REALIZATION AND ENFORCEMENT OF MORTGAGES UNDER THE MORTGAGE AND PROPERTY LAW OF LAGOS 2010
April 2019, Volume 3 Issue 1
As earlier canvassed in Volume 1 Issue 8 of our October, 2018 edition, the importance of a decent and affordable housing units cannot be over emphasized. Intricately linked to this is the fact that, a mortgage if effectively employed is an avenue to cushion the effect of the challenge of housing deficits in the nation. As important as the concept of a mortgage is, the greatest obstacle to its effective and efficient utilization has been a number of needless litigation in different courts of record in the Nation resulting to setbacks and clogs in the realization of mortgages.
Chigozie Nwagbara in an article titled "ENFORCEMENT OF MORTGAGE SECURITY IN NIGERIA" published by European Centre for Research Training Development UK in the Global Journal of Politics and Law Research Vol. 2 No. 2 pp. 52-63 in June 2014 aptly summarized the importance of taking a mortgage as follows:
…the essence of taking a mortgage security is to give the mortgagee an assurance of having property fall back on upon failure of the mortgagor to meet his contractual obligation on the date fixed for payment of the mortgage debt.
It is asserted that there is nothing as fulfilling as a lender in secured lending having a smooth and hitch free passage in an attempt to realize the security and recover the mortgage debt in the event of the mortgagor's failure to repay the loan. Thus, the frustration emanating from the realization of security and mortgage debt is one the Mortgage and Property Law of Lagos State, 2010 was promulgated to wrestle. The law prescribes the following as the working methods of enforcement of mortgages;
1. Sue on covenant to repay: Section 29 of the Law provides for the covenant to repay. It is so integral that even if the covenant is not indicated in the body of the contractual agreement, it will still be enforced because it is just equitable to pay back debt owed. This is anchored on the equitable maxim that- He who comes to equity must do equity.
2. Enter into possession: By virtue of Section 33 & 34, a legal mortgagee is bestowed by the law to enter into possession of the property used as security by the mortgagor upon failure of the mortgagor to meet his contractual obligation. Hence it is safe to say that this law re-echoed the position in AWOJUGBAGBE LIGHT INDUSTRIES V CHINUKWE where it was held that a mortgagee nor his agents cannot be held liable for trespass when exercising the mortgagee's right to possess the mortgaged property.
3. Sale of mortgaged property: By virtue of Section 35 & 40 of the law, the mortgagee is statutorily vested with the power to sell the mortgaged property upon the mortgagor's default to honor his contractual obligation.
4. Appointment of a Receiver: Section 43 vests the mortgagee with the right to appoint a receiver where he cannot go into physical possession.
5. Foreclosure of the equity of redemption: This can be seen under Sections 19 & 20 of the law. It is to the effect that a foreclosure being a judicial procedure can be used to enforce a mortgage by ensuring that the mortgagee acquires the mortgaged property for himself free from the mortgagor's equity of redemption.
Look out for more information on the MPL is our next issue.