Up-stamping,
Consolidation, and Creation of Subsequent Mortgage(s)
1.
The Concept of Up-Stamping
Up-stamping of mortgages
refers to the practice or process of payment of additional stamp duties on a
mortgage document in satisfaction of the increased facility granted over an
earlier mortgage. This exists where a mortgagor had earlier borrowed money from
a mortgagee using a particular property as security for a loan. If subsequently
the mortgagor wants additional loan from the same mortgagee using the same
property as security; what is required, is that the mortgagee should draft a
new agreement and the new document up-stamped.
Simply put, up-stamping is
the act of paying additional stamp duty on the new mortgage or loan agreement: Owoni Boys Technical Services v. UBN.
Features of Up-Stamping
i.
Same
Property
ii.
Same Parties
iii. New different facility
iv. The terms of the additional loan must be the same as
the initial mortgage
v.
Additional
stamp duties in the new facility
Please note that the
consent of the Governor is not required in granting the new facility so long as
his consent had been obtained when the first mortgage was created: Bank of the North v. Babatunde. Consent
of the Governor is required in respect of alienation of interest in land and
not for any additional facility: Owoniboys
Tech Services Ltd v. Union Bank of Nigeria Plc. Indeed, even where the
Governor’s consent was granted under a law, which had ceased to exist, like the
Land Tenure Law, no further consent of the Governor is required for
up-stamping: Adepate v. Babatunde.
The effects of up-stamping
a mortgage are:
1.
A fresh
consent of the Governor does not need to be obtained
2. A new Deed of Mortgage needed to be executed
3. The new Deed of Mortgage executed by the parties is
only taken for payment of stamp duty on the additional loan: Owoniboys Tech Services v. UBN
Distinction
between Consolidation of Mortgages, Creation of Subsequent or Successive
Mortgages and Up-Stamping
For consolidation of
mortgages, we have same parties; but different properties; and the mortgagor is
barred from redeeming the properties separately. On the other hand, creation of
subsequent or successive mortgagees is applicable only in the states where the Property
and Conveyancing Law is operative and involves, mortgage by assignment of the
same property to different parties.
In contradistinction to
the duo above, up-stamping involves same parties, same property, additional
facility, and need for stamp duty rather than fresh Governor’s consent on the
addition facility.
2.
Facts and Principles of
Owoniboys Technical Services Nig. Ltd. v. UBN Plc (2003) 15 NWLR (Pt. 844) 545
In the instance case, the Appellant
applied for a loan of N50,000 from the
respondent in 1973 and obtained the consent of the Governor pursuant to the
extant Land Tenure Law of Northern Nigeria to mortgage his property at Taiwo
Road, Ilorin, Kwara State. A Deed of Mortgage was executed between the parties.
Later on, additional facilities of N100,000
and N200,000 were granted over the same
property and newer Deeds were prepared for the additional facility. Governor’s
consent was not obtained in respect of the additional facilities or subsequent
Deeds.
The appellant alleged that
this was in violation of the consent requirement. The trial Judge gave judgment
to the appellant because no Governor’s consent was obtained for the second and
third mortgage, meaning that they were null and void. The Court of Appeal
disagreed with the trial Judge. Upon further appeal to the Supreme Court, it
was held that Governor’s consent was not required for the up stamping of the
new facilities. The position is the same even if the second loan was far larger
than the first loan.
3.
Facts and Principles of
Olori Motors Nig. Ltd. v. Union Bank Plc (1998) 5 NWLR (Pt. 551) 652
In the instance case, there was a mortgage between the parties and failure of the mortgagor to redeem. Consequently,
the mortgagee instituted an action against the mortgagor seeking for a court
order for the sale of the mortgage security. The court held that the mortgagee
can exercise his power of sale without recourse to the court. According to the
court, the rights of the mortgagee are cumulative and not alternatives. He can
institute an action for recovery of debt, use his power of sale or go and take
possession. The mortgagee can pursue all the remedies at the same time
(simultaneously).
More so, assuming that the
mortgagee had gone to court and the court gave judgment in his favour that the
mortgagor should pay the debt, and as a consequence, the mortgagor then raises
the cheque, planning to pay the money. If mortgagee abandons the judgment and
sells the property before payment, the sale is a proper sale.
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