Transfer of Property Act Section 67 — Right to foreclosure or sale
CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Rights and Liabilities of Mortgagee
General
Summary
Unless the mortgage agreement says otherwise, the lender can go to court once the loan amount is due and before the borrower has redeemed the property or paid the money. The lender can ask the court for a decree that permanently ends the borrower’s right to redeem the property, which is called foreclosure, or a decree that the property be sold. However, this right is limited: only certain types of lenders can seek foreclosure, and lenders of public infrastructure like railways or canals cannot seek foreclosure or sale. Also, a lender who holds only part of the loan cannot sue for just a part of the property unless the lenders have formally split their interests with the borrower’s consent.
Official Text
In the absence of a contract to the contrary, the mortgagee has, at any time after the mortgage-money has become 3[due] to him, and before a decree has been made for the redemption of the mortgaged property, or the mortgage-money has been paid or deposited as hereinafter provided, a right to obtain from the Court 4[a decree] that the mortgagor shall be absolutely debarred of his right to redeem the property, or 4[a decree] that the property be sold. A suit to obtain 4[a decree] that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure. 1. Certain words omitted by Act 20 of 1929, s. 29. 2. Ins. by s. 30, ibid. 3. Subs. by s. 31, ibid., for “payable”. 4. Subs. by s. 31, ibid., for “an order”. Nothing in this section shall be deemed— 1 [
(a) to authorise any mortgagee other than a mortgagee by conditional sale or a mortgagee under an anomalous mortgage by the terms of which he is entitled to foreclose, to institute a suit for foreclosure, or an usufructuary mortgagee as such or a mortgagee by conditional sale as such to institute a suit for sale; or]
(b) to authorise a mortgagor who holds the mortgagee's rights as his trustee or legal representative, and who may sue for a sale of the property, to institute a suit for foreclosure; or
(c) to authorise the mortgagee of a railway, canal or other work in the maintenance of which the public are interested, to institute a suit for foreclosure or sale; or
(d) to authorise a person interested in part only of the mortgage-money to-institute a suit relating only to a corresponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, severed their interests under the mortgage. 2[