By Advocate Md. Shah Alam · 2026-05-21 · 9 min read
Mortgaging property is a common practice in Bangladesh — whether to secure a bank loan, borrow from a private lender, or receive agricultural finance. However, many property owners enter mortgage agreements without fully understanding their rights and the risks involved. This guide explains all types of mortgages, foreclosure rules, and the mortgagor's right of redemption under Bangladesh's Transfer of Property Act 1882.
Under Section 58 of the Transfer of Property Act 1882 (which applies in Bangladesh), a mortgage is defined as:
"The transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability."
Key elements of a valid mortgage under Bangladesh law:
A mortgage is distinct from a sale (which transfers full ownership) and a pledge (which applies to movable goods). Mortgages of immovable property above BDT 100 in value must be by a registered mortgage deed (except for deposit of title deeds). For any mortgage transaction, consult a property lawyer in Dhaka to ensure your rights are protected.
The Transfer of Property Act 1882 recognises six types of mortgages in Bangladesh:
The mortgagor does not deliver possession of the property to the mortgagee. The mortgagor personally undertakes to repay the loan, and if they fail, the mortgagee has the right to have the property sold (but not to take possession). This is the most common form used by banks and financial institutions in Bangladesh.
The property is ostensibly sold to the mortgagee with a condition that on payment of the loan the sale becomes void (i.e., the mortgagor can reclaim the property), or on default the sale becomes absolute. The key distinction from an actual sale is that the condition of reconveyance must be contained in the same document as the sale deed.
This is the most common form of private/informal mortgage in rural Bangladesh. The mortgagor delivers possession of the property to the mortgagee, who is entitled to enjoy the usufruct (rents, income, produce) of the property in lieu of interest. The mortgagee retains possession until the mortgage money is fully paid. No personal obligation to repay exists — the mortgagee recovers the loan from the property's income.
The mortgagor transfers absolute ownership to the mortgagee, with a personal covenant to repay, and an agreement that on repayment the mortgagee will retransfer the property. Common in formal commercial lending in Bangladesh.
The mortgagor deposits the original title documents of the property with the mortgagee (usually a bank) as security, with an oral or written agreement creating a charge. No registration is required. Very commonly used by banks in Dhaka and major cities as a quick, low-cost mortgage security.
Any mortgage that does not fall neatly into the above categories. Often encountered in rural areas with customary local practices.
Understanding which type of mortgage you have entered into is essential because the remedies available to the mortgagee and the protections available to the mortgagor differ significantly between types. Consult a property lawyer in Bangladesh to review your mortgage deed.
The mortgagor (borrower/property owner) retains several important rights under Bangladesh law:
The mortgagor's key duties include:
The mortgagee (lender/bank) also has defined rights and obligations under the Transfer of Property Act:
If a mortgagee (bank or private lender) is mismanaging your mortgaged property or refusing to accept repayment and reconvey, contact Advocate Md. Shah Alam immediately for legal intervention.
Foreclosure is the process by which the mortgagee terminates the mortgagor's equity of redemption and acquires full title to the mortgaged property upon default. Under Bangladesh law:
When the mortgagee is a bank or financial institution, enforcement of mortgage security is governed by the Artha Rin Adalat Ain 2003 (Money Loan Court Act). The bank files a suit before the Artha Rin Adalat (Money Loan Court), which has special powers to attach and sell mortgaged property and apply proceeds to the outstanding loan. Time limits for these proceedings are strictly enforced. Consult a Supreme Court lawyer in Bangladesh if facing bank foreclosure proceedings.
The right of redemption under Section 60 of the Transfer of Property Act 1882 is considered one of the most sacrosanct rights of a mortgagor. It provides that at any time after the principal money has become due, the mortgagor has the right to:
Bangladesh law, following Indian and English equity principles, strictly prohibits any clause in a mortgage deed that has the effect of preventing, curtailing, or restricting the mortgagor's right of redemption. Such clauses — called clogs on the equity of redemption — are void and unenforceable. Common void clauses include:
A mortgagor must file a suit for redemption within 30 years (for usufructuary mortgages, the period starts from the date of the mortgage; for others, from the date the money became due). This long limitation period protects mortgagors who may be in financial difficulty for extended periods.
If a lender or bank is refusing to accept your repayment or threatening to sell your mortgaged property illegally, contact a property lawyer in Dhaka immediately to protect your redemption rights through an injunction or redemption suit.
Mortgage disputes in Bangladesh are unfortunately common. Typical dispute scenarios include:
Given the technical complexity of mortgage litigation, always engage an experienced property lawyer in Bangladesh. For urgent matters involving bank enforcement actions or illegal property seizures, contact Advocate Md. Shah Alam for immediate legal assistance.
In a usufructuary mortgage, the mortgagor transfers possession of the property to the mortgagee, who collects the rents and income of the property as repayment of the loan instead of receiving cash interest payments. This is one of the most common forms of private mortgage in rural Bangladesh.
No. In Bangladesh, a bank must file a suit before the Artha Rin Adalat (Money Loan Court) and obtain a court decree before selling mortgaged property. Self-help foreclosure or seizure of mortgaged property without a court order is illegal.
The right of redemption (Section 60 of the Transfer of Property Act 1882) is the mortgagor's right to pay off the mortgage money at any time before foreclosure and demand that the mortgagee reconvey the property. This right is fundamental and cannot be permanently extinguished by any clause in the mortgage deed.
Yes, all mortgages of immovable property for amounts above BDT 100 must be made by a registered deed, except for a mortgage by deposit of title deeds (equitable mortgage), which can be created without registration. Unregistered simple or usufructuary mortgages are not enforceable against third parties.
A clog on the equity of redemption is any clause in a mortgage deed that prevents or restricts the mortgagor's right to redeem the property. Such clauses are void under Bangladesh law. For example, a clause giving the mortgagee the right to buy the property at a fixed price on default is unenforceable.
A mortgage suit in the civil court can take 2–5 years depending on the complexity and court backlog. Suits before the Artha Rin Adalat (for bank loans) are governed by stricter timelines under the Artha Rin Adalat Ain 2003, which mandates faster disposal, though delays still occur in practice.
If the auction sale price exceeds the mortgage money, interest, and court costs, the surplus must be returned to the mortgagor (or subsequent encumbrancers). The mortgagee is not entitled to keep the surplus — only the amount owed to them.