What is Usufructuary Mortgage?

A mortgage is a way to buy a house without making the full payment at the time of purchase.

There are various types of mortgages and all play a unique role. In this answer, I will explain: What is usufructuary mortgage.

Usufructuary is a word derived from the Latin word  ‘usufruct’ which means Reap the benefits or to bear fruit. The meaning of  Usufructuary mortgage is that the borrower transfers the possession of his property to the lender. Then lender has the liberty to rent out the property or lease out the property to generate income. If the borrower is unable to transfer the possession to the borrower then he can ask his tenants to transfer the rent directly to the lender.

The usufructuary mortgage in transfer of property act

is also known as "Bare Mortgage" or "English Mortgage." It is a type of mortgage arrangement recognized in Indian property and real estate law.

It's a specific form of mortgage in which the borrower transfers the possession of the property to the lender while retaining the ownership of the property.

Here is the

usufructuary mortgage example

:

In a usufructuary mortgage, the borrower transfers the actual possession of the mortgaged property to the lender, as security for a loan.

Despite transferring possession, the ownership of the property remains with the borrower. The borrower is obligated to repay the loan amount along with interest. The lender collects the rent or income generated from the mortgaged property while in possession.

After the full repayment of the loan amount with interest, the lender returns the possession of the property to the borrower. If the borrower defaults on the loan, the lender has the right to sell the property to recover the outstanding loan amount.

A usufructuary mortgage is registered as per the requirements of the Registration Act, 1908. This deed should be registered with the local sub-registrar office.

This is all about

usufructuary mortgage in transfer of property act.

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Although new plans and mortgages have been introduced, in India,  usufructuary mortgages were in vogue during the mid-19th century. Due to natural calamities such as floods, drought or financial emergencies, farmers would go for financial aid by opting for usufructuary mortgages. So, what is usufructuary mortgage meaning. I will share a simple and easy definition with you.

Meaning of usufructuary mortgage:

There are different types of mortgages in India, those include:

• Simple Mortgage

• Usufructuary Mortgage

• English Mortgage

• Mortgage by conditional sale

• Mortgage by title deed deposit

• Anomalous mortgage

 I will primarily discuss What Is Usufructuary Mortgage with you.

The usufructuary is a type of mortgage where the lender can generate revenue by renting out. In this condition, if an individual mortgages agricultural land to the lender, the lender can have full control over the production of the land. 

One thing we must know about Usufructuary Mortgage is that lenders can only take money from the borrower through rents and profits coming directly from the property. In any condition, the lender cannot sell or foreclose the property. After the lender gets the money back, the borrower should get his property back instantly. Therefore, after payment, the borrower has the right to recover his property.

For this type of mortgage, proper registration is required along with the stamp duty. Just like the registration charges, the stamp duty varies from State to State. 

This is the usufructuary mortgage meaning in a nutshell. I hope you like it.

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