Sections 70-73 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 70 to 73 list what a mortgagee gets or may do beyond the basic right to be repaid. His security grows with accessions and a renewed lease, he may spend money on the property and add it to the debt, he may insure it, and he can claim from a revenue sale surplus or from compensation. This is explained as per the text of the Act consulted.
The mortgagee is entitled to accessions to the mortgaged property and to a renewed lease the mortgagor obtains, for the purposes of his security. Under section 72 he may spend necessary money and add it to the principal at the rate on the principal or nine per cent per annum where none is fixed, and he may insure against fire up to a stated limit, including two-thirds of reinstatement cost where the deed fixes none. Under section 73 he can claim surplus sale-proceeds or acquisition compensation, ranking after prior encumbrancers.
Source and context
The text consulted is a publisher's print of the Act showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003); later amendments should be checked. These sections are the lender's counterpart to the mortgagor-side rules in our article on sections 63 and 64. Sections 74 and 75 are repealed in the copy; section 76, on the liabilities of a mortgagee in possession, is in our next article. For lenders structuring a loan against property, our loan against property service can walk through the security documents.
Section 70: accession to mortgaged property
If, after the date of a mortgage, any accession is made to the mortgaged property, the mortgagee, in the absence of a contract to the contrary, is entitled to it for the purposes of his security. The Act's own illustrations show the idea:
- (a) A field bordering a river is mortgaged and is increased by alluvion. The mortgagee is entitled to the increase for the purposes of his security.
- (b) A plot of building land is mortgaged and the owner afterwards puts up a house on it. The mortgagee is entitled to the house as well as the plot.
Section 71: renewal of a mortgaged lease
When the mortgaged property is a lease and the mortgagor obtains a renewal, the mortgagee, in the absence of a contract to the contrary, is entitled to the new lease for the purposes of the security. The copy prints "[ *]" after the word lease, marking omitted words without saying what they were. The mirror rule, where the mortgagee obtains the renewal, is in section 64.
Section 72: spending, interest and insurance
The section is headed as the right of a mortgagee in possession. It says a mortgagee "may spend such money as is necessary" for the purposes listed. Clause (a) is shown only as "[ *]" in the copy, so the list begins at clause (b); we have no text for clause (a) in the copy consulted.
| Clause | Purpose of the spending |
|---|---|
| (a) | Omitted in the copy (printed as "[ *]") |
| (b) | Preservation of the mortgaged property from destruction, forfeiture or sale |
| (c) | Supporting the mortgagor's title to the property |
| (d) | Making his own title to it good against the mortgagor |
| (e) | Where the property is a renewable leasehold, renewal of the lease |
Interest on the spending. In the absence of a contract to the contrary, the mortgagee may add the money to the principal at the rate of interest payable on the principal, and, where no such rate is fixed, at nine per cent per annum.
Proviso. Spending under clause (b) or (c) is not treated as necessary unless the mortgagor has been called upon and has failed to take proper and timely steps to preserve the property or support the title.
Insurance. Where the property is by nature insurable, the mortgagee may, in the absence of a contract to the contrary, insure it against loss or damage by fire, the whole or any part. The premiums are added to the principal money with interest at the same rate as on the principal, or nine per cent per annum if no rate is fixed. The insured amount must not exceed the amount specified in the mortgage-deed or, if none is specified, two-thirds of the amount that would be required in case of total destruction to reinstate the property insured.
No double insurance. The mortgagee is not authorised to insure when insurance is kept up by or for the mortgagor to the amount the mortgagee is allowed to insure.
Section 73: revenue sale and compulsory acquisition
- (1) Revenue sale. Where the property, a part or an interest in it is sold owing to failure to pay arrears of revenue, other charges of a public nature or rent due in respect of it, and the failure did not arise from any default of the mortgagee, the mortgagee can claim payment of the mortgage-money, in whole or in part, out of any surplus of the sale-proceeds left after paying the arrears and all charges and deductions directed by law.
- (2) Acquisition. Where the property or any part or interest is acquired under the Land Acquisition Act, 1894 (1 of 1894), as printed, or any other enactment then in force for compulsory acquisition of immovable property, the mortgagee can claim payment of the mortgage-money, in whole or in part, out of the compensation due to the mortgagor. The reader should check the current law for the corresponding provision; that Act is not explained here.
- (3) Priority. Such claims prevail against all other claims except those of prior encumbrancers, and may be enforced even though the principal money on the mortgage has not yet become due.
A short example
Sana mortgages a shop to a lender, who takes possession. A fire-insurance policy kept by Sana already covers the full amount the lender could have insured, so the lender cannot insure again. A municipal order later requires urgent repairs to stop the roof falling in. Under clause (b), but only after the lender has called on Sana and she has failed to act, the lender may do the repairs and add the cost to the principal at the contract rate, or at nine per cent per annum if no rate is fixed. Later, part of the shop's frontage is taken by the State for a road. Under section 73(2) the lender may claim from the compensation, ranking after any prior mortgagee.
Practical points
- Keep receipts. Spending added to the debt must be shown to be necessary, and the proviso requires a prior call on the mortgagor in cases (b) and (c).
- Check the deed for any contract that changes the rate or the insurance limit.
- Insurance: the two-thirds limit applies only where the deed names no amount.
- Acquisition and revenue sale: a lender can claim even before the loan is due.
- See also what is a charge, mortgage, hypothecation or pledge for related security terms.
Need help with lender rights over mortgaged property?
If you hold or are about to take a mortgage and want clear clauses on spending, insurance and claims on compensation, our loan against property team can go through your security documents with you.
Key takeaways
- A mortgagee is entitled to accessions and to a renewed lease obtained by the mortgagor, for his security.
- Necessary spending can be added to the principal at the contract rate, or nine per cent per annum where none is fixed.
- Spending under (b) or (c) is necessary only if the mortgagor was called upon and failed to act.
- Fire insurance by the mortgagee is capped at the deed amount or two-thirds of reinstatement cost.
- Claims on revenue-sale surplus or acquisition compensation rank after prior encumbrancers and can be made before the principal is due.
Read next
- Sections 63 and 64: accession, improvements and renewed lease on redemption
- Sections 76 and 77: liabilities of a mortgagee in possession
- Sections 78 and 79: priority between mortgagees
- Types of mortgage under the Transfer of Property Act
Disclaimer: Based on a publisher's print of the Transfer of Property Act, 1882 showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003), as consulted on 2 October 2026. State amendments, later amendments, stamp duty and registration charges are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.