HOW TO CREATE LEGAL MORTGAGES IN NIGERIA

HOW TO CREATE LEGAL MORTGAGES IN NIGERIA

Meaning of Mortgage Defining mortgage can be very tricky and dicey. Lord Macnaghten opined in Samuel V. Jarrah Timber and Wood Paving Corporation [1] that "no one...by the light of nature ever understood an English mortgage of real estate". In Intercity Bank Plc V. Feed and Food Farms Nig. LTD [2], the court defined a mortgage as a conveyance of property as security for a debt, which is lost or became dead to the debt if the money or the interest due on it is not paid on a certain date. Similarly, in Olowu V. Miller Bros Limited [3], the court defined mortgage as security created by contract for the payment of a debt already due or to become due.

Owing to the fact that no definition is accepted on a general note, hence, for better description of what mortgage is, there is need to broach its features.

Features of mortgage include [4]:

1. It is conveyance of an interest in land to a lender of money.

2. The land is held only as security or collateral to ensure repayment of the money loaned.

3. The property is re-conveyed back to its owner when the money loaned is repaid.

4. In the event of a failure to repay the money advanced, the lender of the money has the right to sell the land to realise the money advanced. He can also exercise other remedies to ensure payment.

On a specific note, the method of creating legal mortgages in Nigeria depends on where the property is located whether in states covered by the Property and Conveyancing Law, Conveyancing Act or Mortgage and Property Law, Lagos State. Under the Conveyancing Act, mortgage can be created through assignment, sublease or sub-demise and Deed of Statutory Mortgage. Under the Property and Conveyancing Law, Demise, sub-demise or sublease and legal charge are the means. When it comes to the Mortgage and Property Law, the ways of creating mortgage depends on whether the legal interest is a right of occupancy or a leasehold interest.

However, on a broad note, legal mortgages are created in one of the following ways:

1. Via a legal mortgage of a fee simple: This way, the mortgagor conveys the whole of his beneficial interest to the mortgagee with a covenant by the mortgagee that he will re-convey the mortgaged property upon repayment of the loan on an agreed date which usually extends up to six months in accordance with common law.

2. Via a legal mortgage of leasehold or rights of occupancy: By this medium, it may be created through:

(i) the mortgagor assigning the whole of his unexpired term of the lease or right of occupancy or;

(ii) sublease of the mortgagor's term [5].

[1] (1904) AC 323 at 326

[2] (2002) FWLR, part 128 p.1289

[3] (1922) 3 NLR, 110; Per Pennington J.

[4] Y.Y Dadem. Property Law Practice in Nigeria. 4th Edition. Jos University Press Limited.

[5] Ibid.

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