BARR, CHIGOZIE EZEKIEL
victorezekielc@gmail.com/+2348034997413
This is the same all over Nigeria. Thus, there is uniformity in creating equitable mortgage. It may be created orally, or in writing, or by conduct. However, there are several methods of creating equitable mortgage viz:
1. Deposit of the deed – There must be an intention that the deposit must serve as security for the mortgage. Thus, once the delivery of title deed is accompanied with a clear intention that the title deed should be taken or retained as security; it shall amount to the creation of equitable mortgage. The practice is that the mortgagor executes a memorandum of deposit that contains the terms of the loan (that is, the amount, interest, date of repayment, nature of the security, etc). The memorandum of deposit under hand or as a deed, but as a deed is better because it has the advantage of conferring on the lender (the bank) the statutory power of sale of the mortgaged property notwithstanding that the bank is an equitable mortgagee provided that the memorandum contains any, or all of the power of attorney clause and the trust device.(click on the pictures on left or right hand sides for more insights)
2. Agreement to create a legal mortgage – The owner of a legal estate may agree in writing in addition to deposit of title deeds, to create a legal mortgage in favour of a creditor. In such instances, once the lender advances the money whether the agreement is under seal or under hand, equitable mortgage is created. This is based on the principle that equity regards as done that which ought to be done – Walsh v. Lonsdale (1882) 21 Ch. D. 9. The equitable mortgagee can enforce the agreement by an action in equity for specific performance – Yaro v. Arewa Construction Ltd (2008) All FWLR (Pt. 400) 603; Carter v. Wake (1877) 4 CH. D. 605; Ogundiani v. Araba (1978) 1 LRN 280.
3. Equitable charge of the mortgagor’s property – This is a mere charge or lien in the property. Mere equitable charge of the mortgagor’s property does not create an estate (proprietary right) which may rest in the mortgagee by way of specific performances, but merely gives a right to payment of the property. The security in this instance can only be realized through sale or appointment of a receiver under an order of court – Ogundiani v. Araba (supra).
4. Equitable mortgage of registered land – Under the Registration of Titles Law, equitable mortgages can be created by the deposit of Certificate of Title and completing and filing Form 15 in the 1st Schedule under section 58 of the Registration of Titles Law.
Mortgage of equitable interest – Where the interest of a mortgagor over a property is only equitable, the only interest he can mortgage over such property is equitable and not legal. That is, a holder of an equitable interest can only create an equitable mortgage on the interest he holds. EQUITABLE MORTGAGE
This is a mortgage that confers equitable interest on the mortgagee. It is a mortgage created under the rules of equity.
ADVANTAGES OF EQUITABLE MORTGAGE
Small amount – Equitable mortgage is good for a loan of small amount, that is, where the loan is for a small amount, it is better to secure the loan by equitable mortgage which is cheaper than a legal mortgage in terms of perfection.
Short period of payment – Equitable mortgage is good for a short term loan, that is, where the period of repayment is for a short period, equitable mortgage is better because it is easier and quicker to achieve than the legal mortgage.
This is the same all over Nigeria. Thus, there is uniformity in creating equitable mortgage. It may be created orally, or in writing, or by conduct. However, there are several methods of creating equitable mortgage viz:
1. Deposit of the deed – There must be an intention that the deposit must serve as security for the mortgage. Thus, once the delivery of title deed is accompanied with a clear intention that the title deed should be taken or retained as security; it shall amount to the creation of equitable mortgage. The practice is that the mortgagor executes a memorandum of deposit that contains the terms of the loan (that is, the amount, interest, date of repayment, nature of the security, etc). The memorandum of deposit under hand or as a deed, but as a deed is better because it has the advantage of conferring on the lender (the bank) the statutory power of sale of the mortgaged property notwithstanding that the bank is an equitable mortgagee provided that the memorandum contains any, or all of the power of attorney clause and the trust device.(click on the pictures on left or right hand sides for more insights)
2. Agreement to create a legal mortgage – The owner of a legal estate may agree in writing in addition to deposit of title deeds, to create a legal mortgage in favour of a creditor. In such instances, once the lender advances the money whether the agreement is under seal or under hand, equitable mortgage is created. This is based on the principle that equity regards as done that which ought to be done – Walsh v. Lonsdale (1882) 21 Ch. D. 9. The equitable mortgagee can enforce the agreement by an action in equity for specific performance – Yaro v. Arewa Construction Ltd (2008) All FWLR (Pt. 400) 603; Carter v. Wake (1877) 4 CH. D. 605; Ogundiani v. Araba (1978) 1 LRN 280.
3. Equitable charge of the mortgagor’s property – This is a mere charge or lien in the property. Mere equitable charge of the mortgagor’s property does not create an estate (proprietary right) which may rest in the mortgagee by way of specific performances, but merely gives a right to payment of the property. The security in this instance can only be realized through sale or appointment of a receiver under an order of court – Ogundiani v. Araba (supra).
4. Equitable mortgage of registered land – Under the Registration of Titles Law, equitable mortgages can be created by the deposit of Certificate of Title and completing and filing Form 15 in the 1st Schedule under section 58 of the Registration of Titles Law.
Mortgage of equitable interest – Where the interest of a mortgagor over a property is only equitable, the only interest he can mortgage over such property is equitable and not legal. That is, a holder of an equitable interest can only create an equitable mortgage on the interest he holds. EQUITABLE MORTGAGE
This is a mortgage that confers equitable interest on the mortgagee. It is a mortgage created under the rules of equity.
ADVANTAGES OF EQUITABLE MORTGAGE
Small amount – Equitable mortgage is good for a loan of small amount, that is, where the loan is for a small amount, it is better to secure the loan by equitable mortgage which is cheaper than a legal mortgage in terms of perfection.
Short period of payment – Equitable mortgage is good for a short term loan, that is, where the period of repayment is for a short period, equitable mortgage is better because it is easier and quicker to achieve than the legal mortgage.
Barr, Ezekiel chigozie has many years experience in providing legal representation and advising clients across an exceptionally broad range of contentious and non-contentious matters. His main goal is to help clients resolve any contentious or non-contentious legal problem they are having rapidly and cost effectively.
Email: victorezekielc@gmail.com
Tel: +2348034997413
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