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RIGHT TO REDEEM IS INCIDENTAL IN MORTGAGES

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Dictum

Incident to every mortgage is a right of the mortgagor to redeem – this right is generally referred to as the equity of redemption. – Ogundare JSC. Ejikeme v. Okonkwo (1994)

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MORTGAGE DEBT HAS TO BE OUTSTANDING FOR MORTGAGEE TO TAKE POSSESSION

A deed of legal mortgage is said to have been created once an agreement exists between the parties, and the instrument signed by the parties which is described as a legal mortgage, provided it is under a seal. Therefore, the legal effect of a deed of legal mortgage is that it allows the mortgagee exercise its possessory rights over the mortgage property. It is to be noted however, that caveat in the position of a mortgagee remains that the mortgage debt has to be outstanding and unliquidated in order for the right of a mortgagee to immediate possession of the mortgaged property to become activated. See AFRIBANK V. ALADE (2000) LPELR – 10722 (CA) and S.W.V. (NIG) LTD V. AMCON (2020) 3 NWLR (prt 1710) 179.

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

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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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WHERE MORTGAGE IS BY CHARGE

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)

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DISPUTE AS TO AMOUNT OWNED IS NOT VALID GRANT FOR MORTGAGEE NOT TO SELL

A dispute as to volume of indebtedness is not a valid ground known to law such as can be relied upon to prohibit a mortgagee from exercising his right of sale. In other words, the mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute. He will be restrained, however, if the mortgagor pays the amount claimed into court, that is the amount which the mortgagee swears to be due to him, unless on the terms of the mortgage the claim is exclusive. [Sabbagh v. Batik of West Africa (1962) 2 All NLR 225]

– L.A. Ayanlere v. Federal Mortgage Bank of Nig. Ltd. (1998) – CA/K/186/96

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How Equitable Mortgage is created?

Now, equitable mortgages are created inter alia, (1) by mere deposit of title deeds with a clear intention that the deed should be taken or retained as security for the loan; (2) by an agreement to create a legal mortgage and (3) by mere equitable Charge of the mortgagor’s property. In passing we think that it should be pointed out that the last of the three classes of equitable mortgage i.e. that which is created merely by a charge on the property intended as security for the loan differs considerably from the first two in respect of the remedies it confers; and the property so charged is appropriated only to the discharge of a debt or some other burden in respect of which the property stands charged.

– Idigbe JSC. Ogundiani v. Araba (1978)

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A MORTGAGEE HAS A POWER OF SALE AS OF RIGHT IN THIS INSTANCE

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

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