Section 435: Property deemed to be mortgaged

1) If a debtor gives the whole or any portion of an immovable property in which the debtor has right, ownership or possession to a creditor in consideration for a loan which the debtor borrows from the creditor, entitling the creditor to possess that property with effect from the date of execution of the deed or after a certain period, such property shall be deemed to have been given in mortgage.

2) If the deed provides that the creditor is entitled to possess the property mortgaged pursuant to sub-section (1) with immediate effect at the time of lending or after a certain period, such a mortgage shall be deemed to be a mortgage with possession (Bhogbandaki), and if the deed provides that the creditor is entitled to possess the property in the event of the debtor’s default on repayment of the loan within the deadline set by the creditor and the debtor for repayment, such a mortgage shall be deemed to be a mortgage without possession (Drishtibandhaki).

3) A property to be mortgaged shall be of such nature as may be capable of being enjoyed by the mortgagee.

4) A person shall not mortgage a property in which he or she has no right, ownership or possession or which he or she will acquire in the future.