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Difference between "conditional mortgage" and "sale with condition to repurchase".



Difference between "conditional mortgage" and "sale with condition to repurchase".

A conditional mortgage and a sale with condition to repurchase are two different types of transactions involving property. 

The main difference is that in a conditional mortgage, the original owner of the property remains the debtor and has the right to redeem the property by paying off the debt to the lender, who is the conditional buyer. In a sale with condition to repurchase, the original owner sells the property outright to the buyer and has no debt or right to redeem, but only an option to repurchase the property within a specified period by paying the agreed price to the buyer. 


A conditional mortgage is a form of mortgage by which the owner of the property transfers it to the lender as a security for the loan, but with a condition that the transfer will become absolute or void depending on whether the loan is repaid or not. A conditional mortgage must be evidenced by one document that contains the condition of redemption. A conditional mortgage is governed by Section 58 (c) of the Transfer of Property Act, 1882.


A sale with condition to repurchase is a form of sale by which the owner of the property sells it to the buyer, but with a condition that the buyer will reconvey the property to the seller if the seller pays the agreed price within a specified period. A sale with condition to repurchase may be evidenced by more than one document, such as a sale deed and a separate agreement of reconveyance. A sale with condition to repurchase is not a mortgage, as there is no debt or security involved. A sale with condition to repurchase is governed by the general principles of contract law.

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