Usufructuary Mortgage: Meaning, Features and Latest Updates

Table of Contents: 

1. What is Usufructuary Mortgage 
2. Features of Usufructuary Mortgage 
3. Latest Updates on Usufructuary Mortgage

A mortgagor, or a borrower, is the one who borrows money from a lender to buy a property. Recently, in India, the usufructuary mortgage has created a surge. The Supreme Court of India noticed that once a usufructuary mortgage is created, the borrower has the right to redeem the mortgage at any time. But with so much news around the world, people are still confused about what a usufructuary mortgage is. So, in order to bring light to the topic, we have created this blog to broaden your understanding. Continue reading this blog and discover the usufructuary mortgage's meaning and its characteristics. 

What is a Usufructuary Mortgage

Before understanding the usufructuary mortgage meaning, let's first get a glimpse of the mortgage. A mortgage is when a person borrows money from a certain person by pledging land to the lender as a security deposit. The word usufructuary is derived from the word "usufruct." The meaning of this Latin word is to "reap the benefits."

Now let's jump to the real meaning of usufructuary mortgage. A usufructuary mortgage is a type of mortgage in which the borrower delivers the possession and has the freedom to enjoy an income from the mortgagee's property. Nevertheless, the title deed still remains with the owner. 

Based on the Transfer of Property Act, there are 5 categories: Usufructuary Mortgage. It means that the lender has the liberty to enjoy certain benefits and rights over the security of the land. Let's understand more in-depth with the help of an example.

You may have noticed or heard how often a farmer mortgages his agricultural land. When he does, the lender has the right to demand production till the land is in his possession. 

Also Read: Mortgage Mistakes To Avoid When Buying A Home

Features of Usufructuary Mortgage

• The mortgagee has a right to use the property until the dues are finally paid off. 

• The mortgagee does not hold the right to sell the mortgaged property.

• The payment is not time-limited.

• The mortgagor has no personal liability involved.

• A stated or implied promise by the mortgagor to deliver such possession or delivery of possession of the mortgaged property.

 Also Read: Easy ways to pay off your mortgage faster.

The latest updates on Usufructuary Mortgage

The mortgagor may redeem the usufructuary mortgage at any moment, as the Supreme Court has reaffirmed. The High Court's decision to favour the mortgagor, allowing him to redeem the subject land, was challenged, but Justices Hemant Gupta and V. Ramasubramanian turned it down. 

The plaintiff filed a lawsuit seeking a declaration that she had become the owner following the extinction of the mortgage rights, as well as a permanent injunction because the mortgagor did not repay the mortgage within the allotted 30 years. The First Appellate Court upheld the same judgement. The Second Appellate Court rejected the case.

Also Read: Top 6 Differences Between Registered and Equitable Mortgages on Home Loans