Distinguish between mortgage and charge.
Find the answer to the mains question of Property Law only on Legal Bites.
Question: Distinguish between mortgage and charge. [JJS 2014]Find the answer to the mains question of Property Law only on Legal Bites. [Distinguish between mortgage and charge.]AnswerThe Transfer of Property Act, 1882 governs the creation and regulation of various interests in immovable property. Among these, mortgage and charge are two important modes of securing a debt. While both create a security over immovable property, they differ significantly in nature, scope, and...
Question: Distinguish between mortgage and charge. [JJS 2014]
Find the answer to the mains question of Property Law only on Legal Bites. [Distinguish between mortgage and charge.]
Answer
The Transfer of Property Act, 1882 governs the creation and regulation of various interests in immovable property. Among these, mortgage and charge are two important modes of securing a debt. While both create a security over immovable property, they differ significantly in nature, scope, and legal consequences.
| Basis of Distinction | Mortgage | Charge |
|---|---|---|
| Definition | A mortgage is a transfer of an interest in specific immovable property to secure a loan or the performance of an obligation. (Section 58) | A charge is a right created over immovable property without transferring interest, to secure the payment of money. (Section 100) |
| Transfer of Interest | Transfers a specific interest in the property to the mortgagee. | Does not transfer interest; only creates a security right over the property. |
| Creation | Created by act of parties (written document and usually registered). | Can be created either by act of parties or operation of law (e.g., decree). |
| Registration | Registration is compulsory if value exceeds ₹100. | Registration is not mandatory if created by operation of law. |
| Right of Foreclosure/Sale | Mortgagee can enforce foreclosure or sale if money is not repaid (depending on mortgage type). | A charge-holder has no right of foreclosure, but may approach the court for sale. |
| Examples | Simple mortgage, usufructuary mortgage, mortgage by conditional sale, etc. | A charge created by a court decree, or by agreement to secure maintenance. |
A mortgage involves the transfer of a legal interest in immovable property as security, while a charge is merely a right to claim payment out of property without transferring any interest. Thus, a mortgage is a stronger and more enforceable security compared to a charge.
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