spot_img

Conditional Sale Mortgage

Mortgage by conditional sale is defined under Section 58(c) of Transfer of Property Act, 1882.

In mortgage by conditional sale the mortgagor sells the property to the mortgagee under certain conditions- on the failure of repayment before the due date or repayment of mortgage amount; the sale will remain invalid or mortgagee shall retransfer the property to mortgagor after repayment.

It is a type of mortgage where there occurs an ostensible sale, which is converted into absolute sale in the event that the ostensible seller is unable to repay the loan. The ostensible seller in such a mortgage incurs no personal liability as far as the debt is concerned.

CONDITIONS PLACED BY MORTGAGEE

In this mortgagee places three conditions to the mortgagor, and the mortgagee shall have the right to sell the property if:

  • mortgagor defaults in payment of mortgage money on a certain date.
  • as soon as the payment is made by the mortgagor the sale shall become void.
  • on the payment of money by the mortgagor, the property is transferred to the seller.

Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.

A mortgage by conditional sale is required to be evidenced by atleast one document.

Thus, in nutshell, conditional sale mortgage is a mortgage which appears to be a sale with a condition that the property sold would be transferred back to the original owner on the repayment of the loan.

Also Like:

LEAVE A REPLY

Please enter your comment!
Please enter your name here

🤩 🥳 SPECIAL MAKAR SANKRANTI OFFER 🥳 🤩spot_img

POPULAR POST

RELATED ARTICLES

Provision Coverage Ratio in detail

To tackle the NPA or bad assets problem in the banking sector, RBI has designed several mechanisms. Among these, the most important one is...

What is FEMA Act 1999 ?

Foreign Exchange Management Act, 1999 (FEMA) came into force by an act of Parliament & came into effect from 1st June, 2000. FEMA Act was...

Yield to Maturity ( YTM )

YTM is nothing but the internal rate of return (IRR) of a bond. It is also known as redemption yield. Yield to maturity is the...

Negative Lien in detail

WHAT IS LIEN ? A lien is a right of a person to retain a property which is in his ownership or possession till such...