RIGHTS OF PARTIES TO A MORTGAGE
A mortgage is the transfer of the ownership of an asset by way of security by a borrower to a lender upon the express or implied condition that it will be re-transferred to the mortgagor upon discharge of the secured obligations. Parties to a mortgage, including mortgagor and mortgagee, have their rights. These rights will be examined as follows:
A] Rights of the Mortgagor
1. Right of redemption
The right of redemption allows the mortgagor to redeem the property under certain circumstances. The mortgagor can ask the mortgagee to transfer all mortgage deeds and other documents relating to the mortgaged property, which are in the possession of the mortgagee. It will transfer ownership to the mortgagor. The right of redemption cannot be redeemed in part and must be an absolute transfer.
2. Transfer to a third party
Transfer to a third party allows the mortgagor to request the mortgagee to transfer the mortgaged property to a third party and retransfer to the mortgagor. It can only occur when the mortgagee is not in possession of the property, the right of retransfer is stated in the initial contract, and the right of redemption still holds.
3. Inspection and production of documents
Inspection and production of documents provide the mortgagor with the right of redemption to inspect and create copies of all documents (related to the mortgage) in possession of the mortgagee.
4. Additions to property Additions to property allow the mortgagor to have rights of redemption on any additions or improvements to the property.
B] Rights of the Mortgagee
1. Right to Take Possession of the Mortgaged Property
A legal mortgagee has a right or remedy to enter upon and take possession of the mortgaged property until the amount of the loan with interest is recovered. The right to possession does not depend upon any default on the part of the mortgagor. A mortgagee who takes possession becomes the manager of the property in which the mortgagor still has a beneficial interest. He therefore has to account to the mortgagor.
2. The Right or Power of Sale by the Mortgagee
The mortgagee’s power of sale may be conferred on him expressly by the mortgager by a stipulation to that effect in the mortgage. Apart from an express conferment by the mortgagor, the mortgagee’s power or right of sale may be derived from statute. There are three conditions that must exist before a sale by the mortgagee becomes valid; they are:
(a.) The mortgagee must give notice to the mortgagor that he is in default for three months.
(b.) There must be some arrears of interest for at least two months, which the mortgagee must also notify the mortgagor.
(c.) There must have been some breach of the mortgage covenant (a formal agreement).
3. The Power or Right to Appoint a Receiver
The power to appoint a receiver of the mortgaged property may be derived from an express provision to that effect in the mortgage. A receiver appointed by the mortgagee is generally under the mortgagee’s control: he can, at the mortgagee’s direction, insure the mortgaged property, and needs the mortgagee’s written authority even to execute necessary repairs.
4. The Right of Foreclosure
The right of foreclosure mainly avails the equitable mortgagee. Foreclosure is the judicial process by which the mortgagor’s equitable right to redeem is extinguished and the mortgaged property is rested absolutely in the mortgagee. In an application for foreclosure, the court has a discretionary power to order a sale instead of foreclosure at the request of the mortgagor or any person interested either in the mortgage money or in the right of redemption.
NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com
WRITTEN BY CHAMAN LAW FIRM TEAM
EMAIL: chamanlawfirm@gmail.com
TEL: 08065553671, 08024230080