A mortgagor is an individual or a business entity providing a mortgage or security lien to real estate in exchange for the lender providing funds to the mortgagor. A mortgagee is a lender who provides money to the owner of real estate and who takes security or a lien in real estate as assurance for repayment of the loan. Often, the mortgagor is referred to as the borrower while the lender is referred to as the mortgagee.

A mortgage is a lien against real estate in exchange for the repayment of money. A mortgage may be for a loan used to purchase the real estate, or for money loaned after the real estate is purchased. In either case, the real estate is used as security for the money lent, or mortgage loan, and the mortgage is the security agreement. Mortgages are public documents and are recorded. A mortgage is the loan used to secure ownership of a property.

Example: The Bank loans Rs200, 000 to Mr Singh for the purchase of a home. Mr Singh is referred to as the mortgagor in the transaction, and the Bank is referred to as the mortgagee.

 

How a Mortgage Works

When you obtain a mortgage loan, you will sign a covenant promising to repay the amount borrowed according to the terms outlined in the loan agreement. You will also sign a mortgage, giving the lender a lien or security on the property. In the event you do not pay back the loan, the lender has the right to sell the property to complete repayment of the loan. If there is more than one mortgage, the first mortgage is paid before any secondary mortgages are paid, if there is enough left over from the sale.

The lender will not own the property through a mortgage loan only retain a lien on the property. You are generally free to do with the property as you wish, except that transferring the property without paying off the mortgage is usually prohibited without the lender’s permission.

There may be more than one mortgage on a parcel of real estate. Mortgages filed later in time are called second (or third) mortgages. Because they are considered inferior, the first mortgage gets paid out first in the event of default.

Mortgages are recorded on land title certificates which are public documents recorded at the Land Titles Offices in the city or province where the real estate is located. Public recording informs the public that a lender has a security against the real estate.

 

Rights And Liabilities Of Mortgagor:-
1.    Redeem Of Property:- As the loan is returned then a mortgagor has a right to redeem the property. All documents and the mortgage deed should be returned to the borrower.

2.    Right to Claim Damages:- If the property is damaged during the possession of the mortgagee then the mortgagor has a right to claim the damages from the mortgagee.

3.    Partial Redemption:- If mortgagee wants to acquire a share in the mortgaged property through inheritance or purchase the mortgagor has the right of partial redemption.

4.    Right of Lease:- If the possession of the property is in the hands of mortgagor then he can make lease of this property for the ordinary period.

5.    Follow the Agreement Deed:- The mortgagor will observe all the conditions contained in the agreement deed. He will also defend the title of property if the property is in his possession.

6.    Recovery of Possession:- When the mortgagor returns the loan then he has a right to recover the possession of the property from the mortgagee.

7.    Liability of Taxes :- If property is in the possession of the mortgagor then the liability of all types of taxes will be on the mortgagor over of Modaraba certificates is not impressive. Now the ratio of equity is very high in relation to debt financing.

8.    Control of Modaraba Companies:- There are many checks on the Modaraba companies to regulate the modaraba. The state bank, religious board, corporate law authority and registrar of modaraba are responsible to regulate the modaraba company.

9.    Appointment of Auditor:- It is very necessary that Modaraba Company should appoint the auditor. Auditor should be qualified charted accountant approved by the registrar. The auditor should certify the objectives and accounts of the modaraba.

10.    Audit Report of The Company:- Auditor verified balance sheet and profit and loss report about the company must be given to the modaraba certificate holders with in six month of the closing accounts period.

 

Liabilities of Mortgagor – 

Under Section 65 of the Transfer of Property Act, 1882 the liabilities of the mortgagor are as follows –

1) A Mortgagor must have the right to mortgage such property;

2)  The mortgagor must have a legal title of the property;

3) The mortgagor is liable to pay all taxes if the property is not in the possession of the mortgagee.

4) The mortgagor is liable to pay the lease rent of the mortgaged property if the mortgaged property is under the lease. The mortgagor must comply also with the terms and conditions of the lease deed if the mortgaged property is under lease deed; and

5) The Mortgagor is liable to comply also with the terms and condition of the previous mortgage deed if any relating with the same property.

 

Rights Of Mortgagee:-
Following are the important rights of mortgagee:

1. Selling Right:- If borrower fails to return the loan in time then the mortgagee has the right to sell the property of the mortgagor. But it will be sold and getting decree from the court. Property will be sold by auction.

2. Shortage of Money Case:- After selling the property if amount is less than the loan, the balance can be recovered from the person by getting the decree from the court.

3. Usufructuary Case:- In this case mortgagee has no right to sell the property and to obtain the decree from the court. The banker can retain the possession till the recovery of the loan.

4. Refusal of Debt:- If a borrower refuses to return the loan or he is unable to pay the debt then the lender can get a foreclosure decree from the court.

5. Adjustment of Payment:- The banker has a right to distribute the payment received after the sale of property according the principal amount, interest and other charges.

6. Joint Suit:- If the mortgagor is more than one person then suit will be filed against all of them if the loan is not returned

7. Sale of Private Property:- In case of private property the mortgagee will issue at least 3 months’ notice to the mortgagor before selling the property.

 

Liabilities Of Mortgagee:-
When property is in the possession of the mortgagee then it has the following duties or liabilities:
1.    Property may not be damaged.
2.    No alteration is allowed in property.
3.    The property must be insured.
4.    Property must be kept secured.
5.    Rent of the property must be collected.
6.    Govt. Revenue must be paid.
7.    Property must be kept clear from all dues.

The dream of working class is to own a house. For the majority of aspiring homeowners, a mortgage is an indispensable element of their home financing. This long-term financing option provides home buyers with a valuable anchor that allows them to move forward with their purchase knowing that they will be able to successfully finance this significant investment. When the process of selecting a mortgage begins, it is not uncommon to be overwhelmed by the large number of terms and concepts that exist in this industry.  Understanding the language of home lending will help you make educated decisions about the money you borrow. Defining the terms mortgagor and mortgagee is a great first step on the path to educating yourself about home mortgages. Thus, the mortgagor is the entity lending the money and the mortgagee is the individual or persons borrowing it.

 

Reference:

  1. https://www.srdlawnotes.com/2018/01/mortgage-rights-of-mortgagee-property.html
  2. https://www.firstfoundation.ca/mortgage-glossary/mortgagor/
  3. https://studypoints.blogspot.com/2012/09/rights-and-liabilities-of-mortgagee-and.html
  4. https://www.google.co.in/search?q=images+mortgage&tbm=isch&tbo=u&source=univ&sa=X&ved=2ahUKEwjxt63JhOPdAhVJLI8KHRrmAxAQsAR6BAgGEAE#imgrc=heWby54uSXfIdM:
  5. Image Source: Nightingale Benefits