The New York statutory form of mortgage contains nine covenants made by the mortgagor. Not all of these must be used; occasionally some of them are altered or omitted, and often others are added. First will be considered the usual covenants. These appear in the form of mortgage set out in this chapter.

By the first covenant the mortgagor agrees to pay the indebtedness, and not only that but to do so as provided in the mortgage. It implies also that if there arise any default in carrying out the terms of the obligation, the lender may have the property sold to satisfy his claim in due legal course by means of an action in foreclosure.

The second and fourth covenants are usually set forth in the bond. They should accord in both instruments. Their meaning is explained in the discussion of the bond. (Page 87.)

The third covenant prohibits the removal or demolition of any building on the pledged property. This prevents any lowering of the value of the security. The land might be worth $2,000; the building $8,000. Together they are sufficient security for a mortgage loan of $5,000. But if the building were removed the pledge would be entirely inadequate. Should the borrower attempt any such act, he may be enjoined by court order at the instance of the lender, who may also forthwith call the loan and commence foreclosure.

The fifth covenant is known as the "Receiver clause." An action to foreclose the mortgages takes several months. During this time the owner is collecting the rents, thereby getting all the benefits from the property, and knowing that he will soon lose it, he neglects to expend anything in keeping up the property. When the mortgage contains this clause, the mortgagee can prevent this injustice, by applying for the appointment of a receiver. The receiver steps into the owner's shoes, collects the rents and pays the carrying charges from the time of his appointment till the sale of the property in the action. Whatever net profit he has in his hands at the termination of his duties becomes an additional fund from which the mortgagee may satisfy his claim.

The sixth covenant is an agreement on the mortgagor's part to pay all taxes, assessments and water rates. If they are not paid the mortgagee may call a default under the fourth covenant. But this covenant goes further than that. It permits the mortgagee to pay them, if the mortgagor fails to do so, and add the amount of such payments to the amount of principal and interest due him.

By the seventh covenant the mortgagor obligates himself to give, within a certain time (usually fixed at five days upon request in person or ten days upon request by mail) a statement of the amount due. Such a statement is known as an "estoppel certificate." Its purpose is readily explainable. If the holder of the mortgage desires to sell it, he is enabled by this covenant to place in his assignee's hands a statement by the owner of the land of how much is owing on the mortgage. The purchaser is thereby assured that no claim of payment or reduction can be later made by the debtor.

The eighth covenant specifies that the notices provided in the various covenants may be served either personally or by mail. Without this clause it would be necessary to secure personal service on the owner, a thing which is often very difficult to accomplish, particularly if the owner desires to evade service. A notice deposited in a regularly maintained mail receptacle, postpaid, properly addressed is presumed to have been received by the addressee.

The ninth covenant is similar to the covenant of warranty in a deed. It is a guarantee by the mortgagor that he has good title to the property described in the mortgage.