The mortgagor pledges their property's title deeds or ownership documents as collateral security for the equitable mortgage and registered mortgage to the mortgagee or their agents while availing a loan. While equitable mortgage stamp duty may not always be required, increasing instances of housing loan fraud have led several states to make registration mandatory to ensure excellent protection for both parties involved.
What is the meaning of equitable mortgage? Also known as Mortgage by deposit of title deeds, it is a process where a borrower deposits their property's title deed with the lender as security for a loan until it is repaid. Equitable mortgage charges create a charge on the property without the need for legal procedures. Although no written documentation is required, an agreement signed by both parties and notarized is necessary.
The Limitation Act sets the time frame for an equitable mortgage at 12 years under Article 62. This means the lender has up to 12 years to take legal action against the borrower in case of default.
To create a home loan mortgage registration, the borrower provides the lender with the title deed of immovable property as security until the loan is fully repaid. This does not involve any legal process, but a memorandum of deposit of title deeds is usually executed between both parties to formalise the arrangement.
Although an equitable mortgage registration lacks a statutory power of sale, you may have a contractual right or ability to seek court permission to sell the land in case of default by the mortgagor. Courts have an inherent power to order the sale and disposal of proceeds, also known as the "judicial sale" of a property, after determining the existence of a charge over the land.
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