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English Mortgage

The English Mortgage is one of the six categories of mortgages defined under the Transfer of Property Act, 1882 (TPA). It is a highly secure form of mortgage for the lender because it involves the complete transfer of the property's legal title to the mortgagee, coupled with a personal covenant (promise) from the borrower to repay the loan on a fixed date.

1. Statutory Definition (TPA Section 58(e))

The English Mortgage is defined in Section 58(e) of the TPA as:

"Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage."1

Key Characteristics

  1. Personal Covenant to Repay: The mortgagor (borrower) explicitly binds himself to repay the debt on a specified, fixed date. This gives the mortgagee a direct right to sue the borrower personally for the debt.

  2. Absolute Transfer of Title: The mortgagor transfers the legal ownership (title) of the mortgaged property absolutely to the mortgagee (lender). This is the defining feature, although the transfer is not permanent; it is conditional upon non-repayment.

  3. Proviso for Re-transfer: The absolute transfer is subject to a proviso (condition) that, upon full repayment of the mortgage money on the specified date, the mortgagee must re-transfer the property back to the mortgagor.

  4. Possession is Not Essential: Unlike a Usufructuary Mortgage, the English Mortgage does not require the transfer of physical possession of the property to the mortgagee. The mortgagor usually retains possession.

2. Distinction from Other Mortgages

The distinct nature of the English Mortgage lies in its combination of absolute transfer (like a sale) and a personal promise to repay.

A. Vs. Mortgage by Conditional Sale (Section 58(c))

The English Mortgage superficially resembles a Mortgage by Conditional Sale, as both involve a transfer of ownership. However, they differ in a critical way:

  • English Mortgage: The transfer is absolute, but there is a proviso for re-transfer upon payment. The remedy is always Sale (selling the property to recover the debt).

  • Mortgage by Conditional Sale: The sale is only ostensible (apparent). If the debt is not paid, the sale becomes absolute, and the mortgagee's remedy is Foreclosure (acquiring absolute title without sale or court intervention).

B. Vs. Simple Mortgage (Section 58(b))

The two are distinct regarding the nature of the transfer:

  • English Mortgage: Transfers the legal title (ownership) to the mortgagee.

  • Simple Mortgage: Does not transfer title or possession; it merely transfers a limited interest—the right to sell the property through the intervention of the Court.

3. Remedies and Legal Implications

A. Remedies Available to the Mortgagee

The unique structure of the English Mortgage grants the mortgagee two powerful remedies simultaneously:

  1. Right to Sue (Personal Covenant): The mortgagee can sue the mortgagor personally for the mortgage money because the mortgagor has expressly promised to repay the loan by a fixed date.

  2. Right to Sell (Power of Sale): The mortgagee has the right to sell the mortgaged property without the intervention of the Court upon default, provided the necessary conditions under Section 69 of the TPAare met (e.g., proper notice). This remedy is a significant advantage over a Simple Mortgage, where judicial intervention is required for sale.

B. Right of Redemption

Despite the "absolute" transfer of title to the mortgagee, the mortgagor retains the Right of Redemption(Section 60, TPA). This fundamental right ensures that the mortgagor can recover the title to the property upon full repayment of the principal, interest, and costs, upholding the maxim: "Once a mortgage, always a mortgage."

4. Conclusion

The English Mortgage remains one of the most powerful forms of security for a lender under the TPA. By transferring the legal title to the lender while leaving the borrower with the equitable right of possession and the personal obligation to repay by a fixed date, it maximizes the lender's security and provides efficient remedies upon default, making it suitable for straightforward, time-bound loan arrangements.

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