Transfer of Property Act Section 72 — Rights of mortgagee in possession
CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Rights and Liabilities of Mortgagee
General
Summary
A mortgagee who has taken possession of the property can spend money on necessary things like preserving the property from destruction, forfeiture, or sale, supporting the mortgagor's title to the property, making their own title good against the mortgagor, and renewing the lease if the property is a renewable leasehold. Unless there is a contract saying otherwise, the mortgagee can add this spent money to the principal loan amount, with interest at the same rate as the loan, or at nine percent per year if no rate is fixed. However, spending on preservation or supporting the title is only considered necessary if the mortgagor was asked to take proper steps and failed to do so. If the property is insurable by nature, the mortgagee can also insure it against fire, unless a contract says otherwise, and add the premiums to the principal with interest at the same rate or nine percent per year, but the insurance amount cannot exceed what is specified in the mortgage deed, or two-thirds of the cost to rebuild the property if no amount is specified. The mortgagee cannot insure the property if the mortgagor or someone on their behalf already keeps up insurance to the amount the mortgagee is allowed to insure.
Official Text
2[A mortgagee] may spend such money as is necessary— 3* * * * *
(b) for 4[the preservation of the mortgaged property] from destruction, forfeiture or sale;
(c) for supporting the mortgagor's title to the property;
(d) for making his own title thereto good against the mortgagor; and
(e) when the mortgaged property is a renewable lease-hold, for the renewal of the lease; and may, in the absence of a contract to the contrary, add such money to the principal money, at the rate of interest payable on the principal, and, where no such rate is fixed, at the rate of nine per cent. per annum: 1. The words “for a term of years” omitted by Act 20 of 1929, s. 36. 2. Subs. by s. 37, ibid., for certain words. 3. Clause (a) omitted by s. 37, ibid. 4. Subs. by s. 37, ibid., for “its preservation”. 1 [Provided that the expenditure of money by the mortgagee under clause (b) or clause (c) shall not be deemed to be necessary unless the mortgagor has been called upon and has failed to take proper and timely steps to preserve the property or to support the title.] Where the property is by its nature insurable, the mortgagee may also, in the absence of a contract to the contrary, insure and keep insured against loss or damage by fire the whole or any part of such property; and the premiums paid for any such insurance shall be 2[added to the principal money with interest at the same rate as is payable on the principal money or, where no such rate is fixed, at the rate of nine per cent. per annum]. But the amount of such insurance shall not exceed the amount specified in this behalf in the mortgage-deed or (if no such amount is therein specified) two-thirds of the amount that would be required in case of total destruction to reinstate the property insured. Nothing in this section shall be deemed to authorise the mortgagee to insure when an insurance of the property is kept up by or on behalf of the mortgagor to the amount in which the mortgagee is hereby authorised to insure. 3[