LAND LAW 2.8 MORTGAGES; DOCUMENTATION
Though not so necessary for exams.
A mortgage agreement must be evinced in writing and signed by the parties (in accordance with Section 4 of the Statute of Frauds).
The memorandum/written agreement should contain information relating to the parties, the contract sum, payable interest, mode and manner of payment and redemption. (The mortgage agreement would usually contain information and terms on; the commencement date, Recitals (Stipulating/Stating the parties’ intention. E.g. that A wants to mortgage his land to B), Testatum (Which describes the actual transaction), Provisions on insurance (Which burden usually falls on the mortgagor but can be varied), compensation upon acquisition by government-See Section 28 LUA, Covenants, Alienation, Consolidation of Mortgage and so on).
The parties can include clauses in the agreement. However, the courts have consistently held that clauses limiting the mortgagor’s equity of redemption (i.e. clauses that absolutely prevent the mortgagor from repaying and redeeming his property once the due date has passed) are void.
The creditor (i.e. mortgagee) should ensure that legal requirements for documentation are complied with. Where the mortgagor is an illiterate, the agreement must be executed, read and explained to him (i.e. the illiterate mortgagor) in the presence/before a magistrate or justice of peace-Section 1, 4 Illiterates Protection Law.
The governor’s consent should be obtained (this may not be required for mortgage by deposit of title deeds-Okuneye V FBN). Failure to obtain the requisite governor’s consent renders the transaction void-Savannah Bank V Ajiloh. Although in Awojugbagbe Light Industries V Chinukwe the court held that absence of consent merely renders the transaction “inchoate” until the governor’s consent is obtained. However the recent case of UBN V Ayodare, maintained that where the requisite consent of the governor is not obtained, the mortgage transaction would be void.
Furthermore, the mortgage document should be properly stamped in compliance with Section 22 of the Stamp Duties Act.
The mortgage agreement should be registered else it may not be admissible in evidence to prove the existence of the security-section 15 Land Registration Act 1924. Though it can be used to show payment. Priority is ranked from date of registration-Section 16. Note however that registration does not cure a defect in title. In areas where the Registration of Titles Act applies, registration of the interest comprised in the conveyance must be done within 2 months else transaction would be void and subsequent purchasers would acquire void title which cannot be cured by subsequent registration-Onashile V Barclays Bank Ltd.