas you give a description of property with separate schedule(wherein you will provide exact details of Mortgaged Property like Patta number, taluka number, an exact description of property what is the direction towards north, south, west and East and the nearby area of the property) and details of loan amount.

Typical clauses which include in the said deed are :

1.      This deed of Mortgage shall be co-extensive and co-terminus with the Agreement for Advance.

2.      That the Mortgagors shall expend all care and money during the pendency of this Deed of Mortgage to maintain the Mortgaged Property in good state and condition and protected against loss, deterioration and damages.

3.      That the Mortgagors shall not in any manner whatsoever deal with or transfer the Mortgaged Property either by way of lease, sale, gift, licence, etc. to parties other than the Mortgagee till such time as the Advance remains unpaid and till the pendency of this Deed of Mortgage.

4.      That the Mortgagee, its employees, agents and nominees shall be entitled to, at all times, during the pendency of this Deed of Mortgage, without notice to the Mortgagors, enter the Mortgaged Property and/or to inspect/ check the same and also on default of the repayment of any money hereby secured or the performance of any obligation of Mortgagors to the Mortgagee or occurrence of the circumstances in the opinion of the Mortgagee endanger the security, to take possession, or sell by public auction or private contract without being bound to exercise any of these powers or being liable for any loss in the exercise thereof and without prejudice to the Mortgagee’s remedies of the suit or otherwise.

5.      That the Mortgagors declare that the Mortgaged Property is the absolute property of the Mortgagors and the Mortgagors have full and exclusive right to the enjoyment of the benefits arising from the Mortgaged Property whether as the absolute and exclusive owner of the Mortgaged Property or otherwise and that the Mortgaged Property is free from all encumbrances and factual defects and the Mortgagors have full subsisting interest in the same and that the Mortgagee shall have absolute right, title, interest, power and authority to alienate or transfer the same by way of sale or mortgage or otherwise.

6.      That the Mortgagors further declare and undertake that the Mortgaged Property shall be kept free from any prior or future charge or encumbrances.

7.    That the Mortgagors shall pay all revenue, taxes, cesses, charges in relation to the Mortgaged Property or as to the user thereof and shall always keep the benefits arising out of the Mortgaged Property free from all charges statutory or otherwise and shall keep the Mortgagee indemnified against all such demands, claims, charges and expenses, whatsoever in that behalf.

8.    That the Mortgagee shall be at liberty without being bound and at its option to pay all revenue taxes, cesses and other such public or statutory demands and charges by debiting the same to the account of the Borrower if the Mortgagors fail to pay the same within the time and payment so made together with interest thereon at the above rate and any expenses incurred shall also be secured hereby and deemed as the Advance.

9.    That the Mortgagors shall during the continuance of this security, keep all the Title Deeds of the Mortgaged Property detailed in Schedule I hereto hereby mortgaged, deposited with the Mortgagee and shall hold the same interest for the Mortgagee for any period in which the said documents are left or allowed to remain with the Mortgagee or realized to the Mortgagee temporarily on his request. The Mortgagors shall in no case deliver the Title Deeds to any other person or deal with them in any manner prejudicial to the interest of the Mortgagee during the continuance of this security.

10.    That the Mortgagee shall not be answerable or accountable for any losses, which may happen or about the exercise or execution of any of the power or trusts, which may be vested in the Mortgagee by virtue of these presents or by any legislative enactment.

11.    That the Advance allowed by the Mortgagee shall be used by the Borrower for the purpose of and in relation to clearance of tis dues payable to the Bank and for no other purpose whatsoever.

12.    That this security shall operate as a contingent security for all monies, indebtedness and liabilities aforesaid notwithstanding that the amount advanced by the Bank, earlier have come to be repaid and the accounts closed or further advances made and fresh accounts opened and notwithstanding the existence of credit balance or such account/s at any time or any partial payment of fluctuations of accounts.

13.    That the Mortgagee shall be competent at all times in accordance with the Agreement for Advance executed by the Mortgagors and to recall the Advance and in that event the Mortgagors shall have no grievance to question the Mortgagee’s right.

14.    That the Mortgagors have agreed that the Borrower shall pay the Advance given to the Mortgagee within [●] days of demand made by the Mortgagee and in the event of the following happening the entire amount of the Advance or the part of the Advance remaining due shall become payable immediately alongwith interest @ [●]% per annum on the whole or part of the Advance remaining due and payable calculated from the eight day from the date of the demand:

(i)   Failure by the Borrower/ the Mortgagors to pay the whole or part of the Advance to the Mortgagee within [●] days of demand made at any time by the Mortgagee,

(ii)   Upon the Property, the Adjoining Property and the Other Adjoining Property respectively not being conveyed to the Mortgagee on or before [●][Date] as mentioned in the Advance for Payment for any reason whatsoever and the Mortgagee shall be entitled to realize its dues in the manner provided in Clause 15 hereunder.

15.    That if the Borrower shall fail to pay the Mortgagee the amount due from the Mortgagee, this mortgage at any time on demand being made for it together with interest and all other sums, incidental and all other charges, the Mortgagee shall be competent and fully justified and entitled to realize its dues by sale of the Mortgaged Property hereby mortgaged and if the sale proceeds are insufficient to satisfy the dues of the Mortgagee including costs and other charges etc. In the event of a suit becoming necessary for the recovery of the mortgagee dues, interest at the aforesaid rate shall continue to run and be charged till all realizations of the full dues of the Mortgagee.

         PROVIDED THAT the Borrower shall pay to the Mortgagee all its dues with interest thereon and incidental and other charges and thus adjust the Advance account the Mortgagee shall , at the request of the Mortgagors execute a receipt therefore or a Deed of Redemption, at the cost of the Mortgagors as the case may be.

15A.   That the Borrower shall be bound and undertake to accept the balance of the Advance including interest and charges etc. as claimed to be due from the Borrower to the Mortgagee under this Deed as disclosed from the books maintained by the Mortgagee as true and the statement of account from such books shall be sufficient and conclusive proof of the correctness of the same.

16.    That the Mortgagors shall bear expenses on stamp papers and registration of this Deed.