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1. Section 58 of the Transfer of Property Act defines “mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and “mortgage-deed”. A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement that may give rise to a pecuniary liability.
2. The transfer is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are
called the mortgage money, and the instrument (if any) by which the transfer is effected is called a mortgage deed.
3. In simple words, a mortgage is a transfer of an interest in immovable property for securing loans. Therefore, in leases where the lease deed
provides for prior permission of the lessor for the assignment of leasehold rights, it shall be obligatory for the lessee to obtain prior permission from the
lessor before mortgaging the premises. Failure to do so shall amount to a breach of lease terms on which the property can be re-entered.
PURPOSE OF MORTGAGE:
A lessee or a duly authorized agent can seek mortgage permission for the following purposes: –
(i) for raising loans for the construction of additions and alterations to the building; or
(ii) for raising loans for other purposes like a business.
4. MORTGAGE WITHOUT PERMISSION:
A mortgage is a transfer of the demised premises and hence where the lease the deed provides the permission of the lessor shall be obtained before any assignment or transfer of the property, it shall be incumbent upon the lessee to obtain the prior permission of the lessor to mortgage the premises.
Mortgage without the lessor’s permission in restricted leases shall be a breach of the terms of the lease. Such breach of terms may be regularised
(i) Payment of penalty at the notified rates.
(ii) Execution of a tripartite agreement providing for the recovery of unearned increase etc. in the event of foreclosure of the mortgage.