A mortgage is a transfer of interest in certain immovable property in order to secure loan advanced or to be advanced in the future. A mortgage deed is a document through which the mortgagor transfers an interest in real estate to a mortgagee for the purpose of providing a mortgage loan. The mortgage deed is the evidence of the interest transferred to the mortgage holder. It determines the terms and conditions between mortgagee and mortgagor.
A mortgage deed is required when an individual is loaning money from another person/business and is required to transfer interest in a property to such person.
A mortgage deed is essential as it consists of the obligations, terms and conditions between the mortgagor and the mortgagee. It determines the parties to the deed, the rights of the lender, the extent of interest and title over the property, states the loan amount along with rate of interest and of course, evidences that interest in the property has been transferred to the lender/mortgagee.
There are several kinds of mortgage in India. In a Simple mortgage, the property can be mortgaged without delivering its possession and the morgager binds himself personally to pay the mortgage-money, and in the deed agrees that in case the mortgager fails to pay in accordance with the deed/contract, the mortgagee will have a right over the mortgaged property. The latter can even sell this property.
Given below is a list of clauses/information that should be included in a mortgage deed:
The relevant personal details of the parties such as full name, residential addresses and ages of the parties to the agreement,
Details regarding the property in question,
Details regarding the extent of interest of the mortgagor and the mortgagee over the mortgaged property,
Details regarding the modes and conditions for repayment of the loan amount,
Duties and responsibilities of and between the parties,
Mortgage clause - stating the type of Mortgage the parties have agreed to,
Clause stating whether the mortgagor has the right to exercise possession over the mortgaged property or not,
Clause specifying the treatment of mortgaged property in the scenario where the mortgagor is declared insolvent,
Tenure of the mortgage deed as to when the mortgagor is entitled to get his/her property back,
Penalty clause explaining the details of what the penalty would be if either party defaults in fulfilling its duties in accordance with the agreement/deed,
General clauses such as applicable laws, dispute settlement clause, confidentiality, amendment clause, etc., and
Date of signing of the agreement.
Draft of Simple Mortgage Deed
This Deed of Mortgage made at ...................... this ................ day of ................... Between X, son of ............................... resident of ............................ hereinafter called as a mortgagor of the ONE PART and Y, son of ...................... resident of .................. hereinafter called as a mortgagee of the OTHER PART.
WHEREAS, the mortgagor is absolutely seized and possessed of or otherwise well and sufficiently entitled to the house bearing municipal no................ situated on ........................ Road, ....................... more particularly described in the Schedule hereunder written;
AND WHEREAS, the mortgagor has requested the mortgagee to lend him a sum of Rs. ........................ which the mortgagee has agreed on the mortgagor mortgaging his property.
NOW,This Deed Witnesseth That in pursuance to the said agreement and in consideration of the sum of Rs. .................. at or before the execution of these presents paid by the mortgagee to the mortgagor (the receipt whereof, the mortgagor doth hereby admit and acknowledge and of and from the same hereby release and discharge the mortgagee), the mortgagor hereby covenants with the mortgagee that he will pay on the ..................... day of ................. (hereinafter called "the said date"), the said sum of Rs. ................. with interest @ ........ % per annum from the date of these presents till the repayment of the said sum in full, every quarter the first instalment of interest to be paid on the ................... day of .......... 20___ and each subsequent instalment on the ................ day of July, October, January and April of each succeeding year until the said sum is repaid in full.
AND this deed further WITNESSETH that
In consideration aforesaid, the mortgagor doth hereby transfer by way of mortgage his house bearing municipal no ................. situated on .............. Road . ...................... and more particularly described in the Schedule hereunder written as a security for repayment of the said sum with interest @ ................ per annum with the condition that the mortgagor, his heirs, executors, administrators or assigns shall on the said the pay to the mortgagee, his heirs, executors, administrators or assigns the said sum of Rs .............. together with interest thereon at the rate mentioned above, the said mortgagee, his heirs, executors, administrators, or assigns shall at any time thereafter upon the request and at the cost of the mortgagor, his heirs, executors, administrators or assigns reconvey the said house, hereinbefore expressed to be mortgaged unto or to the use of the mortgagor, his heirs, executors, administrators or assigns or as he or they shall direct.
