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Under section 65 of the Transfer of Property Act, 1882, which statements about implied covenants by the…

Statement I accurately describes the mortgagor’s title-defence covenant. Statement II accurately places public charges on the mortgagor while the mortgagee is out of…

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Under section 65 of the Transfer of Property Act, 1882, which statements about implied covenants by the mortgagor are correct?

I. In the absence of a contract to the contrary, the mortgagor shall be deemed to contract with the mortgagee that the mortgagor shall defend, or, if the mortgagee is in possession of the mortgaged property, will enable him/her to defend, the mortgagor's title thereto.

II. In the absence of a contract to the contrary, the mortgagor shall be deemed to contract with the mortgagee that the mortgagor will, so long as the mortgagee is not in possession of the mortgaged property, pay all public charges accruing due in respect of the property.

III. In the absence of a contract to the contrary, the mortgagor shall be deemed to contract with the mortgagee, where the mortgage is a second or subsequent incumbrance on the property, that the mortgagee will pay the interest from time to time accruing due on each prior incumbrance as and when it becomes due, and will at the proper time, discharge the principal money due on such prior incumbrance.

IV. In the absence of a contract to the contrary, the mortgagor shall be deemed to contract with the mortgagee, where the mortgaged property is a lease, that the rent payable under the lease, the conditions contained therein, and the contracts binding upon the lessee, have been paid, performed, and observed down to the commencement of the mortgage.

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Answer and explanation

Correct answer D

Statement I accurately describes the mortgagor’s title-defence covenant.

Statement II accurately places public charges on the mortgagor while the mortgagee is out of possession.

Statement III is false because the mortgagor bears the prior encumbrance obligations.

Statement IV accurately states the implied covenant about compliance with the lease down to commencement of the mortgage.

Option feedback

Option A

III incorrectly makes the mortgagee responsible for the prior interest and principal.

Option B

II is also correct. The mortgagor pays public charges while the mortgagee is out of possession.

Option C

III assigns payment to the wrong party and the set omits the valid public-charge covenant.

Option D

I, II and IV correctly state implied covenants by the mortgagor.

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