In this Issue:-
1. Legal Alert – July 2013 – Mortgage and Property Law of Lagos State
2. Disclaimer Notice.
3. Copyright Notice.
Legal Alert – July 2013 – Mortgage and Property Law of Lagos State
What is a Mortgage?
A Mortgage is described by the Lagos State Mortgage and Property Law to be the transfer of any interest in a specific movable or immovable property, for the purpose of securing the repayment of a loan against an existing or future debt, or the performance of an engagement which may give rise to pecuniary liability.
A Mortgage also includes any charge or lien on any property for securing the repayment of money or money’s worth.
Lagos State Mortgage Board
The Lagos State Mortgage and Property Law established the Lagos State Mortgage Board (“the Mortgage Board”) to principally generate a conducive environment for accessible and affordable Mortgages or credit facilities for the benefit of the citizens of Lagos State, so that more of these citizens can acquire their own homes.
It is also the statutory function of this Board to advise the Executive Governor of Lagos State with regard to the funding, administration and structure of the State’s Mortgage Finance Program or policy for the benefit of all the residents of Lagos State.
The Mortgage Board is further charged to make regulations which protect the residents of Lagos State from any unconscionable business practices or unfair terms that may be imposed by Mortgage lenders, providers, brokers and all such other persons holding themselves out as offering Mortgage facilities and services in Lagos State.
The Mortgage Board is also charged to mediate and arbitrate on any dispute which may arise from Mortgage transactions covered under the Mortgage and Property Law.
The activities of the Mortgage Board must not however be in direct or indirect competition with the activities undertaken by registered Mortgage lenders, Mortgage brokers or real estate developers.
The Mortgage Board is also statutorily required to promote the culture of concessions, deferred payments or instalmental payment of stamp duties and land title registration fees, with respect to the stamping of Mortgages and the registration fees payable to the Commissioner of Stamp Duties and the Registrar of Titles respectively.
Modes of Creating Legal Mortgages
Significantly, with the enactment of the Mortgage and Property Law, the provisions of the Conveyancing Act, 1881 no longer have any application or effect to mortgage transactions in Lagos State.
Generally, a Mortgage is created either by the temporary passing of the title to a property to a lender for a term of years, with the Mortgagor/Borrower’s right of redeeming or repaying the loan; or by the execution of a Deed of Legal Mortgage.
A Mortgage of a leasehold is also created in the manner above described save that the term of years charged shall be at least less by One (1) day and subject to the provision for redemption or repayment of the loan.
Under the Lagos State Mortgage and Property Law, an Equitable Mortgage of a right of occupancy cannot be created by a mere deposit of the title deed or charge on a property except the deposit of the title deed is accompanied by an agreement to create a Legal Mortgage in favour of the Mortgagee/Lender.
Where the deposit of a title deed is accompanied by an agreement to create a legal mortgage, and such a legal mortgage is not executed, the Mortgagee may within thirty (30) days commence legal proceedings to compel the Borrower or Mortgagor to execute a legal mortgage in the Mortgagee’s favour and thereafter exercise the powers of a mortgagee as conferred under the Mortgage and Property Law.
Realisation of Right of Occupancy
A Mortgagee – i.e. the securer of the loan on a landed property - has, subject to the express terms of the Mortgage Agreement which must be registered with the Governor’s consent affixed, the express power to sell the Mortgaged property where the Mortgagor or Borrower defaults in fulfilling the Mortgage repayment terms and conditions.
Subject to no prior superior charge, a valid legal title will thereon vest on the purchaser of the Mortgagee’s legal entity where the conditions described in the above paragraph are fulfilled by the Mortgagee.
Realisation of Equitable Mortgage
A Mortgagee and a Purchaser of an equitable interest in land can by filing an Originating Summons in Court, obtain a vesting Court Order conveying the Mortgaged property to the Purchaser, or may appoint a person to so convey the equitable interest in land to the Purchaser. This and other similar provisions apply to Equitable Mortgages made or arising before or after the commencement of the Mortgage and Property Law.
Other Mortgagor & Mortgagee Rights
THE RIGHT TO SUE. Where a Mortgagor or Borrower binds himself to repay a Mortgage loan, or the Mortgaged property is insufficient to liquidate the Mortgage loan, or the Mortgaged property is wholly or partly destr