Transfer of Property Act (TPA)
Accession to Mortgaged Property: Sections 63, 63A and 70, and Who Takes What Is Added
Property does not stay still while a mortgage runs. Land grows by alluvion, a building goes up on it, machinery is installed, a lease is renewed. The Act answers the question in two directions. Section 70 gives the mortgagee the accession for the purposes of his security, so that what has been added answers the debt. Sections 63 and 63A give the mortgagor the accession and any improvements on redemption, and settle when he must pay for them. The two are not in conflict: one deals with the extent of the security while the mortgage subsists, the other with what he gets back when it ends.
Figure 1: The parallel idea in section 8 — what passes with property without being mentioned
1. Section 70: The Mortgagee's Security Extends to the Accession
Section 70, TPA 'If, after the date of a mortgage, any accession is made to the mortgaged property, the mortgagee shall, for the purposes of the security, be entitled to such accession.' Illustration (a). A mortgages to B a certain field bordering on a stream. The field is increased by alluvion. For the purposes of his security, B is entitled to the increase. Illustration (b). A mortgages certain land to B and afterwards erects a house on it. For the purposes of his security, B is entitled to the house as well as the land. |
- The words that limit the section are 'for the purposes of the security'. The mortgagee does not become the owner of the accession; his security simply covers it, so that it is available to answer the debt.
- It applies to accessions of every kind — natural, as by alluvion, and artificial, as by building.
- It yields to a contract to the contrary, like most of the chapter.
- And it is the counterpart of section 63. What is within the security during the mortgage returns to the mortgagor when he redeems.
2. Section 63: The Mortgagor Takes the Accession on Redemption
Section 63, TPA — the substance Where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, received any accession, the mortgagor, upon redemption, is in the absence of a contract to the contrary entitled as against the mortgagee to that accession. Where the accession was acquired at the expense of the mortgagee and is capable of separate possession or enjoyment without detriment to the principal property, the mortgagor who desires to take it must pay the expense of acquiring it. Where separate enjoyment is not possible, the accession must be delivered with the property; and the mortgagor is liable to pay the proper cost as an addition to the principal money, with interest, only where the acquisition was necessary to preserve the property from destruction, forfeiture or sale, or was made with his assent. In that last case the profits arising from the accession are credited to the mortgagor; and where the mortgage is usufructuary, those profits are set off against the interest on the money so spent. |
3. Working Section 63 Through
The accession | Who bears the cost, and what happens on redemption |
|---|---|
Acquired at the mortgagor's expense, or arising naturally | It goes to the mortgagor on redemption, and he pays nothing |
Acquired at the mortgagee's expense, and separable without detriment | The mortgagor takes it only if he wishes, and then pays the expense of acquiring it; otherwise the mortgagee may take it away |
Acquired at the mortgagee's expense, inseparable, and necessary to preserve the property | It must be delivered with the property, and the cost is added to the principal with interest |
Acquired at the mortgagee's expense, inseparable, and made with the mortgagor's assent | The same — cost added to the principal with interest |
Acquired at the mortgagee's expense, inseparable, neither necessary nor assented to | It passes with the property, and the mortgagor pays nothing for it |
4. Section 63A: Improvements
Section 63A, TPA — the substance Where mortgaged property in possession of the mortgagee has been improved during the continuance of the mortgage, the mortgagor is, on redemption and in the absence of a contract to the contrary, entitled to the improvement, and is not liable to pay for it. Except where the improvement was necessary to preserve the property from destruction or deterioration, or was necessary to prevent the security from becoming insufficient, or was made in compliance with the lawful order of a public servant or public authority, or was made with the mortgagor's consent — in which case the cost is added to the principal money, with interest at the same rate. Where the mortgage is usufructuary and the improvement was made at the mortgagee's cost, the profits from the improvement are set off against the interest on the money so spent. |
The difference between an accession and an improvement is one of degree rather than kind: an accession is something added to the property, an improvement is work done on what is already there. The scheme of both sections is the same — the mortgagor gets the benefit on redemption, and pays only where the expenditure was necessary, ordered, or consented to.
5. Section 64: The Renewal of a Mortgaged Lease
Where the mortgaged property is a lease and the mortgagee obtains a renewal of it, the mortgagor is entitled, on redemption, to the benefit of the new lease — section 64. The mirror provision is section 71, under which, if the mortgagor obtains the renewal, the mortgagee is entitled to it for the purposes of his security. Neither party may improve his own position by taking the renewal in his own name.
6. The Four Provisions Together
Section | Whose benefit | What it provides |
|---|---|---|
70 | The mortgagee | An accession made after the date of the mortgage falls within the security |
71 | The mortgagee | A renewal of a mortgaged lease obtained by the mortgagor enures to the security |
63 | The mortgagor | On redemption he takes the accession, paying for it only in the cases the section names |
63A | The mortgagor | On redemption he takes improvements, paying for them only where they were necessary, ordered or consented to |
64 | The mortgagor | On redemption he takes the benefit of a renewed lease obtained by the mortgagee |
Retention aid During the mortgage, everything added answers the debt; at redemption, everything added goes back. The only question is who pays, and the answer is the mortgagor — but only where the expenditure was necessary, ordered, or consented to, or where he chooses to keep a separable accession. |
7. Related Topics and Provisions
- Right of Redemption, Section 60 — the moment at which sections 63, 63A and 64 operate
- Rights and Liabilities of the Mortgagee — sections 70, 71 and 72 in their place
- Section 72, TPA — the mortgagee's right to spend on preservation, and to add it to the principal
- Section 76, TPA — the liabilities of a mortgagee in possession, including repairs and accounts
- Section 8, TPA — the parallel rule about what passes with property
- Doctrine of Fixtures — when what is added becomes part of the land