borrowings against property presentation - unitedworld school of business

7/28/2019 Borrowings Against Property Presentation - Unitedworld School of Business

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BORROWINGS

AGAINSTPROPERTY


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CONTENTS : Loan against property Pledge Hypothecation

Lien Mortgages Types of mortgages

Reverse mortgages Registration charges Rights and liabilities of parties


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Kind of properties can be mortgage for a loan: Normally loan is taken against self-occupied or rented

residential property. This could be a house or even a piece of land.

The eligibility criteria to get a loan against property:This criteria will vary from one bank to another. However, fromall the host of factors, the common factors that all banks look atare:

Your income, savings, debt obligations Cost/value of the property mortgaged Your repayment track record for other loans, credit cards etc.


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The normal interest rates and tenure forrepayment offered for a loan against property are:Interest rates on loan against property range from 12% -15.75%and the loan tenure can be up to 15 years.

A loan against property is one of the best ways to raise money.The only disadvantage of such a loan is that if the borrower is not

able to pay the loan fully, the bank or the financial institutioncan take possession of the mortgaged property


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Pledge

The bailment of goods as security for payment of a debt or

performance of a promise is called pledge.

The person delivering the goods is called pledger orpawnor and the person to whom they are delivered is called

the pledgee or pawnee.

A pledge is a bailment for security.

Example- A borrows Rs.200 from B and keeps his watch as

security for payment of the debt, the bailment ofwatch is a pledge.

Any kind of movable property , i.e., goods, documents, orvaluable may be pledged.


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Rights of pawnee

1. Right of retainer (sec. 173)2. Right to extraordinary expenses (sec.175)3. Right against true owner, when the pawnors title is defective

(sec.178)4. Pawnees rights where pawnor makes default (sec.176)

Rights of pawnor

1. Right to get back goods.2. Right to redeem debt (sec.177)3. Preservation and maintenance of the goods.4. Rights of an ordinary debtor.


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Duties of pawnee

1. To take reasonable care of the goods (sec.151)2. Not to take any unauthorised use of goods (sec.154)3. Not to mix the goods pledged with his own goods

(sec.156 and sec.156)

4. To return the goods (sec.161)

Duties of pawnor

1. To disclose known faults (sec.150)2. To bear extraordinary expenses (sec.158)3. To receive back the goods.4. To indemnify the pawnee (sec.164)


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Hypothecation is the practice where a borrower

pledges collateral to secure a debt or a borrower, asa condition precedent to a loan, has a third party(usually an affiliate) pledge collateral for theborrower. The borrower retains ownership of thecollateral, but it is "hypothetically" controlled bythe creditor in that he has the right to seizepossession if the borrower defaults. A common

example occurs when a consumer enters into amortgage agreement, in which the consumer'shouse becomes collateral until the mortgage loanis paid off.


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Sec. 58 of the Transfer of Property Act,1882 defines mortgage as -A mortgage is the transfer of an interest in specificimmoveable property for the purpose of securing the

payment of money advanced or to be advanced by way ofloan, an existing or future debt, or the performance of anengagement which may give rise to a pecuniary liability.

The transferor is called a mortgagor, the transferee a

mortgagee; the principal money and interest of whichpayment is secured for the time being are called themortgage-money, and the instrument (if any) by whichthe transfer is effected is called a mortgage-deed.


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Simple Mortgage

Mortgage by Conditional Sale

Usufructuary Mortgage

English MortgageMortgage by deposit of title of deeds

Anomalous Mortgage


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Simple Mortgage -

In a Simple mortgage, the possession of the mortgaged property is nottransferred from mortgagor to the mortgagee.

If the mortgagor fails to repay the loan, the mortgagee has the right to sellthe property and recover the loan from the sale amount.

Mortgage by Conditional Sale -

Under such Mortgage, the mortgagor apparently sells the property to themortgagee on certain conditions -

1.On failure to repay the mortgage money before a certain date the saleshall become absolute,or

2.On condition that on such repayment of mortgage money the sale shallbecome invalid,or3.On condition that on such repayment the mortgagee shall retransfer theproperty.

In such case, the mortgagee is a "mortgagee by conditional sale".


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Anomalous mortgage -Anomalous mortgage is a combination of different types ofmortgages.

\In the US, concept ofReverse Mortgage is fast catching up-

Meaning - A reverse mortgage loan is a loan where the

lender pays the monthly installments to you instead of youmaking any payments to the lender. Hence the name reversemortgage, as the payment stream is reversed. A Reversemortgage enables senior citizens to convert their home equity

into tax-free income. Reverse mortgages enable eligiblehomeowners to access the money they have built up as equity intheir homes. They are primarily designed to strengthen seniorspersonal and financial independence by providing funds withouta monthly payment burden during their lifetime in their home.


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The fees associated with getting the legal titleregistered in the name of owner. This legal processtakes place in the sub-registrars office

Registration charges are paid under the section 860


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The register must contain short description of theproperty charged

The amount of the charge

The name of the person entitled to the charge, etc. The company must keep at its registered office, a copy

of every instrument creating any charge requiring theregistration.

The company should register the charges within 30days of the creation of the charges.


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A charge for the purpose of securing any issue of anydebentures

A floating charge A charge on uncalled share capital

Charge on calls made but not paid A charge on any immovable property A charge on ship A charge on book debts of the company A charge on goodwill or on patent or on license under the

patent or on trademark or copyright or on the license underthe copyright

A charge other than a pledge on any movable property ofthe company.


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Once a charge is registered, it acts as a notice to thepublic at large that the charge holder has an interest inthe charged property. No person can take a defenceagainst the charge holder that he was not aware that a

charge was created against the property. That personwill be entitled to the property subject to the interestof the charge holder. Once certificate of charge isissued by the Registrar, it is conclusive evidence that

the document creating the charge is properlyregistered.


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A charge which is compulsorily registrable but which isnot registered is void.

Omission to registrar particulars of charge is required

punishable with fine. It damages the interest of creditor in whose favour the

charge is created.


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Rights and Liabilities of a Mortgagor

The rights and liabilities of a mortgagor under amortgage are as under:

I. Right of mortgagor to redeem

II. Obligation to transfer to third party instead ofre-transference to mortgagor.

III. Rights to inspection and production ofdocuments


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Rights And Liabilities Of The Mortgagee

The rights and liabilities of a mortgagee are asunder:

Right to foreclosure for sale.

Right to sue for mortgage money Right of power of sale of mortgaged property Right to appoint a receiver Right to accession to mortgaged property

Right to the benefit of the renewed lease Right of mortgagee in possession


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907/A Uvarshad,GandhinagarHighway, Ahmedabad 382422.

Ahmedabad Kolkata

Infinity Benchmark, 10thFloor, Plot G1,Block EP & GP,Sector V, Salt-Lake,Kolkata 700091.

Mumbai

Goldline Business CentreLinkway Estate,Next to Chincholi FireBrigade, Malad (West),Mumbai 400 064.


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borrowings against property presentation - unitedworld school of business

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