A usufructuary mortgage is a form of ownership in which the owner of land gives the right to use that property to another person. The person who owns the property is known as the usufructuary and usually, it is done for commercial purposes or for an exchange of money.

What is a Mortgage? 

   Section 58 of the Transfer of Property Act Defines Mortgage, According to Said section 58 (a) A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being arc called the mortgage money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed. 

Must Read : Mortgage: Rights of a Mortgagee | Property Law

What is a Usufructuary Mortgage?

     As per Section 58(d) of the Transfer of Property Act 1882, where the mortgagor delivers possession expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorizes him to retain possession until payment of the mortgage money, and to receive the rents and profits accruing from the property or any part of such - rents and profits and to appropriate the same in lieu of interest, or in payment of the mortgage-money, or partly in lieu of interest (or) partly in payment of the mortgage-money the transaction is called a usufructuary mortgage and the mortgagee is called as a usufructuary mortgagee.

Characteristics of the Usufructuary Mortgage - 

The characteristics of the usufructuary mortgage are -

(1) The possession of the property is delivered to the mortgagee

(1) The Mortgagee is to get rents and profits in lieu of interest or principal or both

(n) No personal liability is incurred by the mortgagor and

(iv) The mortgagee cannot foreclose or sue for sale Thus, in a usufructuary mortgage, the mortgagor hands over physical possession of the property to the mortgagee and does not take any kind of personal responsibility regarding the payment of the mortgage money and interest The mortgagee himself has to utilize rents and profits accruing from the property for the satisfaction of his mortgage entitled to remain in possession of the property. In a usufructuary mortgage, no time limit is fixed during which the mortgage is to subsist because it is difficult to predict within what time the debt will be satisfied. The mortgagee is supposed to maintain an account of rents and profits obtained by him Where the mortgagor fails to deliver possession of the property, the mortgagee, can sue for possession or for recovery of money advanced But if he has got possession, his remedy is to retain property till his debts are satisfied and he does not have the remedy of foreclosure. 

See Also...

1. Explain the general principles relating to secured loan. 

2. Sale of Immovable Property, Rights, and Liabilities of Buyer and Seller

3. Kinds of Property | Property Law 

4. Difference between Corporeal Property and Incorporeal Property

5. The Doctrine of Novation, Kinds of Novation 


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