The kinds of mortgages are;
- Simple mortgage,
- Mortgage by conditional sale,
- Usufructuary mortgage,
- English mortgage,
- Mortgage by deposit of title deeds, and
- Anomalous mortgage
These are described below;
A simple mortgage is one where;
Without delivering possession of the mortgaged property, the mortgager binds himself personally to pay the mortgage money and agrees expressly or impliedly that in the event of his failure to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of the sale to be applied so far may be necessary, m the payment of the mortgage money.
However, the mortgagee cannot directly sell the property. The sale must be through the intervention of the court.
The mortgagee will have to obtain first a decree from the court for the sale of the mortgaged property since the words used are “cause the mortgaged property to be sold”.
Mortgage by conditional sale
Mortgage by conditional sale is one where the mortgagor ostensibly sells the mortgaged property on the condition that –
- On default of payment of the mortgage money on a certain date the sale shall become absolute, or
- On such payment being made the sale shall become void, or
- On such payment being made the buyer shall transfer the property to the seller.
A usufructuary mortgage is one where the mortgagor delivers or agrees to deliver the possession of the mortgaged property to the mortgagee and authorizes him –
- To retain such possession until payment of the mortgage money,
- To receive the whole or any part of the rents and profits accruing from the property, and
- To appropriate such rents or profits; (i) in lieu of interest, or (ii) in payment of the mortgage money, or (iii) partly in lieu of interest and partly in lieu of the mortgage money.
English mortgage has the following characteristics:
- The mortgagor makes a personal promise to repay the mortgage money on a certain day.
- The property mortgaged is transferred to the mortgagee absolutely. The mortgagee, therefore, is entitled to take immediate possession of the property. He/She may, under certain circumstances sell the mortgaged property without the intervention of the court.
- The transfer is subject to this condition that the mortgagee will re-transfer the property to the mortgagor upon making payment of the mortgage money as agreed.
Mortgage by deposit, of title deeds
Where a person delivers to a creditor or his/her agent documents of title to immovable property, with the intention to create a security thereon, the transaction is called a mortgage by deposit of title deeds-. This mortgage does not require registration. It is the most popular with banks.
A mortgage other than any of the mortgages explained so far. Is an anomalous mortgage. Such a mortgage includes a mortgage formed by combination of two or more types of mortgages as explained above.
It may, therefore, take various forms depending upon custom, local usage, or contract.