Drafting, Pleadings and Appearances · Drafting of Agreements, Deeds and Documents

Drafting Mortgage Deeds and Mortgage by Deposit of Title-Deeds

Updated 11 October 2026 · Fact-checked

A mortgage transfers an interest in specific immovable property to secure a loan. A mortgage by deposit of title-deeds is created by delivering title documents to the lender with intent to secure the debt. To draft it, identify the mortgage type, the parties, the debt and the property, add the clauses, then check stamping and registration.

Understand Drafting Mortgage Deeds and Mortgage by Deposit of Title-Deeds

A mortgage is a transfer of an interest in specific immovable property to secure the payment of a loan or the performance of an obligation. The owner is the mortgagor. The lender is the mortgagee. Your draft must show which kind of mortgage the parties intend, because the kind decides the rights, the formalities and the remedies.

The Transfer of Property Act, 1882 recognises six kinds: simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title-deeds and anomalous mortgage. The simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage and anomalous mortgage need a registered instrument, signed by the mortgagor and attested by two witnesses, where the principal is ₹100 or more. A mortgage by deposit of title-deeds is excluded from that rule. The deed is a formal document that sets out the terms of the loan and the security.

Section 59 sets the formality rule. Where the principal money secured is ₹100 or more, a mortgage other than a mortgage by deposit of title-deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses. Where the principal is less than ₹100, it may be made by a registered instrument, or, except for a simple mortgage, by delivery of the property. The words "other than a mortgage by deposit of title-deeds" are the key exception.

A mortgage by deposit of title-deeds (often called an equitable mortgage) is made when the borrower delivers title documents of the property to the lender, intending them to be security for the debt. Section 96 says the provisions that apply to a simple mortgage apply to it, so far as may be. So the lender's remedies, such as suing for sale, follow the simple mortgage pattern.

In practice, lenders do not rely on delivery alone. They take a memorandum of deposit of title-deeds that records the debt, the property, the documents deposited and the intention to create security. The memorandum is a document of its own. Whether it needs registration and what stamp duty applies depends on its terms and on the state's stamp law. Check both, because a badly drafted memorandum can become inadmissible in evidence.

Key rules to remember

Formality rule for mortgages (Section 59): Principal ₹100 or more: registered instrument + mortgagor's signature + two attesting witnesses, except mortgage by deposit of title-deeds; Deposit of title-deeds is carved out of this requirement. It needs no registered deed merely to create the mortgage.
Small-amount mortgage (Section 59): Principal below ₹100: registered instrument, or delivery of the property (not for a simple mortgage); Rarely relevant in practice, but a favourite theory point.
Mortgage by deposit of title-deeds (Section 96): Simple mortgage provisions apply, so far as may be; Do not say the whole law of simple mortgage applies unchanged. The text says "so far as may be".
Non-registration (Registration Act, Section 49): A document that must be registered does not affect the immovable property, and is not received as evidence of the transaction, unless registered; There is a proviso: it may be received as evidence of a contract in a suit for specific performance or of a collateral transaction not required to be registered.
Priority of registered mortgage (Registration Act, Section 48 proviso): A registered mortgage takes effect against a mortgage-deed later executed and registered for the same property; The proviso refers to a mortgage as defined in Section 58 of the Transfer of Property Act.
Stamp duty burden (Stamp Act, Section 29): Only in the absence of an agreement to the contrary: for Mortgage-deed (Art. 40), Security-bond or Mortgage-deed (Art. 57) and Agreement relating to Deposit of Title-deeds, Pawn or Pledge (Art. 6), the expense of the stamp is borne by the person drawing, making or executing such instrument; Section 29(a) uses the full phrase "the person drawing, making or executing such instrument". It applies only if the parties have not agreed otherwise, so add an express clause on who bears the duty. Article 6 of Schedule I is the article for a memorandum of deposit only subject to state amendments, and the actual rates are fixed by the state. Check your state's schedule.

How to solve Drafting Mortgage Deeds and Mortgage by Deposit of Title-Deeds questions

Use this order for any drafting or case question on mortgage documents. It shows the examiner provision, analysis and conclusion.

1Read the facts and fix the type of mortgage: is there delivery of title documents, possession, a sale condition or a personal covenant to pay?
2State the rule: Section 59 for formalities, Section 96 if deposit of title-deeds is involved.
3Identify the parties, the debt amount, the repayment terms and the exact property with its boundaries and title documents.
4Decide the instrument: a registered mortgage-deed with two attesting witnesses, or a memorandum of deposit with the title-deeds delivered.
5Draft the clauses: recitals, operative words of mortgage, covenants of title, repayment, default and remedies, redemption, costs and stamp duty.
6Check the effect of registration or non-registration under Sections 48 and 49 of the Registration Act, 1908, and who bears stamp duty under Section 29 of the Stamp Act, 1899.
7Add execution and attestation blocks, then state your conclusion in one line.

Quickest way: Four-question check for any mortgage drafting question

When to use it: Use it when time is short and the question asks you to identify the mortgage and draft or advise.

Were title-deeds delivered with intent to secure? If yes, it is a mortgage by deposit under Section 96. If no, it needs a registered deed under Section 59.
Is the principal ₹100 or more? Then a non-deposit mortgage needs registration and two attesting witnesses.
Is a memorandum written? Then stamp and register it as the law and state stamp rules require.
Write the skeleton: title, date, parties, recitals, operative clause, covenants, default, redemption, execution and attestation.

