Works : Islamic Laws
2309. Mortgage means that a person effects a conveyance of property to another person as security for money debt, or property held under responsibility, with a proviso that if that debt is not paid, the creditor may pay himself out of the proceeds of that property.
2310. It is not necessary to pronounce a prescribed formula for effecting the mortgage. If the debtor conveyances his property to the creditor with the intention of providing security for the debt, and the creditor accepts it with the same intention, the mortgage is in order.
2311. The mortgagor and the mortgagee should be adult and sane, and should not have been coerced by anyone. Moreover, the mortgagor should not be bankrupt and feeble-minded. The meaning of 'bankrupt' and 'feeble-minded' have been given in rule 2262. But if the property mortgaged does not belong to the bankrupt, or if he has not been prohibited to use it, there is no objection.
2312. A person can mortgage that property over which he has a right of disposal or discretion, and it is also in order if he mortgages the property of another person with his permission.
2313. The property mortgaged must be such in which trading is permissible by Shariah. Hence, if alcoholic liquor or something like it is mortgaged, the transaction will be void.
2314. The benefit which accrues from the mortgaged property, belongs to the owner, whether the mortgagor or any other person.
2315. The mortgagee cannot present or sell the mortgaged property to another person without the permission of the owner, whether he is the mortgagor or any other person. However, if he presents or sells it to another person, and the owner consents to it later, there is no harm in it.
2316. If a mortgagee sells the mortgaged property with the permission of the owner, the sale proceeds will not be considered mortgaged like the property itself. And the same will apply if the he sells it without the permission of the owner, but the owner endorses the transaction later.
But if the mortgagor sells it with the permission of the mortgagee, with an understanding that its proceeds will be be mortgaged, that is, the sale proceeds of that property will get mortgaged like the property itself, then he must follow the understanding. And if he contravenes it, the transaction will be void, except when the mortgagee gives his assent.
2317. If the creditor demands the repayment of debt when it is due, and the debtor does not repay it, the creditor can sell the mortgaged property and collect his dues, provided that he had been authorised to do so. And if he was not authorised to do so, it will be necessary to obtain permission from the debtor.
And if the debtor is not available, he should obtain permission for the sale of the property from the Mujtahid. In either case, if the sale proceeds exceed the amount due to him, he should give the amount in excess of his debt to the debtor.
2318. If the debtor does not possess anything other than his house he occupies, and the essential household effects, the creditor cannot demand the repayment of debt from him. But, if the thing mortgaged by him is his house and its household effects, the creditor can sell them, and realise his dues.