The nature or concept of mortgage is
not easy to delineate. It is not also easy to understand. LORD MACNAGHTEN
rightly pointed out in Samuel v Jarrah Timber and Wood Paving
Corporation (1904) AC 323 at 326 that: “No one by the light of nature
ever understood English Mortgage of real estate”.
However, one can easily say that a
mortgage is simply a transfer of an interest in property as collateral for a
loan. Again, a mortgage is a security transaction which has been defined by
LINDLEY, MR. in the case of Santley v. Wilde (1899) 2 CH. 747 as a
conveyance of land or other disposition of land designed to secure the payment
of money or discharge of some other obligation.
On the other hand, it can also be
defined as a transfer of interest in land subject to the right of redemption.
Also, a mortgage is a contract charging immovable property as security for the
due repayment of a debt and interest accruing thereupon or for the performance
of some other obligation for which it is given, in accordance with the terms of
the contract.
In Oluwu v. Miller Bross of
Liverpol) Ltd (1922) 3 NLR 110, PENNINGTON J. defined mortgage as a
security created by contract for the payment of a debt already due or to become
due. But a mortgage may not always be for the purpose of securing a debt. It
may be to secure some other obligation. Similarly, in Adenekan v Owolewa
(2004) All FWLR (Pt. 216) 510, the court defined a mortgage as an
ordinary contract between the mortgagor and the mortgagee. Yet again, in
Intercity Bank Plc v Feed &
Food
Farms Nig. Ltd. (2002) FWLR (Pt. 128) 1289 at 1302,
the court defined a
mortgage as a conveyance of property as
security for a debt, which is lost if the money or interest due on it is not
paid on a certain date.
mortgage as a conveyance of property as
security for a debt, which is lost if the money or interest due on it is not
paid on a certain date.
A mortgage deed is a written agreement
which contains written conditions and among the conditions is the provision of
the time when the agreement is terminated by refund of money borrowed from the
mortgagee or the occurrence of the right to sell the mortgaged property upon
failure of the mortgagor to repay the sum lent to the mortgagor by the
mortgagee.
Mortgage is the most common type of
consensual landed security available to a creditor. The lender is known as the
“mortgagee”. He is the person who provides the money and takes the
interest in the property as security for the money which he has lent. The borrower
is known as the “mortgagor”. He is the person who transfers an interest
in property as security for the loan. The document by which the rights of the
mortgagee in respect of the mortgaged property are created is itself known as a
“mortgage”.
When the loan is paid off and the rights of the mortgagee are disencumbered or
lifted from the property, the mortgagor is said to redeem his property.
A typical mortgage transaction occurs
where the owner of an interest in land puts forward the land as security to
another party in exchange for advance of a sum of money as loan. The security
or collateral remains with the party advancing the sum of money until the money
and all interest on it is repaid. The following are some of the features of a
mortgage –
a.
It is a conveyance of interest in land
to a lender of money;
b.
The land is held only as security or
collateral to ensure repayment of the money loaned;
c.
The property is re-conveyed back to its
owner when the money loaned is repaid;
d.
In the event of a failure to repay the
money advanced, the lender of the money has the right to sell the land to
realize the money advanced.