And It Is Hereby Agreed And Declared that if the mortgagor does not pay the said mortgage amount with interest when shall become due and payable under these presents, the mortgagee shall be entitled to sell the said house through any competent court and to realise and receive the said mortgage amount and interest, out of the sale proceeds of the house.
And It Is Further Agreed And Declared by the mortgagor that during the period, the mortgage amount is not paid and the said house remains as a security for the mortgage amount, the mortgagor shall insure the said house and take out an insurance policy in the joint names of the mortgagor and mortgagee and continue the said policy in full force and effect by paying premium and in case of default by the mortgagor to insure or to keep the insurance policy in full force and effect, the mortgagee can insure the said house and the premium paid by the mortgagee will be added to the mortgage amount, if not paid by the mortgagor on demand.
And It Is Further Agreed That the mortgagor can grant lease of the said house with the consent of the mortgagee in writing.
And It Is Further Agreed by the Mortgagor that he shall bear stamp duty, registration charges and other out of pocket expenses for the execution and registration of this deed and reconveyance deed but however each party will bear cost and professional charges of his Solicitor/Advocate.
IN WITNESS WHEREOF the parties have put their hands the day and year first hereunder written.
The Schedule above referred to
Signed and delivered by X the within named mortgagor
Signed and delivered by Y the within named mortgagee
WITNESSES;
1.
2
No specific documents are required in order to draft and execute a mortgage deed. However, ID proofs of the parties in order to confirm the names and permanent addresses of the mortgagor and mortgagee should be scrutinised. Documents evidencing clear title of the property of the mortgagor in question should also be examined. These documents include PAN card, Aadhaar card, passport, property documents, Voter ID card, Driving license, etc.
A simple mortgage deed for an immovable property shall be drafted with the help of a lawyer. There are several legalities and clauses that must be included in your mortgage deed so as to avoid future legal troubles. A mortgage deed must be registered in accordance with the prevalent laws, otherwise such transfer would be rendered as invalid.
No set procedure is applicable in the making of a simple mortgage deed. However, once the contract has been drafted by a lawyer, it should be specifically and carefully read by both the parties to the transaction. Any necessary changes required to be made shall be carried out and once the agreement is finalised, it shall be signed by both the parties along with the requisite witnesses. The said agreement has evidentiary value when it is printed on stamp paper and signed by both the parties. The stamp paper value (if relevant) depends on the particular State in which it is executed. Each party should thereafter keep a signed copy of this mortgage deed.
A mortgage deed should be properly stamped and duly registered to have legal/evidentiary validity. A simple mortgage deed must be signed, registered and attested by at least 2 witnesses. If these steps are excluded, it is equivalent to not having an agreement/deed in the first place. The kind of attestation and registration required, depend upon the kind of mortgage. Nominal stamp duty must also be paid - depending upon the State in which the property is located in.
One of the first and the most important steps that you must undertake is to hire a good documentation lawyer as he/she is aware of the nitty gritty of the legal procedures and necessary requirements involved in drafting of simple mortgage deeds. A lawyer would draft such an agreement, better than you can yourself as he/she has the necessary legal knowledge and experience to handle and draft documents. He/She will be able to guide you and draft for you according to your particular situation - the facts, circumstances, business risks and needs involved. A documentation lawyer is aware of good drafting technique and the clauses that must be included in your mortgage deed. Hiring a good lawyer in order to draft such important legal documents is a prerequisite and will help you in more ways than one.
Loan agreement sample document
Leave and license agreement sample document
Franchise agreement sample document
Agreement for sale of a house sale agreement sample document
Partnership deed sample document
Security bond by a surety sample document
Memorandum of understanding mou sample document
Simple mortgage deed sample document
Separation agreement between husband and wife sample document
Legal Notice for Breach of Trust
Free Legal Document - Banking / Finance
View Document
Legal Notice for Cancellation of Sale Agreement
Free Legal Document - Banking / Finance
View Document
Legal Notice for Non-performance of a Contract
Free Legal Document - Banking / Finance
View Document
Agreement for Sale of a House (Sale Agreement)
Free Legal Document - Banking / Finance
View Document