Property Transfers: Mortgages, Leases, Gifts, and Lis Pendens
Mortgage and Types
A mortgage is security for the payment of debt. A mortgage is created by the act of the parties through a written document providing security for the performance of a duty or the payment of the debt (See Section 58 of the Transfer of Property Act).
Definition of Mortgage
“Mortgage is a transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to pecuniary liability.”
Essentials of Mortgage
The essentials of a mortgage are:
- Transfer of an interest.
- Specific property.
- Security for payment of loan.
Kinds of Mortgage
Various kinds of mortgages exist:
Simple Mortgage
A simple mortgage is a transaction in which, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money. The mortgagor expressly or impliedly agrees that if payment fails according to the contract, the mortgagee shall have the right to cause the mortgaged property to be sold, and the proceeds applied to the mortgage money payment.
Mortgage by Conditional Sale
Where the mortgagor ostensibly sells the mortgaged property on the condition that:
- On default of mortgage money payment by a certain date, the sale shall become absolute; OR
- On such payment being made, the sale shall become void; OR
- On such payment being made, the buyer shall transfer the property to the seller.
This transaction is called a mortgage by conditional sale, and the mortgagee is a mortgagee by conditional sale.
Usufructuary Mortgage
A usufructuary mortgage is a type of mortgage where the mortgagor delivers the possession and the right to enjoy the income from the property to the mortgagee.
English Mortgage
Where the mortgagor binds himself to repay the mortgage money on a certain date and transfers the mortgaged property absolutely to the mortgagee, subject to a proviso that the mortgagee will re-transfer it upon repayment as agreed, the transaction is called an English mortgage.
Mortgage by Deposit of Title Deeds
Where a person, specifying in his behalf, delivers to a creditor or their agent documents of title to immoveable property with the intent to create security thereon, the transaction is called a mortgage by deposit of title deeds.
Anomalous Mortgage
A mortgage that is not a simple mortgage, mortgage by conditional sale, a usufructuary mortgage, or an English mortgage by deposit of title deeds is called an anomalous mortgage.
Remedies for Mortgagor
The mortgagor has the following remedies:
- Suit for sale.
- Suit for money.
How Conditional Mortgage is Determined
The court generally applies certain tests to determine whether the transaction was a sale with a condition of repurchase or a mortgage by way of conditional sale:
- The existence of debt indicates a mortgage.
- The long period of repayment indicates a mortgage.
- A stipulation for interest on repayment indicates a mortgage.
Duties of Registration Officer
When a document is presented for registration to the registration officer, he endorses on every document presented before him the date, place of registration, and signature of the person presenting such document, and gives a receipt for the document to the person presenting it (See Sections 52–62 of the Registration Act).
Duties When Document is Presented
The duties of the registering officer when a document is presented are as follows:
Endorsement on Document
The day, hour, and place of presentation, and the signature of every person presenting a document for registration, shall be endorsed on every such document at the time of presenting it.
Duty to Give Receipt
A receipt for such document shall be given by the registering officer to the person presenting the same.
Duty to Copy Every Presented Document
A document admitted to registration shall without delay be copied into the appropriate book according to the order of its admission.
Duty to Issue Certified Copy
It is the duty of the registering officer to issue a certified copy of the document registered in his office to any person who applies for such copies.
Certificate of Registration
The registering officer shall endorse thereon a certificate containing the word “registered” together with the number and page of the book in which the document has been copied. Such certificate shall be admissible for the purpose of proving that the document has been duly registered in the manner provided by this Act.
Duty to Return Registered Document
The document, if completely registered by the registering officer, shall be returned to the person who presented the document for registration or the person nominated by him.
Conclusion on Registration
To conclude, the registering officer is empowered under the Registration Act to register a document presented by a person. If the officer is not satisfied, he can refuse to register the document. Upon refusal to register the document, different remedies are available.
Lease of Immoveable Property
A lease is a transfer of a right to enjoy the property. The lessor puts the lessee in possession of the property. The rights of ownership are not passed to the transferee; there is only a transfer of the right of enjoyment in a lease (See Sections 105, 108).
Definition of Lease
A lease of immovable property is the right to enjoy such property, made for a certain time (express or implied), or in perpetuity, in consideration for a price paid or promised, or of money, a share of crops, service, or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
Essential Elements of Lease
The essential elements of a lease are:
- Immoveable Property: Lease must relate to immoveable property.
- Fixed Duration of Enjoyment: Such enjoyment of the right of property must be for a fixed duration.
- Transfer of Right: There must be a transfer of the right of enjoyment.
- Consideration: It must be for consideration.
- Acceptance: The transfer must be accepted by the transferee.
Kinds of Lease
The kinds of lease include:
- Lease for a certain time.
