Useful Notes on “Mortgage and Lien”

A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the pay­ment of money advanced by way of loan.

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A lien is the right to holds the property of another as security for performance of an obligation.

Mortgage:

1. It is a form of security cre­ated by act of parties, i.e., by means of contract between the parties.

2. It is an independent or prin­cipal right and is not a mere se­curity for another right.

3. It can remain outstanding even after the extinction of the debt. In such an event the mort­gagor has a right of reassignment or surrender of his mort­gage, called the equity of redemption.

4. There is a transfer of inter­est in specific immovable prop­erty from the debtor to the credi­tor.

5. It is created cither by trans­fer or by encumbrance.

6. Where mortgage is created by transfer of the debtor’s right to the creditor, the debtor is the ben­eficial or equitable owner; on payment of the debt the mort­gagee becomes a mere trustee.

7. The mortgagee’s right is vested conditionally by way of security and subject to redemp­tion by the mortgagor.

1. Possession:

We have seen earlier while studying possession that it is the objective realisation of ownership. It is prima facie evi­dence of ownership. A person in possession cannot be disturbed from his possession by anyone except the true owner and the true owner also cannot dispossess him forcibly but only by a due process of law. If, however, the property belongs to no one, i.e., is res nullius, it confers good title on the possessor as against the entire against world.

2. Prescription:

Prescription means the lapse of such time as can in law creates or extinguishes rights. It is thus the vesting of a right by reason of lapse of time. It is of two kinds: positive or acquisitive and negative or extinctive.

The former operates to create a right; the latter tends to destroy the same by the lapse of time. Thus, the exercise of a right over the property of another, if continued for 20 years without interruption, peaceably and openly and as of a right, results in acquisition of a right which is an example of positive prescription.

Similarly, if I do not sue my debtor for three years after my debt became first due; my right to sue is destroyed. This is negative pre­scription. Long possession creates rights and long want of possession destroys them. If a person holds land adversely to the owner, after 12 years the right of the owner, for want of possession, is extinguished and is vested in that person.

Positive prescription relates to possession of rights and applies only to such rights which admit of possession. But negative prescrip­tion applies even to rights in personam or obligation. Thus, the right to sue is destroyed after the lapse of a particular time, but there cannot be a positive prescription created by the extinction of the remedy.

Negative Prescription is of Two Kinds:

(i) Perfect when it de­stroys the principal right itself, as extinction of ownership by adverse possession of the immovable property for a length of time, and (ii) imperfect when it destroys the right of action only, the principal right remaining in existence. Thus, the right to sue in case of promissory note is destroyed after the lapse of three years, but the debt itself is not extinguished thereby.

The rational basis of prescription lies first in the presumption that possession coincides with owners. Owners are mostly possessors and possessors are mostly owners. The longer, therefore, a man re­mains in possession, the stronger is the presumption that he is the owner.

Secondly, long delay may obliterate all evidence and this fact may tend to the prejudice of justice. Another justification for this rule is provided in the maxim vigilant bus, non dormentibus jura sub- veniunt. The laws assist those who are watchful and vigilant and not those who slumber over their rights.

3. Agreement:

The third mode of acquisition of property is by agreement. It is the result of a bilateral juristic act. It is of two kinds’ assignment and grant.

By assignment the existing rights are transferred from one owner to another. By grant is meant the assurance or transfer of the ownership of property, as distinguished from the delivery or transfer of property itself. A conveyance is a deed of grant.

The general rule is that the title of the transferee by agreement, i.e., grant or assignment, cannot be better than that of the transferor on the principle nemo dat qua non habet, i.e., no man can transfer a better title than he himself has.

There are two exceptions to the maxim: (1) The transferee gets a good title from a trustee who in fraud of his trust sells trust property, provided the transferee has purchased it for value and without notice of the equitable claim of the beneficiary; and (2) where possession is of one man and the ownership of it is in another, the possessor can transfer in certain cases a better title, provided the transferee obtains in good faith believing him to be the owner.

The possessor of a negotiable instrument, say a bearer cheque, may have no title to it but he can give a good title to anyone who takes it from him for value and in good faith. Similarly, mercantile agents in pos­session of the goods can transfer good title, whether they are author­ised to sell them or not.

Inheritance:

On the death of a person certain rights survive him and pass on to heirs and the rest die with him. Those which survive him are tailed heritable rights and those which do not survive him are called uninhabitable. Proprietary rights are inheritable as they possess some economic value, while personal rights ‘are uninhabitable as they constitute his statute as opposed to his estate.

There are exceptions to this rule. Personal right may not die in the case of hereditary titles and proprietary rights may be uninhabitable in case of a lease for the life of the lessee or in joint ownership where the survivor acquires an exclusive title in right of his survivorship.

Succession of a person’s property may be either testate (i.e., by means of a will) or intestate, i.e., without leaving a will. The former is testamentary succession while in the latter succession takes place by operation of law. The testamentary capacity of a person is limited by three kinds of restrictions:

1. Limitation of time:

A will that controls devolution of the estate in perpetuity is void. Under section 14 of the Transfer of Prop­erty Act, the testamentary direction must not offend the rule against perpetuity which lays down that the property cannot be tied up for life in being and 18 years after. It is 21 years in English law.

2. Limitation of amount:

In most legal systems a testator can determine the disposition of only a part of estate by his will, the remainder being reserved by law for the benefit of his dependants. Thus, a Mohammedan cannot, after providing for his funeral expenses and any payment of debt, bequeath more than one-third of the surplus of his estate, unless his heirs consent thereto after the death of the testator.

3. Limitation of purpose:

Any purpose in a testamentary dis­position of property intended to operate against the interests of human­ity by directing that the property of the testator shall lay waste will not be given effect to by law. Thus, direction by a dead person to bury the money along with him or to deposit the same in the sea-bed is void.