Usufructuary Mortgage: Section 58 of Transfer of Property Act

Loan can be secured or unsecured. Loan which is secured by movable property is known as Pledge and loan secured which is secured by immovable property is known as Mortgage.

To understand Usufructuary Mortage Let us first understand: What is Mortgage?

Mortgage means [Section 58(a)]

• Mortgagor is the person who keeps his proper as a security to take a loan. Mortgagee is a person gives the loan and keeps propert until his loan is paid-off. Mortgagee may exercise his different such as Right to foreclosure/forfeiture etc given under Transfer of Property Act.

• Mortgage means “Transfer of an Interest”;

• Transfer of interest must be of some specific immovable property;

• The purpose of transfer of interest must be to secure payment of any debt or performance of an engagement which may give rise to a pecuniary liability.

• Example: A took a loan of Rs. 1 Lakh from the bank and secured the registry of his house. So here Debt is Rs. 1 lakh, Registry of house is security which give rise to a pecuniary liability.

USUFRUCTUARY MORTGAGE:

1. Meaning of Usufructuary mortgage is given under section 58(d) of Transfer of Property Act, 1882.
2. ‘Usufruct’ simply means Benefit.
3. There is no personal liability to pay. So here remedy is not by forfeiture or by foreclosure or sale but rather remedy is to keep property in possession and enjoy  the sale until the principal and interest are paid-off according to terms of the agreement. [Means property is kept in possession till debt is paid off]
4. Nature of usufructuary mortgage is in usufruct, i.e., mortgagee enjoys benefit till mortgage money is paid.
5. Registration is necessary when money taken under usufructuary morgage is Rs. 100 or more.

Essentials of usufructuary mortgage:

i) Delivery of possession of mortgage property to morgagee;

ii) Enjoyment or use of property by mortgagee until his dues are paid-off;

iii) No personal liability of the mortgagor;

iv) Mortgagee cannot sue for the sale of mortgage-property.

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