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BAD FAITH ON THE PURCHASER OF MORTGAGE PROPERTY

Dictum

The law of sale by auction or auction sale protects the purchaser and that is the basis of the principle of law that a mortgagor’s right essentially is in damages. The law has an important qualification and it is that the purchaser must have bought the mortgaged property in good faith, that is bona fide and not in bad faith, that is mala fide. The sympathies of the law on the purchaser will vanish the moment the court comes to the conclusion that the purchaser bought the property in bad faith. Bad faith on the part of the purchaser is a matter of fact to be deduced from the totality of the purchasing or buying conduct of the purchaser. Bad faith taints or better still, destroys a mortgage sale and therefore the property in the sale.

– Niki Tobi JSC. Okonkwo v. Cooperative Bank (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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MORTGAGEE’S RIGHT OF PROPERTY SALE

Intercity Bank Plc. v. F and F F (Nig.) Ltd. (2001) 17 NWLR (Pt.742) 347, wherein Omage, J.C.A. stated as follows on page 365 “In my respectful opinion, the complaint of the mortgagor notwithstanding, about the actual sum owing on the mortgage, the court will not interfere or restrain the mortgagee from exercising his right of sale of the mortgaged property. To intervene is to seek to vary the terms of the mortgage agreement and the court will not rewrite the mortgage agreement for the parties. The right of sale of the mortgagee is the only certain shield of recovery of the mortgagee’s investment … and he should be allowed to sell, ceteris paribus (all things being equal)”.

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FORECLOSURE IS A POWERFUL REMEDY FOR AN EQUITABLE MORTGAGE

The right to foreclosure is very powerful remedy in the hands of the equitable mortgagee and the vendor who takes a legal estate with notice of an equitable mortgage and therefore subject to this class of equitable interest should bear this in mind since, in certain circumstances, he may find in the end that he has bought a worthless legal estate.

– Idigbe JSC. Ogundiani v. Araba (1978)

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DEFINITION OF MORTGAGE

A mortgage is defined as creation of an interest in a property defeasible, that is, annullable upon performing the condition of paying a given sum of money with interest at a certain time. Thus, the legal consequence of the above is that the owner of the mortgaged property becomes divested of the right to dispose of it until he has secured a release of the property from the mortgagee.

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

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ONCE MORTGAGE ALWAYS MORTGAGE

An important feature of mortgages both legal or equitable is that once a mortgage always a mortgage and nothing but a mortgage. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)

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NON-COMPLIANCE WITH AUCTIONEERS LAW ONLY GIVES RISE TO DAMAGES

An auction sale of mortgaged property is however valid despite the non-compliance with auctioneers law. Thus, any irregularity in the sale is remediable to the mortgagor in damages. See OKONKWO V. C.C.B. (NIG) PLC. (Supra). In ABDULKADIR V. MOHAMMED (2019)12 NWLR (prt. 1687) 450 at 496, it was held that except where the sale of a mortgaged property by auction is tainted with fraud and collusion, any irregularity in an auction sale in breach of the auctioneers Law and Land use Act cannot vitiate the sale.

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

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