FORECLOSURE
WHAT IS FORECLOSURE?
Foreclosure is the legal method by which a lender seeks to recover the amount owed on a defaulted loan by gaining possession of and selling the mortgaged properties. Typically, default is caused when a borrower misses a certain number of monthly payments, but it may also happen when the borrower fails to satisfy other conditions in the mortgage contract.
In India, the Transfer of Property Act, 1882 governs the law on mortgage. A mortgagee (person who advances or lends the money) is entitled to recover his outstanding money under the right of foreclosure. This right is available under Section 67 of the Transfer of Property Act, 1882.
The act regards six types of mortgages, namely-
1. simple mortgage
2. mortgage by conditional sale
3. usufructuary mortgage
4. English mortgage
5. mortgage by deposit of title deeds
6. anomalous mortgage.
A mortgagee can exercise his right to foreclosure only under the following conditions-
• The payment of the debt amount