In mortgage by deposit of title deeds, there is simply a deposit of the document of title without anything more, without writing or without any other such formalities. This title deed creates a security. * How is this mortgage by deposit of title deed more useful? If a person is faced with the sudden necessity of money and has no time in hand to prepare a mortgage- deed , this type of mortgage is an expedient way evolved by the legislature- a way which does not require the lengthy process of registration under registration act or a written transaction. All that is required is – 1. A debt, existing or future one. By way of present or future advances – for e.g. building a house. 2. Deposit of title deeds
3. An intention that the title deed shall be security for the debt. There is no presumption that mere deposit constitutes a mortgage. Oral, documentary or circumstantial evidence is looked into.
* What are the modes of depositing the title deeds?
1. The simplest way is the physical delivery of documents by debtor to the creditor. 2. There may be a constructive deposit. It is ascertained by the court whether in substance, there is a delivery or not. Suppose a bank already has the title deeds, it is seen whether the parties agreed to treat the documents for the purposes of mortgage. Few important points.
1. No registration – It is not necessary that the transaction is recorded. It is generally accompanied by memorandum in writing. This writing can be a mere statement that mortgage has been effected. If this written statement is actually a contract of mortgage , then it must be registered. So two basic things in regard to registration of such mortgage are i. The borrower may simply hand over or physically deliver his title deeds to the lender with and intention of constituting a security, no registration or written evidence required. ii. If the borrower and lender want to reduce their bargain...