Section 72 of TPA : Section 72: Rights Of Mortgagee In Possession

Explanation using Example

Imagine Sarah has a house that she mortgages to a bank to secure a loan. The bank, as the mortgagee, has certain rights under Section 72 of the Transfer of Property Act, 1882:

• If a natural calamity damages the house, and Sarah fails to take action, the bank can spend money on repairs to prevent further damage or destruction. The bank can then add this expense to Sarah's loan balance, with interest.
• If there's a legal challenge to Sarah's ownership of the house, and she doesn't defend her title, the bank can incur legal expenses to support her title, ensuring the security of their loan. These costs can also be added to the loan.
• Should the bank discover a flaw in its mortgage documentation, it can rectify this at its own expense to strengthen its claim over the property against Sarah, adding the cost to her loan.
• If Sarah's house is on leasehold land that's about to expire, the bank can renew the lease to maintain the property's value, again adding the cost to Sarah's loan.

In all these cases, the bank must first ask Sarah to take appropriate action. If she fails to do so, the bank can step in, spend the necessary amounts, and add them to the principal loan with interest.

Additionally, if the house is not already insured, the bank can insure the house against fire, with the premium added to Sarah's loan. The insurance amount is limited to either the amount specified in the mortgage deed or two-thirds of the reinstatement value of the house.