Transfer of Property Act Section 65 — Implied contracts by mortgagor
CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Rights and Liabilities of Mortgagor
General
Summary
Unless the mortgage agreement says otherwise, the person giving the mortgage is automatically taken to promise the lender certain things. These include that the borrower actually owns the interest being mortgaged and has the right to transfer it, and that the borrower will protect or help protect the lender’s claim to the property against others. While the lender is not in possession of the property, the borrower must pay all government or public charges on it, and if the property is leased, must keep up with the rent and lease conditions and cover any losses the lender suffers from the borrower failing to do so. If the mortgage is a second or later one, the borrower also promises to pay the interest and principal due on earlier mortgages as they come due. These promises belong to the lender and automatically pass to anyone who later holds the mortgage interest, in whole or in part.
Official Text
In the absence of a contract to the contrary, the mortgagor shall be deemed to contract with the mortgagee,—
(a) that the interest which the mortgagor professes to transfer to the mortgagee subsists, and that the mortgagor has power to transfer the same;
(b) that the mortgagor will defend, or, if the mortgagee be in possession of the mortgaged property, enable him to defend, the mortgagor’s title thereto;
(c) that the mortgagor will, so long as the mortgagee is not in possession of the mortgaged property, pay all public charges accruing due in respect of the property;
(d) and, where the mortgaged property is a lease 4***, that the rent payable under the lease, the conditions contained therein, and the contracts binding on the lessee have been paid, performed and observed down to the commencement of the mortgage; and that the mortgagor will, so long as the security exists and the mortgagee is not in possession of the mortgaged property, pay the rent reserved by the lease, or, if the lease be renewed, the renewed lease, perform the conditions contained therein and observe the contracts binding on the lessee, and 1. Subs. by Act 20 of 1929, s. 26, for “at the same rate of interest”. 2. Ins. by s. 27, ibid. 3. The words “for a term of years” omitted by s. 28, ibid. 4. The words “for a term of years” omitted by s. 29, ibid. indemnify the mortgagee against all claims sustained by reason of the non-payment of the said rent or the a non-performance or non-observance of the said conditions and contracts;
(e) and, where the mortgage is a second or subsequent incumbrance on the property, that the mortgagor will pay the interest from time to time accruing due on each prior incumbrance as and when it becomes due, and will at the proper time discharge the principal money due on such prior incumbrance. 1* * * * *. The benefit of the contracts mentioned in this section shall be annexed to and shall go with the interest of the mortgagee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. 2[