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Right of Redemption - Once a mortgage always a mortgage

Doctrine of redemption is not a new doctrine. Its origin can be traced from Anglo-Saxon and Roman law.Right of Redemption The practice of securing land for payment of money in English law dates back to Anglo-Saxon England when interest loans were illegal. Borrower conveyed estate to lender in consideration of a loan and lender reconvened estate to borrower on redemption.

Section 60 and 91 of the Transfer of Property Act 1882 deals the redemption and who may redeem or institute a suit for redemption. In simple words redemption means the return or repossession of property offered as security upon payment of mortgage debt or a charge. Right of Redemption means right of mortgagor against mortgagee to redeem mortgaged-property. Under Transfer of Property Act, at any time after principal money has become due when mortgage-money is paid or tendered at a proper time and place, mortgagor has following right against mortgagee:

1. Delivery of Mortgage-deed-Mortgagor possesses right to require mortgagee to deliver to mortgagor mortgage-deed and all those documents, which are relating to mortgaged-property and which are in possession or power of mortgagee.

2. Delivery of Mortgaged-property-Mortgagor possesses right to require mortgagee to deliver possession of mortgaged-property to mortgagor when mortgagee is in possession of mortgaged property.

3. Re-transfer of Mortgaged-property-Mortgagor possesses right to require mortgagee to re-transfer mortgaged property to mortgagor or to such third person as mortgagor directs. However, such re-transfer is done at cost of mortgagor.

4. Extinguishment of Mortgagee’s Interest-Mortgagor possesses right to require mortgagee to execute and to have registered on acknowledgement in writing that any right in derogation of mortgagor’s interest, which has been transferred to mortgagee, has been extinguished. However, such a know judgment should be registered in that case where mortgage has been effected by a registered instrument.

Clog on Redemption

Clog on equity of redemption means anything which debars a mortgagor from his exercise to redeem. Where an obligation continues during the term of the mortgage and beyond, which renders the property mortgaged less available in the hands of its owner apart from the realisation of the mortgage debt, it is a clog on the equity of redemption. Clog on the equity of redemption is a restriction on the exercise of the right to redeem. A mortgagor has under section 60 (which does not mention the words in the absence of a contract to the contrary) a right to redeem the mortgaged property at any time after the mortgage money has become payable. A mortgage is a transfer of an interest in specific immovable property as a security for the payment of debt or the discharge of some other obligation for which it is given. The security is redeemable on the payment or discharge of such debt or obligation. Any provisions inserted in the mortgage deed to prevent redemption on payment of the mortgage money in performance of the debtor’s obligation for which the security was given is what is meant by clog or fetter on the equity of redemption and is therefore, void. The mortgagor cannot even be contract at the time of mortgage given up his right of redemption to fetter it in any way. Anything that debars him from exercising his right to redeem is called clog on the equity of redemption. It follows from this “once a mortgage is always a mortgage.”

View of lord Macnaghten-Redemption is of the very nature and essence of a mortgage as mortgages are regarded in equity. It is inherent, in the thing itself, and it is, I think, as firmly settled now as it was in former times that equity not permit any device or contrivance designed or calculated to prevent or impede redemption. It follows as a necessary consequence that where the money secured by a mortgage of land is paid off, the land itself and the owner of the land in the use and enjoyment of it must be as free and unfettered to all intents and purposes as if the land had never been made subject of the security.

View of lord Davey-The principle is this that a mortgage must not be converted into something else, and when once your come to the conclusion that a stipulation for the benefit of the mortgagee is part of the mortgage transaction, it is but part of his security and necessarily comes to an end on payment of the loan.

Instances of clogs on the equity of Redemption

Mortgagor will have no right of redemption

The condition that the mortgagor will not have any right of redemption is a clog as it defeats the equity of redemption.

Mortgagor shall not alienate property

A stipulation that the mortgagor shall not alienate the property pending the mortgage is incapable of enforcement.

Redeeming the mortgage by paying money from his own pocket

A, mortgages his property to B and the time of mortgage contracts with B that A shall not alienate the property during the mortgage and will redeem the mortgage by paying the money from his own pocket and not by money raised by sale or mortgage of a property. This is a clog on redemption and is unenforceable.

Converting a mortgage into sale on default of payment

A condition converting a mortgage into a sale on default of payment is invalid as a clog on redemption.

Instances not amounting to clog

Condition of Sale

A condition of sale is clog if it is part and parcel of the mortgage transaction. Abut subsequent to the mortgage, the mortgagee may stipulate for the purchase of property from the mortgagor.

Long term for redemption

A long term for redemption is necessarily not a clog, e.g. a provision in the mortgage deed that the mortgage agree to certain terms as part of the contract of the mortgage and these terms are fair and advantageous to both the parties and are not inconsistent with or repayment to the contract itself, such a condition would not necessarily be construed as a clog on right of redemption.

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