Mortgages & Charges
- PART I: Mortgage I -
What is a Mortgage
Black’s Law Dictionary 6th ed; Samuel v Jarrah Timber and Wood Paving Corp (1904) AC 323; Olowu v Miller Bros (1922) 3 NLR 110
An interest in land created by a written instrument providing security for the performance of a duty or the payment of a debt.
“No one by the light of nature has yet understood the nature of English mortgage.”
Simply: a conveyance of land as security for a loan transaction with a proviso for cesser upon redemption. On repayment, the conveyance becomes void and the interest reconveyed.
Time Stages in a Mortgage Transaction
| Point | Stage |
|---|---|
| A | Date of creation of mortgage |
| B | Legal Due Date |
| C | End of transaction (repayment / redemption / enforcement of security by sale or foreclosure) |
Right of Redemption
- From A → B: mortgagor has contractual right to redeem;
- If date passes without repayment: B → C: mortgagor obtains an equitable right to redeem;
- From A → C: mortgagor has equity of redemption.
"Once a Mortgage" Doctrine
Owoniboys Technical Services Ltd v Union Bank of Nigeria Ltd (2003) SCNQR 58; Santley v Wilde (1899) 2 Ch Div 474
“Once a mortgage, always a mortgage - there must be no clog on the equity of redemption.”
Unique Nature of Mortgage Transactions
- Secured credit transaction with two main features: (i) money advanced; (ii) collateralised land/house as security;
- Lender entitled only to repayment - security is to strengthen assurance of repayment;
- Equity considers it immoral for lender to profit from mortgagor’s misfortune;
- Hence, the stringent unconventional rules surrounding mortgage transactions.
Parties Terminology
- Mortgagor - the borrower;
- Mortgagee - the lender (usually a Bank);
- Mortgage sum - sum advanced.
Tripartite Mortgages
Three parties may exist:
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