Mortgage Deed Clauses
By any reason person need of amount but he/she does not have that amount, in this case, that person is taking the loan/amount against to any collateral(like property, gold, share etc.) from bank then there is the one agreement between Mortgagee( i.e. bank, Lender etc) and mortgagor(borrower/the person who needs loan) that is called as mortgage deed.
The following are some of the important clauses that need to be included in the Mortgage Deed:
1. Details of the Parties
In the mortgage deed, it is necessary to specify the name of the mortgagor and the mortgagee. The mortgagor is the person who transfers the interest of his property as collateral to take out a loan, while the mortgagee is the person to whom such interest is transferred.
2. Description of the Deed
It is necessary to specify the title of the deed in capital letters for example “THE DEED OF MORTGAGE.”
3. Details of the property
All material descriptions of a mortgaged property should be stated in this clause. For example, it should mention the position of the property, the value of the property, its specification, and all the material details that need to be disclosed.
In a contract, the recitals are the introductory statements revealing the parties' intention to enter into the contract. It usually starts with a sentence like “Whereas the mortgagor has agreed” or “whereby the mortgagor has the rights”.
The quality or extent of the mortgagee and the mortgagor interest in the mortgaged property is determined by this specific clause. The clause specifies the rights the mortgagee will enjoy over the land. As per the deal, it also limits the mortgagee's rights.
6. Covenant for repayment
The methods and conditions for repaying the amount of the loan are specified in this clause. The clause also recites the consideration and tenure for the mortgaged money to be repaid.
7. Mortgage Clause
This clause highlights the type of mortgage agreed upon by the parties. As all the rights and obligations of both parties depend on the type of mortgage under which the property is being mortgaged, this is the most essential clause of the mortgage deed.
The clause also describes the duty of the mortgagee and mortgagor like:
In the case that the mortgagee has repaired the property, if given in the contract, he may claim the money from the mortgagor.
The mortgagor holder must pay all other costs.
If it is clearly specified in the clause that, without the prior permission of the mortgagee, the mortgagor is unable to lease the mortgaged land, the former can not do so without the latter's consent.
The clause decided whether or not the mortgagor had the right to exercise possession of the mortgaged property. It also depends on the type of mortgage you want to mortgage the property.
9. Title deeds
The above clause explains to the mortgagee what title deeds need to be transferred. If the clause provides that all the title deeds relating to the mortgaged property must be issued to the mortgagee, therefore all the documents relating to the title deed must be transferred to the mortgagee by the mortgagor.
In the mortgage deed, this clause is an integral provision since it defines the disposition of mortgaged property in the event of the mortgage being rendered insolvent.
11. Required Documents
In this clause, all the documents which are necessary for making the deed valid and identifying the parties are specified. For e.g.: PAN card, Adhar card, Passport, Bank passbook, Property Documents, Voter’s ID, Driving License.
12. Redemption clause
Once again, redemption is the most significant and basic right of mortgage holders. It is an important attribute of a mortgage transaction. The provision specifies the tenure of the mortgage deed as to when the mortgagor is entitled to return his property.
13. Attestation and stamp duty
It is important to state that, in order to have legal validity, the mortgage deed is properly registered and stamped. In the case of a simple mortgage, it is equivalent to not getting a contract in the first place if the deed is not signed, recorded and approved by at least two witnesses.
14. Interest rates
We have to be very careful about the interest rates charged on a mortgage. It's a fixed rate sometimes, but sometimes the rates will fluctuate, which is a matter of concern.
But you have to carefully look at the interest rates in the agreement if you sign any mortgage agreement.
15. Amendment clause
Such clauses can be entirely contrary to the mortgagor's interest because, in the case of a party's default, they grant the mortgagee the right to amend the clauses of the agreements.
16. Lease Clause
This clause allows the mortgagor to lease the mortgaged property with the prior permission of the mortgagee. This clause is beneficial for the mortgagor.