Common mistakes in Drafting Mortgage Deeds and Mortgage by Deposit of Title-Deeds

Saying every mortgage needs a registered deed.
Students remember Section 59 but forget its exception.
Fix: Write that a mortgage other than one by deposit of title-deeds, with principal of ₹100 or more, needs a registered instrument.
Treating delivery of title-deeds as enough without recording intention.
The delivery act feels like the whole transaction.
Fix: Draft a memorandum that records the debt, the documents deposited and the intention to create security.
Describing the property loosely, for example just "my flat in Pune".
Students focus on the legal clauses and neglect the schedule.
Fix: Add a schedule with full address, survey or plot number, area, boundaries and the list of title documents.
Forgetting stamp duty and registration consequences.
These are treated as separate chapters.
Fix: Always close with a line on Section 29 of the Stamp Act, and Sections 48 and 49 of the Registration Act.
Stating that Section 96 makes a deposit mortgage identical to a simple mortgage.
Students shorten the rule.
Fix: Quote it accurately: simple mortgage provisions apply "so far as may be".
Omitting default and redemption clauses.
Students draft only the creation of the mortgage.
Fix: Include the events of default, the lender's remedies and the mortgagor's right to redeem. Mention that Section 83 allows the mortgagor to deposit the amount due in court once the principal money has become due.

Worked examples

Example 1

Meera Textiles Pvt. Ltd. borrows ₹50,00,000 from Sunrise Bank and hands over the original title-deeds of its factory land in Coimbatore, with no registered mortgage-deed. Is a valid mortgage created, and what should you draft?

Show the solution

Fact analysis: title documents were delivered to the lender to secure a loan, so this is a mortgage by deposit of title-deeds.
Provision: Section 59 requires a registered instrument for mortgages of ₹100 or more, but expressly excludes a mortgage by deposit of title-deeds. Section 96 applies simple mortgage provisions to it so far as may be.
Analysis: the principal exceeds ₹100, yet no registered deed is needed merely to create the mortgage. The key requirement is delivery with intent to secure the debt.
Drafting point: record the intent in a memorandum of deposit stating the loan, the property and the list of documents delivered.
Compliance point: check stamp duty on the memorandum under the state's stamp law. Article 6 of Schedule I (Agreement relating to Deposit of Title-deeds, Pawn or Pledge) is the relevant article only subject to state amendments, so confirm the state's article and rate. Also check whether registration is required. Under Section 29(a), only if the parties have made no agreement to the contrary, the person drawing, making or executing the instrument bears the duty, so add an express clause.
Conclusion: the mortgage can be valid without a registered deed, but the memorandum should be properly stamped to be safely usable as evidence.

Answer: A valid mortgage by deposit of title-deeds can arise from delivery with intent to secure, even without a registered deed (Sections 59 and 96). Draft a memorandum of deposit and stamp it as required.

Example 2

Draft the key clauses of a memorandum of deposit of title-deeds for a loan of ₹20,00,000 by Anand Finance Ltd. to Rohan Mehta, secured on his house in Nashik.

Show the solution

Title and date: Memorandum of Deposit of Title-Deeds, with place and date.
Parties: Rohan Mehta, with address, as borrower and mortgagor; Anand Finance Ltd., with registered office, as lender and mortgagee.
Recital: the lender has agreed to lend ₹20,00,000 and the borrower has deposited the title-deeds listed in the Schedule with intent to create security.
Operative clause: the borrower confirms that on this date the title-deeds were delivered to the lender with intent to create a mortgage by deposit of title-deeds on the property in the Schedule, to secure the loan, interest and costs.
Covenants: good title, no prior encumbrance, payment of taxes, insurance, no further charge without consent, and repayment on the agreed dates.
Default and redemption: on default the lender may enforce the security as the law permits; on full payment the lender returns the documents. Add a clause on who bears stamp duty.
Schedule: description of the property and the list of title documents. Close with signatures and witnesses.

Answer: The memorandum should contain title, parties, recital of loan and deposit, operative words showing intent, covenants, default and redemption clauses, stamp duty clause and a schedule of property and documents.

Exam tips

Begin every answer with the type of mortgage and the section, then analyse the facts and conclude.
In drafting questions, include a schedule of property and a list of deposited documents. Examiners look for them.
Quote Section 59's exception for deposit of title-deeds exactly, and Section 96's phrase "so far as may be".
Close with one line each on stamp duty (Section 29, Stamp Act) and registration effect (Sections 48 and 49, Registration Act). State duty rates only if you know your state's figures.
Use the same party names and amounts from the question throughout your draft.

Practice questions from Drafting of Agreements, Deeds and Documents

Drafting Mortgage Deeds and Mortgage by Deposit of Title-Deeds: frequently asked questions

What is the difference between an equitable mortgage and a registered mortgage?

An equitable mortgage is a mortgage by deposit of title-deeds, created by delivering title documents with intent to secure a debt. A registered mortgage is made by a signed, attested and registered deed under Section 59. The deposit mortgage is expressly excluded from the registered-instrument rule.

Is a memorandum of deposit of title-deeds compulsory?

The law on mortgage creation turns on delivery of title-deeds with intent to secure the debt. A memorandum is not what creates the mortgage, but lenders take one to record the intention and terms. If you write one, check its stamp and registration requirements.

Which section governs mortgage by deposit of title-deeds?

Section 96 of the Transfer of Property Act, 1882 provides that the provisions applying to a simple mortgage apply to it so far as may be. Section 59 separately excludes it from the registered-instrument requirement.

What happens if a mortgage deed that needs registration is not registered?

Under Section 49 of the Registration Act, 1908, such a document does not affect the immovable property and cannot be received as evidence of the transaction. The proviso allows limited use, such as evidence of a contract in a specific performance suit or of a collateral transaction.

Who pays stamp duty on a mortgage deed?

Under Section 29 of the Indian Stamp Act, 1899, in the absence of an agreement to the contrary, the person executing a mortgage-deed bears the stamp expense. Your draft should state this expressly to avoid dispute.