PARTICULARS OF INFORMATION REQUIRED IN A DEED OF MORTGAGE

1.      Commencement and Date

2.      Parties

3.      Recitals

4.      Testatum

5.      Mortgaging clause

6.      Proviso for redemption

7.      Mortgaging covenants

8.      Proviso for redemption (if necessary)

9.      Consideration clause (if any)

10.  Testimonium

11.  Execution and Attestation.

COMMENCEMENT AND DATE

(THIS LEGAL MORTGAGE is made the …………… day of ………… 20…)

A deed takes effect from the date of the delivery not necessarily the date on the deed.

PARTIES

(BETWEEN …………………. and ……………………)

The terms used to describe the parties are Mortgagor / Mortgagee or Borrower / Lender. Whichever is used should be adapted to throughout, that is, there should be consistency.

RECITALS

(BACKGROUND / THIS AGREEMENT RECITES AS FOLLOWS)

The recital should contain the following:

1.      The borrower’s title.

2.      The agreement to borrow

3.      The fact that the guarantor or surety (if any) has agreed to guaranty or provide surety for the loan. It is advisable that the guarantor or surety should covenant to be primarily liable in the event of a default by the mortgagor.

4.      That the Governor’s consent and where necessary, the consent of the head-lessor or in the case of the mortgage of a family land, the consent of the head and principal members of the family, has been obtained.

TESTATUM

(NOW THIS DEED WITNESS AS FOLLOWS)

In a mortgage deed, unlike the deed of assignment, there are two testatum.

First Testatum – This is where the borrower covenants to repay the principal sum and interest on an agreed date, which is the legal due date. In practice, the date inserted as the legal due date is a technical matter. The mortgagee insert in the mortgage a date that is shorter than the agreed date. The advantage of inserting a shorter date is that the legal due date will arise early enough and the mortgagee is able to exercise its statutory power of sale after that date. The alternative is to insert a longer date as the legal due date (though not advisable) because the mortgagee must wait until that date before it can exercise its statutory power of sale. Apart from providing for the legal due date, the first testatum also provide for the interest rate on the loan, which the mortgagor is expected to pay punctually, that is, on the date fixed for payment – Maclaine v. Gatty (1921) 1 AC 376.

Second Testatum – (AND THIS MORTGAGE…) This is where the mortgagor states the capacity in which he is mortgaging, usually he conveys to the mortgagee as a ‘beneficial owner’. Where a mortgagor conveys and he is expressed to convey as a beneficial owner under sections 7(c) of the CA; and section 100(1)(c) of the PCL which provides for 7 (seven) covenants namely:

        i.            A right to convey

      ii.            Quiet enjoyment

    iii.            Freedom from encumbrances

    iv.            Further assurances

      v.            That the lease is valid and subsisting

    vi.            That all the rents/rates have been paid and covenants performed

  vii.            That the mortgagor will continue to pay rents/rates and perform covenants.

The covenants implied in the mortgage are the same as the six covenants implied where a vendor conveys as beneficial owner, except that, after the sixth covenant, there is a seventh covenant that states that the mortgagor covenants with the mortgagee that “he will at all times, as long as the money remains owing on the security of the conveyance, pay, observe and perform all the covenants, conditions, and agreements contained in the lease” and will keep the mortgagee indemnified against all actions, claims and demands, if any, arising from the default of the mortgagor in the performance and observance of the covenants and conditions in the lease.

This second testatum also contain the description of the property mortgaged.

THE MORTGAGING CLAUSE

(TO HOLD UNTO)                            

This is the clause that provides for the interest conveyed by the mortgagor or mortgagee. The form of the mortgaging clause depends on whether the mortgage is created by assignment or sub-demise.

PROVISO FOR REDEMPTION

(PROVIDED THAT)

The date inserted here should be the same as that inserted in the first testatum; and after redemption, the mortgage should be properly discharged. The proviso is not contained in a mortgage created by a charge by way of a legal mortgage.

CONSIDERATION CLAUSE

The consideration clause states the amount the property is being sold or demised to a mortgagee. It is on the disclosed amount that stamp duties will be paid.

BORROWER’S COVENANT

The mortgage should include all covenants on the mortgagor’s part such as the covenant for repair, insurance, postponement of redemption, leasing by the mortgagor, and consolidation.

TESTIMONIUM

(IN WITNESS OF WHICH)

This is the clause in the deed of mortgage that connects the parties to the contents and covenants in the deed of mortgage.

EXECUTION AND ATTESTATION

(SIGNED, SEALED AND DELIVERED) and (IN THE PRESENCE OF)

The mortgagee is usually a corporate entity. However, every document executed by a company shall be attested in accordance with its articles of association – section 131 of Evidence Act. Where the mortgagor is an individual then he should execute the mortgage deed as follows – SIGNED, SEALED AND DELIVERED… IN THE PRESENCE OF …