19. the ninth covenant the owner of the mortgaged premises agrees to sign an estoppel certificate, that is to say, a written instru ment which certifies to the amount due on the mort gage. A mortgage is not always a lien for the amount of principal and interest mentioned in it. A payment may have been made by the owner of the property or it may have been modified by agreement. The estoppel certificate is of value to the mortgagee and any assignee relying on it, as it confirms the amount claimed by the mortgagee and estops the owner from claiming any less amount to be due.
Failure to furnish the certificate when requested, within the time specified, may result in the entire mortgage becoming due.
20. Special agreements in the covenants described, special provisions, either for the benefit of the owner of the land or the holder of the mortgage may be included in the mortgage. One of these is known as the release clause which states that the holder of the mortgage agrees to release por tions of the premises upon payment of a certain sum of money on account of the principal. This provision is of value when the mortgage covers a number of lots which the owner may sell separately. As he sells one or more lots he pays the mortgagee a specified amount agreed upon, and obtains an instrument re leasing the plots sold from the lien of the mortgage.
Another important clause is frequently inserted in mortgages which are junior liens on the property, that is, subject to prior mortgages. This is known as the "lifting clause" and provides that the mort gage is subject and subordinate to the prior mort gage, and shall continue to be subject and subordi-, nate to any new mortgage of like amount and similar terms, made to replace the existing prior mortgage, and that the holder agrees to execute any instrument necessary to effect such subordination.
The subordinate mortgage may further provide that if there is any default in the payment of interest on the prior mortgage, the holder of the junior lien may pay such interest and add it to the amount se cured by his mortgage; also, that if any action is com menced to foreclose the prior mortgage, the holder of this mortgage may elect to consider his mortgage im mediately due and payable. This provision is valu able to the holder of a mortgage, the lien of which may be jeopardized by default occurring in a prior mortgage, as it helps him to preserve his lien on the property.
21. Special forms of mortgage.—There are a num ber of forms of mortgages which are used as occasion requires. Three of such forms are the following: (a) Instalment mortgage. The principal feature of the instalment mortgage is its provision that the principal sum shall be paid in instalments. Some times it is provided that certain instalments of prin cipal shall be paid in addition to interest. In other cases it is provided that specified amounts shall be paid, out of which interest on the mortgage shall be taken and the balance of the payment be applied to ward the payment of the principal. In the latter case the interest charge becomes smaller as the prin cipal is reduced ; hence, as the payment remains the same, the portion applied to principal becomes greater with each succeeding payment.
(b) Building loan mortgages are used to secure advances on a loan made to finance the construction of some improvement on the land. The principal is advanced to the owner from time to time during the progress of the work. The mortgage is made out for the total amount to be loaned, but it is only a lien on the property for the amount actually ad vanced. As advances are made they are receipted on the bond. In New York, it is necessary to file a building loan agreement in connection with such a mortgage, setting forth among other things, how the advances are to be made.
(c) Trust mortgages are made to a trustee, usu ally to secure an issue of bonds. Instead of one bond, held by one person, there may be many bonds held by a number of persons, all secured by one mortgage. The mortgage is then made to the trustee who acts for all the bondholders. This form of mortgage con tains all the covenants and agreements found in the usual form and, in addition, a number of provisions regarding the rights and duties of the trustee and the individual bondholders. In Canada the form of mortgage or charge depends on whether the Torrens System or Land Titles Act is in force or not. If the propyrty is under the Land Titles Act, the docu ment is usually called a charge, otherwise a mortgage.