By S&S Co. Advocates & Solicitors · Published 3 September 2026 · Informational content, not legal advice. See our disclaimer
What an Equitable Mortgage Is
An equitable mortgage, also called a mortgage by deposit of title deeds, is created under Section 58(f) of the Transfer of Property Act, 1882 when a borrower delivers the original documents of title to an immovable property to a lender, or the lender's agent, with the intention that these documents shall serve as security for a debt. Unlike a registered mortgage, an equitable mortgage does not require a separate mortgage deed to be registered, which historically made it a faster and lower-cost route for banks to take security over property, particularly in towns notified for this purpose.
What Must Be Proved to Establish It
Because an equitable mortgage can be created without a written mortgage instrument, courts require clear proof of two elements: an actual deposit of the original title deeds, and (critically) an intention on the borrower's part, at the time of deposit, that the deeds are being handed over specifically as security for a debt, not for some unrelated purpose such as safekeeping. Mere possession of title documents by a bank, without evidence of this security intention (typically shown through a memorandum of deposit, the loan sanction documentation, or clear surrounding correspondence), does not by itself establish a valid equitable mortgage.
How an Equitable Mortgage Is Enforced
Where the underlying loan is a secured facility covered by the SARFAESI Act, a bank holding a valid equitable mortgage can generally use SARFAESI's summary enforcement machinery (issuing a Section 13(2) demand notice and, if unpaid, proceeding to take possession and sell the property) without first having to file a civil suit. Where SARFAESI does not apply, the lender's recourse is a civil suit for enforcement of the mortgage, typically seeking a decree for sale of the mortgaged property.
Practical Safeguards for Lenders
Lenders relying on equitable mortgages should always execute and retain a clear, contemporaneous memorandum of deposit recording the borrower's express intention to create security, since this documentation is often the decisive evidence if the validity of the mortgage is later disputed by the borrower or contested by third-party claimants such as legal heirs.
Frequently Asked Questions
Does an equitable mortgage need to be registered?
Generally, no separate registered mortgage deed is required for a valid equitable mortgage created by deposit of title deeds, which is one of its practical advantages, though this depends on whether the property is located in a jurisdiction notified for this mode of mortgage.
Is handing over property documents to a bank always enough to create a mortgage?
No. Courts require proof that the documents were deposited with the specific intention of creating security for a debt; mere possession of the documents by the bank, without such proof of intention, is not sufficient.
Can a bank use SARFAESI to enforce an equitable mortgage?
Yes, where the underlying loan is a secured facility covered by the SARFAESI Act and the equitable mortgage is validly established, the bank can generally use SARFAESI's summary enforcement machinery rather than filing a civil suit.
References & Further Reading
This article references the following statutory provisions and regulatory materials. Readers should always verify current rules, circulars and timelines against the applicable statute, regulation or RBI direction as amended, since these are revised from time to time.
- Transfer of Property Act, 1882, Section 58(f).
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).