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EQUITABLE MORTGAGE FIRST IN TIME TAKES PRIORITY

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I have earlier set out the peculiar factors and circumstances not least being that the appellant has paid part of the purchase price of ₦2.3m to the tune of ₦1.8m leaving a balance of ₦500,000.00 and has been put in possession of the disputed property. There is a binding agreement of sale of the 1st respondent’s interest in the said property between the appellant and the 1st respondent. The appellant has thereby acquired an equitable interest to the extent of the 1st respondent’s interest in the equity of redemption and this is the interest which the mortgagor, the 1st respondent has had at all material times. The 1st respondent cannot give what it hasn’t got. And as I intimated earlier any attempt to pass the legal estate in the disputed property to the appellant will be of no effect and void not voidable because the 1st respondent as the mortgagor has bound itself to convey the legal estate to the mortgagee whenever it is called upon to do so until the principal, interest and costs are duly paid on the mortgage. See: Barclays Bank of Nigeria Ltd v. Ashiru and Anor. (supra) per ldigbe JSC, and Jared v. Clements (1903) 1 Ch. 428. Besides, the appellant is acquainted with notice of the mortgage and so cannot take priority to the 2nd respondent’s equitable mortgage which is first in time. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)

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MORTGAGEE TO GIVE NOTICE BEFORE RESALE

In line with the provisions of section 125(1) of the Property and conveyancing Law, a mortgagee shall not exercise his power of sale unless and until a notice requiring payment of the mortgage money has been served on the mortgagor or one of several mortgagors and default has been made in payment of the mortgaged money or of part thereof for three months after such service. See B.O.N. Ltd. v. Aliyu (1999) 7 NWLR (Pt. 612) 622, where this court held that “the requirement of the law is that notice of intention to sell a mortgage property must be sent to the mortgagor as the words “shall not” are mandatory and not advisory. Consequently, any sale of any mortgage without the requisite notice is invalid ab initio and cannot convey any title to a subsequent purchaser”.

– Augie JSC. Bank v. TEE (2003)

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RIGHT TO REDEMPTION IN MORTGAGE CANNOT BE BARRED

It is a settled rule of equity that any agreement which directly bars the mortgagor’s right to redemption is ineffectual. – Iguh JSC. Ejikeme v. Okonkwo (1994)

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EQUITABLE MORTGAGE TO CREATE A LEGAL MORTGAGE CAN SUE IN SPECIFIC PERFORMANCE

The equitable mortgage by agreement to create a legal mortgage, therefore, entitles the equitable mortgagee to something more than a mere right to payment out of the property or premises mortgaged; under the general principles, his remedies correspond as nearly as possible with those of the legal mortgagee. Because equity regards that as done which ought to be done the equitable mortgagee, by agreement to create a legal mortgage, can enforce the execution of a legal mortgage by suing in equity for specific performance; if successful he obtains a legal term of years and can then pursue all the statutory remedies open to a legal mortgagee.

– Idigbe JSC. Ogundiani v. Araba (1978)

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FORECLOSURE IS A POWERFUL REMEDY FOR AN EQUITABLE MORTGAGE

The right to foreclosure is very powerful remedy in the hands of the equitable mortgagee and the vendor who takes a legal estate with notice of an equitable mortgage and therefore subject to this class of equitable interest should bear this in mind since, in certain circumstances, he may find in the end that he has bought a worthless legal estate.

– Idigbe JSC. Ogundiani v. Araba (1978)

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OBJECTION TO MANNER OF SALE WILL NOT STOP A MORTGAGOR FROM SELLING

It is a well established principle of law that a mortgagee will not be restrained on the exercise of his power of sale merely because the mortgagor objects to the manner in which the sale is being arranged or because the mortgagor has commenced a redemption action in court. (See Adams v. Scott (1859) 7 WR 213). But the mortgagee will be restrained if the mortgagor pays the amount claimed by the mortgagee into court. (See Hickson v. Darlow (1883) 23 Ch.D. 690).

— Udoma, JSC. Nig. Housing Dev. Society v. Mumuni (1997) – SC 440/1975

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EQUITABLE MORTGAGE HAS PART PERFORMANCE

“An equitable mortgage is an agreement that has arisen out of the deposit of the mortgagor’s title deeds with the mortgagee for loan as security. The essence of an equitable mortgage by deposit of title deeds is an agreement, between parties concerned, followed by an act of part performance. Where a party pursuant to an oral agreement deposits his title deeds with a bank as here, the act of depositing the title deeds is regarded as part performance of an agreement, which removes the transaction from the provisions of the Statute of Frauds 1677.” as per Barclays Bank of Nigeria Ltd. v. Alhaji Adamu B. Ashiru and Anor. (1978) 6-7 S.C. (Reprint) 70; (1978) 6-7 S.C. 70

– Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)

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