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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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
In other words where the mortgage is by way of charge, and not by conveyance, the mortgagee takes no estate whatsoever in the land or in the property but he has generally only an equitable interest to be enforced by sale upon an order of court. The equitable charge simpliciter only gives a right to payment out of the property; it does not amount to an agreement to give a legal mortgage at all. The strict mode of enforcing the charge is, however, by sale (or appointment of a receiver under an order of court) but never by foreclosure. On the other hand where, as here, the agreement is to create a legal mortgage when required following a default in the terms of the agreement, the agreement may be enforced according to its terms notwithstanding that the legal mortgage when executed will also confer on the mortgagee an immediate power of sale.
– Idigbe JSC. Ogundiani v. Araba (1978)
A mortgagee, unless where a contrary intention is shown, has a power of sale provided: (a) the mortgage was made by deed; and (b) the mortgage money is due, that is the legal date for redemption has passed. Where the money is payable by installments, the power of sale arises as soon as any installment is in arrears.
– L.A. Ayanlere v. Federal Mortgage Bank of Nig. Ltd. (1998) – CA/K/186/96
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)
I have earlier set out the peculiar factors and circumstances not least being that the appellant has paid part of the purchase price of ₦2.3m to the tune of ₦1.8m leaving a balance of ₦500,000.00 and has been put in possession of the disputed property. There is a binding agreement of sale of the 1st respondent’s interest in the said property between the appellant and the 1st respondent. The appellant has thereby acquired an equitable interest to the extent of the 1st respondent’s interest in the equity of redemption and this is the interest which the mortgagor, the 1st respondent has had at all material times. The 1st respondent cannot give what it hasn’t got. And as I intimated earlier any attempt to pass the legal estate in the disputed property to the appellant will be of no effect and void not voidable because the 1st respondent as the mortgagor has bound itself to convey the legal estate to the mortgagee whenever it is called upon to do so until the principal, interest and costs are duly paid on the mortgage. See: Barclays Bank of Nigeria Ltd v. Ashiru and Anor. (supra) per ldigbe JSC, and Jared v. Clements (1903) 1 Ch. 428. Besides, the appellant is acquainted with notice of the mortgage and so cannot take priority to the 2nd respondent’s equitable mortgage which is first in time. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
For the purpose of this appeal, it must be emphasized that a building erected on a mortgaged land form part of the mortgaged property by virtue of the maxim quic quid plantatur solo solo cedit – meaning “he who owns the land owns what is on it”. Adepate v. Babatunde (2002) 4 NWLR Pt. 756, Pg. 99
— O.O. Adekeye, JSC. Agboola v UBA (2011) – SC.86/2003
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