- A periodic lease.
- Lease in perpetuity.
How the Lease Comes to an End
A lease of immoveable property comes to an end in the following ways:
Laps of Time
By efflux of the time limited thereby.
Happening of a Specified Event
Where such time is limited conditionally on the happening of some event, the lease of immoveable property comes to an end.
Termination of the Interest of Lessor
Where the interest of the lessor in the property terminates, or their power to dispose of the same extends only to, the happening of such event.
Merger
In the case where the interests of the lessee and lessor in the whole of the property become vested at the same time in one person in the same right.
Express Surrender
That is to say, in case the lessee yields up their interest under the lease to the lessor, by mutual agreement between them.
Implied Surrender
A lease of immoveable property may come to an end by implied surrender.
Forfeiture
This occurs if the lessee breaks an express condition which provides that on breach thereof the lessor may re-enter; or if the lessee renounces their character as such by setting up a title in a third person or by claiming title in themselves; or if the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event; or if the transferee gives notice in writing to the lessee of their intention to determine the lease.
Expiration of Time Given in Notice to Quit
On the expiration of a notice to determine the lease, or quit or of intention to quit, the property leased, duly given by one party to the other.
Gift of Property
The transfer of certain existing moveable or immoveable property is called a gift if it is made voluntarily without consideration by one person to another person. A gift can also be revoked.
Definition of Gift
Gift is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration by one person called the donor to another called the donee, and accepted by or on behalf of the donee (See Sections 122, 123 Transfer of Property Act).
Essentials of a Valid Gift
The essentials of a valid gift are as under:
- Parties: There are two parties in a gift: one is called the donor and the other is called the donee.
- Subject Matter: The subject matter of the gift may be movable or immovable property.
- Existing Property: Such property must exist at the time of the gift.
- Consideration: Property transfer is made without consideration.
- Voluntarily: The transfer by gift should be made voluntarily.
- Acceptance: There must be acceptance of the gift. Acceptance must be made during the lifetime of the donor.
Transfer How Effected
In Case of Immoveable Property
For the purpose of making a gift of immoveable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.
In Case of Moveable Property
For the purpose of making a gift of moveable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered.
Concept of Gift Under Muslim Law
Under Muslim law, a gift has the following three essentials:
- Declaration of gift by the donor.
- Acceptance by the donee.
- Delivery of possession.
Conclusion on Gift
To conclude, a gift is an unconditional transfer of property, made immediately and without any exchange or consideration by one person to another person and accepted by or on behalf of the latter. The requirements for a gift under the Transfer of Property Act and under Islamic law differ.
Doctrine of Lis Pendens
A person cannot transfer property during the pendency of a suit between the parties in court. During the pendency of a suit, nothing new should be introduced (See Section 52 Transfer of Property Act).
Meaning of Lis Pendens
Lis means a cause of action; pendens means a pending suit.
Doctrine of Lis Pendens
According to Section 52: “During the pendency in any court having authority in Pakistan or established beyond the limits of Pakistan by the Federal Government of any suit or proceeding which is not collusive and in which any right to immoveable property is directly or specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the right of any other party thereto under any decree or order which may be made therein, except under the authority of the court and on such terms as it may impose.”
Basis of Doctrine of Lis Pendens
The doctrine of Lis Pendens is based on the maxim:
“Pendente lite nihil innovetur.”
It means during litigation, nothing new should be introduced.
Purposes of Lis Pendens
Prevention of Multiplicity of Suits
The important purpose of Lis Pendens is to prevent multiplicity of suits (PLD 1948 PC 117). It was held that the broad purpose of Section 52 is to maintain the status quo unaffected by the act of any party to the litigation pending its determination.
Essentials of Doctrine of Lis Pendens
The essentials of the doctrine of Lis Pendens are:
- Transfer During Pendency of Suit: Transfer by any party to the litigation should have taken place during the pendency of the suit.
- Competent Court of Jurisdiction: The suit must be pending in a court of competent jurisdiction.
- Suit Should Be Non-Collusive: The suit should be non-collusive.
- Suit Relating to Immoveable Property: The suit must relate to immoveable property.
- Right to Immoveable Property Must Be Direct: It is necessary that the right to immoveable property must be directly and specifically in question.
Exceptions
Transfers can be made during the pendency in the following exception:
- By operation of law.
Scope
The Doctrine of Lis Pendens bars the transfer or encumbering of any right to immovable property during the pendency of a suit or proceeding before a court of law.
Conclusion on Lis Pendens
To conclude, this is a general rule known as Lis Pendens in which the transfer of immoveable property cannot be made during the pendency of litigation in a court. This rule or doctrine protects the sanctity of the court.