Section 76 of TPA : Section 76: Liabilities Of Mortgagee In Possession

Explanation using Example

Imagine a scenario where Mr. A has mortgaged his property to Mr. B, a bank, to secure a loan. Mr. B has taken possession of the property as per the mortgage terms. Here's how Section 76 of The Transfer of Property Act, 1882, would apply:

• Mr. B must manage Mr. A's property carefully, as if it were his own, ensuring not to neglect or misuse it.
• Mr. B should actively try to collect rent from tenants occupying the property.
• Mr. B must pay the property taxes and any public charges from the rental income, unless their agreement states otherwise.
• Essential repairs should be made by Mr. B, using the property's income after paying public charges and interest on the loan.
• Mr. B cannot do anything that would harm the property's value or condition.
• If Mr. B has insured the property and it suffers fire damage, he must use the insurance payout to repair the property or reduce Mr. A's mortgage debt if instructed.
• Mr. B must keep detailed accounts of income and expenses related to the property and share them with Mr. A upon request.
• After covering management expenses, the remaining rental income should be used to reduce the interest or principal of Mr. A's loan, with any excess returned to Mr. A.
• If Mr. A pays off the mortgage, Mr. B must account for all income from that point forward and cannot charge for any subsequent expenses.

If Mr. B neglects these duties and causes a financial loss, he may have to compensate Mr. A for that loss when they settle the accounts.