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Simple Mortgage Deed



    What is Simple Mortgage Deed?

    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. 

    Why is Simple Mortgage Deed required?

    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. 

    What should a Simple Mortgage Deed cover?

    Given below is a list of clauses/information that should be included in a mortgage deed:

    1. The relevant personal details of the parties such as full name, residential addresses and ages of the parties to the agreement, 

    2. Details regarding the property in question, 

    3. Details regarding the extent of interest of the mortgagor and the mortgagee over the mortgaged property,

    4. Details regarding the modes and conditions for repayment of the loan amount,

    5. Duties and responsibilities of and between the parties,

    6. Mortgage clause - stating the type of Mortgage the parties have agreed to,

    7. Clause stating whether the mortgagor has the right to exercise possession over the mortgaged property or not, 

    8. Clause specifying the treatment of mortgaged property in the scenario where the mortgagor is declared insolvent,

    9. Tenure of the mortgage deed as to when the mortgagor is entitled to get his/her property back,

    10. 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, 

    11. General clauses such as applicable laws, dispute settlement clause, confidentiality, amendment clause, etc., and

    12. Date of signing of the agreement.

    Documents Required for Simple Mortgage Deed

    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. 

    Procedure for Simple Mortgage Deed

    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.

    How can a lawyer help to draft Simple Mortgage Deed?

    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.

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