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EQUITABLE MORTGAGE TO CREATE A LEGAL MORTGAGE CAN SUE IN SPECIFIC PERFORMANCE

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The equitable mortgage by agreement to create a legal mortgage, therefore, entitles the equitable mortgagee to something more than a mere right to payment out of the property or premises mortgaged; under the general principles, his remedies correspond as nearly as possible with those of the legal mortgagee. Because equity regards that as done which ought to be done the equitable mortgagee, by agreement to create a legal mortgage, can enforce the execution of a legal mortgage by suing in equity for specific performance; if successful he obtains a legal term of years and can then pursue all the statutory remedies open to a legal mortgagee.

– Idigbe JSC. Ogundiani v. Araba (1978)

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mortgage, specific performance

NATURE OF SPECIFIC PERFORMANCE AND WHEN IT WILL BE GRANTED

The appellant, with the above position as depicted, desires to have specific performance of the agreement between it and the 1st respondent ordered by the court in its favour. Specific performance has been defined in Black’s Law Dictionary Ninth Edition at page 1529 as ‘the rendering, as nearly as practicable, of a promised performance through a judgment or decree; a court ordered remedy that requires precise fulfilment of a legal or contractual obligation when monetary damages are inappropriate or inadequate, as when sale of real estate or a rare article is involved. Specific performance is an equitable remedy that lies within the court’s discretion to award whenever the common law remedy is insufficient.’ In making an order for specific performance, the court must exercise its discretion judicially and judiciously as well. The Judge has to be discreet and balance the interest of both sides properly in his bid to do justice to the contending parties. See: (University of Lagos v. Olaniyan (1985) 16 NSCC (Pt. 1) 98, 113; Eronini v. Iheuko (1989) 2 NSCC (Pt.1) 503, 513; (1980) 3 SC (Pt.1) 30.

— Fabiyi, JSC. Best Ltd. v. Blackwood Hodge (2011) – SC

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READY BUILT HOUSES TO BE PAID FOR INSTALLMENTALLY ARE MORTGAGES

I will have to state clearly that the statutory corporations, with authority to build houses and sell on terms to people who otherwise would be unable to build on their own, are in someway mortgages to the buyers. But instead of outright loan to the buyer they provide ready built houses to be paid for on certain terms. The terms range according to the laid down policy of each corporation. Some require a certain percentage of the full price to be paid as first deposit and the remainder to be paid in certain instalments. They are in some cases flexible as to time but in most cases spell out when and how to liquidate the full price. All these terms are without prejudice to mortgagor’s right to pay the full price outright; or if he defaults for just a few days or even weeks in a reasonable way he still retains his equity of redemption, i.e. even if the contractual date had passed. Howard V Harris (1683) 1 Vern 190; Spurgeon V Collier (1578) 1 Eden 55; Jennings V Ward (1705) 5 Vern 520. What found its way into our statutes is no more than the historical Common Law Practice of protecting the weak borrowing from the overbearing lender. Once the lender (mortgagee) was adequately protected to recover his money in full plus interest at reasonable time even if somewhat outside the contracted period the mortgagor’s equity of redemption should not be vitiated. What is essentially a mortgage in this case is dressed up as a conveyance with the right to withhold possession from the mortgagor until he liquidated the debt; but should he fail to liquidate by unreasonably defaulting in payment and was in arrears for long the mortgagee’s right of foreclosure should also not be vitiated.

— Belgore, JSC. A.S.H.D.C. v Emekwue (1996) – SC. 282/1989

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CONTINUING MORTGAGE NEEDS NO REGISTRATION

B.O.N Ltd. v. Akintoye (1999) 12 NWLR (Pt. 631) 392: “Where an original mortgage is a continuing security for raising a second mortgage, what is needed is to upstamp it. There is no need to obtain a fresh consent of the Governor for the second mortgage. In the instant case, where the wordings of the mortgage deeds relating to the security are clear and unambiguous and where the original deed was a continuing security, there was no need to obtain a fresh consent of the Governor for the second mortgage”.

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RIGHT TO REDEEM A MORTGAGE

It is important to note that incident to every mortgage is a right of the mortgagor to redeem. This right is generally referred to as the right of redemption. The right to redeem is so inseparable an incident of a mortgage that it cannot be taken away even by an expressed agreement of the parties that the mortgage is not to be redeem or that the right is to be continued to a particular time or to a particular description of persons. The right continues unless and until the mortgagor’s title is extinguished or his interest is destroyed by sale either under the process of the court or of a power in the mortgage deed.

– Mohammed JCA. Rufukka v. Kurfi (1996)

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EFFECT OF NOTICE ON PURCHASER OF AN EQUITABLE MORTGAGE

This brings us to the subject of the equitable doctrine of “Notice.” It is usually said that a purchaser of the legal estate in any property for value and without notice has an “absolute, unqualified and unanswerable defence” to any claim of a prior equitable owner or person having a prior equitable interest in the same property (see Pilcher Vs Rawlings (1872) 7 Ch. App. 259 at 269 per James L.J.). Where, however, the purchaser, as here, has notice of a prior equitable mortgage in the property in which he seeks to take a legal estate he has a duty, by himself or by his vendor, to get rid of that prior equitable interest otherwise he is taking unnecessary risk.

– Idigbe JSC. Ogundiani v. Araba (1978)

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OBJECTION TO MANNER OF SALE WILL NOT STOP A MORTGAGOR FROM SELLING

It is a well established principle of law that a mortgagee will not be restrained on the exercise of his power of sale merely because the mortgagor objects to the manner in which the sale is being arranged or because the mortgagor has commenced a redemption action in court. (See Adams v. Scott (1859) 7 WR 213). But the mortgagee will be restrained if the mortgagor pays the amount claimed by the mortgagee into court. (See Hickson v. Darlow (1883) 23 Ch.D. 690).

— Udoma, JSC. Nig. Housing Dev. Society v. Mumuni (1997) – SC 440/1975

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