Grand Master - , 3:00 am On 9 Sep 2017
Man finds it easy not in life in carrying out his daily routine unilaterally without the help of another, he will have to conveniently make for himself an alternative to carry out his routine. The subject matter of every commercial activities is money, and in the absent of it, the option open to a determined minded fellow is to borrow some money and use one of his most valued asset as collateral or security to secure the loan so desired to be taken, this is the underlining concept of mortgage transaction.
What is Mortgage?
Juridically, some benchers described mortgage thus; Justice Niki Tobi JSC described Mortgage as a ‘’concept not easy to relate and not easy to understand and comprehend’’
Lord MacNaghten in Samuel Jarrah’s case described Mortgage thus; ‘’No one by the light of Nature ever understood an English Mortgage of real estate’’
Succeeding the above duo dictums, Mortgage is defined to mean a Non permanent conveyance of one’s interest in real estate with a sine qou non that such conveyed property will be redeemed after the payment of Principal and Interest, the parties to this Nature of transaction is the mortgagor and the Mortgagee, the mortgagor is the party making the conveyance and the mortgagee is the recipient of the conveyed property. In a Lay language, Mortgages operate like loan, the mortgaged property is used as a collateral or security for the loan taken.
Element of a valid Mortgage.
1. Capacity of the parties; for there to be a valid mortgage transaction, parties must be capable psychologically (major) and not a minor, save in where there are fellows standing in loco parentis to the minor, they must also be of sound mind and not an insane mind.
2. Property; for a mortgage to be validly made, a property of value has to be present which is used as security in case the mortgagor defaults in payment, such property used mostly is real estate i.e landed property which is of a better title to it owner.
3. Compliance with the relevant laws; this depends on the location were the mortgaged property is located or situated.
4. Stamping and registration of deed of legal mortgage.
Mortgage as compared with other related transactions
1. Sale; In sale, the interest one inherently have in a property is completely transferred to the prospective buyer, while in mortgage, the interest is temporarily transferred and which is subject to the right of redemption. For instance, were a person took to sell his real estate, the document certifying the real owner of his valid right over the said property sought to be sold which is otherwise known as C of O (certificate of occupancy) is permanently transferred to the purchaser, while in mortgage, the C of O is temporarily transferred to the mortgagee which is subject to the right of redemption.
2. Pledge; under this head, the pledgor only has right to possession alone which is defacto in Nature, while in mortgage transaction, ownership is conveyed temporarily which is to be redeemed upon the payment of the principal and the interest.
3. Charge; In mortgage, property is conveyed as security which is redeemable upon payment of principal and interest, while in charge, nothing is conveyed, the chargee is only given some right over a certain property used as security, such right so conferred on the chargee maybe usufructuary in Nature.
4. Lien; In lien, the debtor’s property is retained or remain in the possession of the creditor, this is only as a way of coercing the debtor to pay what he owes his creditor, while in mortgages, the property is used as a security for the loan taken.
NB: from the forgoing wordings on mortgage, it should be noted that, the mortgagee have the power of sale which will depend on the mode of creating the mortgage transaction and the Laws governing same which is determined by the location and nature of the property involved, this will be explained in the next phases of the on Mortgage. However, where the mortgagor defaults in the payment of principal and interest even after exhausting his right of equity of redemption as noted earlier, the mortgagee can sell the mortgaged property and recover the value of the loan given which includes the principal and interest and therefore the mortgagor takes the reversionary interest where there is remainder.
a. Mortgagor: this is the party in a mortgage transaction that is taking the loan and giving a property of value as security in securing the former
b. Mortgagee: this is the party to which the mortgage property is conveyed to in honour of the loan given to the mortgagor.
c. Mortgaged property: this is the property used as the subject of the mortgage transaction which is in most cases are landed properties (real estate).
d. Principal and interest: the former means the actual value of the loan given and the later is the commission that accrues from the mortgage transaction.
e. Reversionary interest: this is the residue of the proceeds of sale of the mortgaged property where the principal and interest has been taken by the mortgagee.
Sadiq Alkali Ibrahim