mortgage by conditional sale
In a mortgage by conditional sale the mortgagor ostensibly sells the property on condition that the sale becomes absolute on default of payment on a certain date, or becomes void on payment, or the buyer must retransfer the property on payment. The mortgagee's remedy is foreclosure, not sale.
A transaction is not a mortgage of this kind unless the condition is embodied in the same document that effects the sale. The key question is the intention of the parties: a sale with a separate agreement to repurchase is an outright sale, while a single document showing the transaction was meant as security for a debt is a mortgage.
Example
The deed recited a sale but provided that the property would be reconveyed on repayment of the Rs 2 lakh loan within three years; it was a mortgage by conditional sale.
In Indian law
- Section 58(c), Transfer of Property Act, 1882 (with proviso)
- Section 67, Transfer of Property Act, 1882 (foreclosure)
See also
mortgage · foreclosure · clog on redemption · equity of redemption
Read more in the study notes
- Mortgage deed and lease deed (Drafting, Pleading and Conveyance)
- Mortgage: definition and kinds (Property Law)