Transfer of Property Act Section 63A — Improvements to mortgaged property
CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Rights and Liabilities of Mortgagor
General
Summary
If the property is improved while the mortgagee is in possession, the mortgagor gets the benefit of that improvement when they redeem the property, unless there is an agreement saying otherwise. Generally, the mortgagor does not have to pay for the improvement. However, the mortgagor must pay the reasonable cost of the improvement if it was needed to save the property from damage or decay, to keep the loan security adequate, or if it was done because a public official or authority lawfully ordered it. This payment is added to the principal loan amount, with interest at the same rate as the loan, or at nine percent per year if no rate is set, and any extra profits from the improvement are given to the mortgagor.
Official Text
(1) Where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement; and the mortgagor shall not, save only in cases provided for in sub-section (2), be liable to pay the cost thereof. (2)Where any such improvement was effected at the cost of the mortgagee and was necessary to preserve the property from destruction or deterioration or was necessary to prevent the security from becoming insufficient, or was made in compliance with the lawful order of any public servant or public authority, the mortgagor shall, in the absence of a contract to the contrary, be liable to, pay the proper cost thereof as an addition to the principal money with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent. per annum, and the profits, if any, accruing by reason of the improvement shall be credited to the mortgagor.]