BAR PART 2: LECTURER EXPLAIN THIS (PART 2)

CREATION OF MORTGAGES UNDER THE NEW MORTGAGE PROPERTY LAW OF LAGOS STATE

PRELIMINARY

Prior to the new Mortgage and Property Law, 2010, Lagos State had the Conveyancing Acts, 1881 and 1882 and the Registration of Titles Law as the principal laws on mortgages. However, this changed with the coming into effect of the Mortgage and Property Law, 2010. The new law came into effect on 23^rd August, 2010.  Section 68 of the new law repealed Conveyancing Act, 1881. But note that this repeal (of the CA) is with respect to only mortgages, since the MPL applies to only mortgages in Lagos State.

General Modes of Creating Mortgages in Nigeria

Generally, in Nigeria, mode of Creation of Legal Mortgages depends on:

§  Location (under (1) PCL; (2) C.A and in (3) Lagos (MPL & LRL)

§  Nature of interest of mortgagor

§  Quantum of interest to be used as security

PROPERTY LAW PRACTICE JURISDICTIONS FOR PURPOSES OF MORTGAGES IN NIGERIA:

The Country is usually divided into:

¡  States that apply Conveyancin g Act (CA) --- all states in the defunct Northern Nigeria and Eastern Nigeria;

¡  States that apply the Property & Conveyancing Law (PCL) --- all states in the defunct Western & Mid-western Nigeria, including Delta and Edo States;

¡  The Mortgage & Property Law (MPL), 2010 (Lagos) ---- this applies only to Lagos State. Note that the Land Registration Law (LRL), 2015 (Lagos) also has provisions on mortgages. See sections 49 (1), 54, 50, 52, and 55 of the LRL, 2015, which apply exclusively to mortgages.

Modes of Creation of Mortgages in States that apply PCL

§  Sub-demise-S.109, PCL

§  Charge by deed expressed to be by way of legal mortgage -S.110 PCL

§  Statutory Charge/Mortgage ---S.137(1) PCL

Modes of Creation of Mortgages in States that apply C.A

¡  Assignment.

¡  Sub-demise.

¡  Statutory Charge/Mortgage-S.26(1) C.A, 1881.

Creation of Legal Mortgages in Lagos State

¡  C.A, 1881 is repealed-S. 68 MPL.

¡  The mode of creating mortgages in Lagos depends on the nature of interest. The interest may be Right of Occupancy; Leasehold; or Equitable Interest

(a)  Modes of Creation of LEGAL Mortgages in Lagos where the mortgagor`s interest is a Right of Occupancy-S.15 MPL:  Mortgage of a Right of occupancy can be created either by:

§  Demise for a term of years absolute, or

§  Charge by deed expressed to be by way of legal Mortgage, or

§  Charge by deed expressed to be by way of statutory mortgage

¡  Note-Use of Form 1 in 2^nd Schedule (S.49, MPL)

(b)Modes of Creation of LEGAL Mortgages in Lagos where the

interest is Leasehold---- S.16 MPL:          Mortgage of leasehold interest can be created either by:

§  Sub-demise for a term of years absolute less by one day at least, or

§  Charge by deed expressed to be by way of a legal mortgage, or

§  Charge by deed expressed to be by way of a statutory mortgage

¡  Note-Use of Form 1 in 2^nd Schedule (S.49, MPL)

PERFECTION OF LEGAL MORTGAGES IN LAGOS STATE: 

The following steps are involved:

(1)  The usual/general perfection --- Governor`s Consent, Stamping and Registration;

(2)  Registration of the Mortgage with the Lagos State Mortgage Board --- The Mortgagee must deliver the mortgage Deed/Instrument to the Executive Secretary of the Lagos State Mortgage Board for registration --- S.53 MPL

(3)  Registration of the Mortgage with CAC where a COMPANY is the mortgagor --- Every mortgage or charge created by a Company must be registered with the Corporate Affairs Commission (CAC) within 90 days from the date of its creation – see s. 197 of CAMA, Cap C20, LFN, 2004 

Creation of Equitable Mortgages in Lagos State -S.18 MPL (3 Ways)

§  By Deposit of Title Documents accompanied by Agreement to create a legal mortgage

§  By Charge accompanied by agreement to create legal mortgage or

§  By Assignment of an equitable interest

▪      Note the Right of the Mortgagee to approach the Court within 30 days bge-S.37 MPL. The sale of the security without service of demand notice does not affect interest of the purchaser ---S. 38(2) MPL.

NOTE:

Even though the MPL provides for only three modes of creating an equitable mortgage in Lagos State, it is pertinent to note that the other modes of creating an equitable mortgage may still apply in some cases in Lagos State---- e.g., the rule in Walsh v. Lonsdale, inchoate legal mortgage, mortgage created where the only interest the mortgage has in the property is equitable, etc

(Written By Dr. Francis Julius ONIEKORO, & modified and updated for the purpose of Bar part II by S.C Udemezue)