When there is a mortgage deed signed between the mortgagor and the mortgagee, there is a clause that provides for the power of sale.
This clause specifies that in the event of continuous default in making the mortgage payments, the mortgagee without the court’s intervention can directly apply the clause and ask the mortgagor to vacate the premises for outright sale. The mortgagee is also legally bound to recover all his dues and pay back the mortgagor the excess balance if any.
The power of sale clause is by itself very powerful since it does away the tedious overtones of a court case. There are no legal decisions and hearings to be waited upon; the decision is generally taken immediately when a certain number of mortgage payments become outstanding. The mortgagor is not given any other opportunity to present his part of the case, he is asked to vacate the premises within a stipulated number of days and the property bought with the loan amount is disposed off. In certain cases, in the larger interests of the mortgagor the power of sale clause may provide for auctioning off the property with the sale being awarded to the highest bidder. This is beneficial to the mortgagor as well since some monetary value can be salvaged which can help him to fend himself.
The provision of the power of sale clause is so deterring that every attempt is made by the person taking the loan to make payments regularly and not go into any default. Since the that clause in a mortgage agreement is legal and complies with the laws of the land, there is hardly any remedy available to the mortgagor for rebutting this clause later. The most important benefactor in a power of sale is the mortgagee who is assured of regular agreed installments in the normal course or a sale value for recovery of the loan amount in the extreme case.
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