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A MORTGAGEE IS NOT A TRUSTEE OF A POWER OF SALE FOR THE MORTGAGOR

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The purchaser ought to have been made a party to this suit in view of the reliefs of the plaintiff to declare the sale null and void and consequently to set it aside. Any order made in favour of the plaintiff will adversely affect the purchaser. It is also pertinent that where there is prayer to set aside an auction sale, the court must remember that it is settled law that a mortgagee is not a trustee of a power of sale for the mortgagor except for the balance of the purchase money. It is a power given to him for his own benefit, enabling him to protect the mortgage debt. A purchaser who bought a property sold by a legal mortgage in exercise of his power of sale under a mortgage upon a default and repayment of a loan by the mortgagor is not a trespasser. All State Trust Bank v. Nsofor (2004) All FWLR Pt. 201, Pg. 7719 Union Bank of Nigeria v. Ozigi (1991) 2 NWLR Pt. 176, Pg. 677.

— O.O. Adekeye, JSC. Agboola v UBA (2011) – SC.86/2003

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EQUITABLE MORTGAGE HAS PART PERFORMANCE

“An equitable mortgage is an agreement that has arisen out of the deposit of the mortgagor’s title deeds with the mortgagee for loan as security. The essence of an equitable mortgage by deposit of title deeds is an agreement, between parties concerned, followed by an act of part performance. Where a party pursuant to an oral agreement deposits his title deeds with a bank as here, the act of depositing the title deeds is regarded as part performance of an agreement, which removes the transaction from the provisions of the Statute of Frauds 1677.” as per Barclays Bank of Nigeria Ltd. v. Alhaji Adamu B. Ashiru and Anor. (1978) 6-7 S.C. (Reprint) 70; (1978) 6-7 S.C. 70

– Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)

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DEPOSIT OF TITLE DEED CREATES EQUITABLE MORTGAGE

It is settled that the deposit of title deeds with a bank as security for a loan, creates an equitable mortgage as against legal mortgage which is created by deed transferring the legal estate to the mortgagee. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)

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DATE FOR PAYMENT IN A MORTGAGE AGREEMENT

Fixing a date for repayment in a mortgage transaction does not generally indicate the parties intention that the actual payment is to be made on the named date, but only that the mortgagee may call for payment on or after that date, if so minded, but not before. See Ogioro v. Igbinovia (supra), and B.O.N Ltd. v.Akintoye (supra), where it was also held that if the mortgage debt is not paid at any time fixed for payment, the mortgagee is entitled to exercise his power of sale, the debt having been deemed to have become due and payable on that day.

– Augie JSC. Bank v. TEE (2003)

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IN LEGAL MORTGAGE PROPERTY IS TRANSFERRED TO THE MORTGAGEE SUBJECT TO REDEMPTION

In a legal mortgage, title to the property is therefore transferred to the mortgagee subject to the proviso that the mortgage property would be reconveyed by the mortgagee to the mortgagor upon the performance of the conditions stipulated in the mortgage deed and upon payment of the debt at the time stipulated therein. In other words, the mortgagor is liable to repay the loan as stipulated; otherwise the mortgaged property is foreclosed. See BANK OF NORTH V. BELLO (2000) 7 NWLR (prt 664) 244, ADETONA V. ZENITH INTERNATIONAL BANK PLC (2011) 18 NWLR (prt 1278) 627 and ATIBA IYALAMU SAVINGS & LOANS LTD V. SUBERU (2018) 13 NWLR (prt 1637) 387 at 414.

— M.L. Shuaibu, JCA. FBN v Benlion (2021) – CA/C/31/2016

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FORECLOSURE PROCEEDING IS FOR EQUITABLE MORTGAGE – MORTGAGOR HOLDS LEGAL ESTATE IN TRUST

In considering the scope of the rights of an equitable mortgagee (not by way of charge) it should be borne in mind that the general rule is that foreclosure (and not sale) is the proper remedy of an equitable mortgagee (See James vs James (1873) L.R. 16 E. 153 citing with approval Pryce vs Bury at 154); and when an equitable mortgagee by deposit of title deeds and agreement to give a legal mortgage if called upon to do so takes foreclosure proceedings to enforce his security, the court usually decrees that the deposit operates as a mortgage and that in default of payments due under the mortgage the mortgagor is trustee of the legal estate for the mortgagee and that he must convey that estate to him.

– Idigbe JSC. Ogundiani v. Araba (1978)

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ATTRIBUTES OF A LEGAL MORTGAGE

The main attributes of a legal mortgage are:- (a) a covenant to pay the principal debt and interest on a given date; (b) a covenant to pay interest in the event of default in payment of the principal on the day named; (c) the demise or sub-demise of, or the charge by way of legal mortgage on the mortgaged property; (d) the proviso for cesser; and (e) Such variations of the statutory provisions with regard to mortgages, as the arrangement between the parties requires.

– Augie JSC. Bank v. TEE (2003)

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