What Are The Rights And Liabilities Of A Mortgagee?

You have the right to occupy and use the subject property.  In other words, you can live there, even though you haven't fully paid for it.

You have a liability to pay off the mortgage interest and principal per the terms of the contract, and usually to maintain hazard insurance to protect the mortgagor's collateral (the house).  You also have requirements to pay property taxes, and sometimes there's a clause requiring you to maintain the property.  So to put it in other words, you have to pay for it, and keep the house in reasonable condition.

There are different rights and liabilities of mortgagee.

Right to sell the property: the mortgagee has the right to sell the property in case the loan is not paid on due date by the mortgagor. The mortgagee after obtaining a decree from the court, sells the property in open auction. If the amount realized is in excess of the amount loaned the balance is paid to the mortgagor. In case it falls short of the mortgaged money then a personal decree to recover the balance is obtained from the court.

Right to private sale: the transfer of property act gives right to the mortgagee of private sale of property, if the mortgage money is not paid. The mortgagee will take this step only by giving at least three months notice to the mortgagor.


Distribution of sale proceeds: the mortgagee has the right to distribute the amount realized from the private sale of property in the payment of the mortgage money, interest for the period and other charges and expense incurred on the sale of property.

Right to foreclosure: A suit to obtain a decree that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure. The court issues this decree only if the mortgagor is unable or refuses to pay the amount of loaned to him.