Posted December 9, 2013 by advocateguru in Learning Centre
 
 

Mortgage and charge

Introduction

Section 100 of the Transfer of Property Act, 1882(henceforth referred as “the Act”) defines a charge.

Where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another; and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property;  and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. “

It says that where immovable property of one person is, by act of parties or operation of law, made security for the payment of money to another, and the transaction does not amount to mortgage, the latter person is said to have a charge on the property, and all the provisions hereinbefore contained which apply to simple mortgage shall, so far as may be, apply to such charge.

Nothing in this section applies to the charge of a trustee on the trust-property for expenses properly insured in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.”

The expenses incurred by the trustee are a charge upon the trust property but this charge, unlike other types of charges, cannot be enforced by the sale of the trust property for it would have the effect of destroying the trust. Section 32 of the Trust Act says that the trust may only reimburse itself for such expenses out of the income of the trust estate and prohibit any disposition of the trust property without previous payment of his expenses.

The second exception lays down that no charge shall be enforced against any property in the hands of the person to whom such property has been transferred for consideration and without notice of the charge. This exception brings out the distinction between a charge and mortgage (which will be discussed in detail by the researcher in the first chapter of this paper. The researcher also wishes to discuss the distinction between a “charge and a lien” and “a charge and a simple mortgage” followed by the kinds of charges in the second chapter of this paper followed by his conclusion.


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