A Critical Analysis of the Mortgage Act 2009: Possible Implications to Mortgage Business in Uganda.

ABSTRACT The generation of this dissertation is divided into four chapters. Chapter one of the dissertation will contain, general introduction, statement of the problem, objectives of the study, methodology, hypothesis, literature revive chapterization, significance of the study and research question. Chapter two will be focusing on literature review; I will be able to handle the review in accordance to the research questions raised. They include to explain the current state and shortfalls of the law relating to mortgage, the effect of implementing the mortgage law and what are the recommendations to improve mortgage transactions. This will be categorized in accordance to international level, regional and finally in Uganda. Chapter three will look at Mortgage law in Uganda, Mortgagors rights under Uganda laws, Mortgagors right of redemption, Mortgagees' right under Uganda law. Appointment of a receiver, taking possession and the right to sell. It will also look at a comparative analysis of the laws on mortgages in Uganda with selected jurisdictions, Mortgages on customary land, the right to sue, appointment of a receiver and the right to possession. Chapter four will look at a critical review of the Mortgage Act , protection of the matrimonial home, validity of spousal consent, variation of a mortgage, need for regulation for interest rate, Mortgagee exercising power of sale, mortgaging of customary land, reinforcement of equity of redemption and general power of court to grant relief. Chapter five will carry the final part, which are the recommendations, regulation of interest rates, loading of a caveat by the spouse on the matrimonial home, guidelines for mortgaging of customary land, formula determining quantum of compensation upon payment, provisions of customers mortgages and commercial mortgages, professionalization of the valuation, mortgagees remedy against employee.

TABLE OF CONTENTS

TABLE OF CONTENTS .................................................................................................................... i

DECLARATION ............................................................................................................................... v

APPROVAL ..................................................................................................................................... vi

DEDICATION ............................................................................................................................... vii

ACKNOWLEGMENT .................................................................................................................... viii

ABSTRACT ..................................................................................................................................... ix

CHAPTER ONE ............................................................................................................................ 1

INTRODUCTION ......................................................................................................................... 1

1.1 Background to the Study ....................................................................................................... 1

1.2 Statement of the Problem ..................................................................................................... 3

1.3 General Objectives of the Study .......................................................................................... 5

1. 4 Specific Objectives of the Study ........................................................................................... 5

1.5 Research Questions ................................................................................................................ 5

1.6 Significance of the Study ....................................................................................................... 6

1. 7 Scope of the Study ................................................................................................................. 6

1.8 Methodology ............................................................................................................................ 6

1.10 Synopsis of Chapter ............................................................................................................. 7

CHAPTER TWO ........................................................................................................................... 8

LITERATURE REVIEW .............................................................................................................. 8

2.1. History and revolution of mortgage law ............................................................................ 8

2.2. What is the current state and shortfalls of the law of mortgages? ............................. 12

2.2.1 International ...................................................................................................................... 12

2.2.2. Regionally .......................................................................................................................... 14

2.2.3. Mortgage Business in Uganda ........................................................................................ 17

2.3 Effect o laws of implicating mortgage laws ...................................................................... 21

2.3.1. International ..................................................................................................................... 21

2.3.2.Regional .............................................................................................................................. 21

2.3.3. Uganda .............................................................................................................................. 22

2.4 .How the law of mortgages can be improved to promote the mortgage transaction;

....................................................................................................................................................... n

2.4.1. International. .................................................................................................................... 23

2.4.2 .Regional ............................................................................................................................ 24

2.4.3.Uganda ................................................................................................................................ 24

CHAPTER THREE ...................................................................................................................... 26

COMPARATIVE STUDY OF THE LAW ON MORTGAGES IN UGANDA WITH

SELECTED COMMON WEALTH JURISDICTION ............................................................. 26

3.1 Mortgage Law In Uganda ................................................................................................... 26

3.1.1 Mortgagor's rights under Ugandan Law ........................................................................ 27

ii

3.2.1 Mortgagor's right of redemption ..................................................................................... 27

3.2.2 Mortgagees Rights under Ugandan Law ....................................................................... 28

3.2.2.1. Appointment of a receiver ........................................................................................... 29

3.2.2.2. Taking Possession ........................................................................................................ 29

3.2.2.3 Mortgagee's power to sell ............................................................................................ 30

3.3 A comparative analysis of the law on mortgages in Uganda with selected

jurisdictions .................................................................................................................................. 31

3.3.1 Mortgages on Customary Land ....................................................................................... 32

3.3.2 The right of redemption ................................................................................................... 34

3.3.3 Mortgagee's Remedies ..................................................................................................... 35

3.3.3.1.The right to sue ............................................................................................................. 35

3.3.3.2. Appointment of a receiver ........................................................................................... 37

3.3.3.3. Right to Possession ...................................................................................................... 40

3.3.3.4 Power of sale .................................................................................................................. 45

CHAPTER FOUR ........................................................................................................................ 48

CRITICAL ANALYSIS OF THE PROVISIONS OF THE MORTGAGE ACT 2009:

PITFALLS AND LANDMARKS ............................................................................................... 48

4.1 Introduction .......................................................................................................................... .48

4.2 Critical Review of the Mortgage Act 2009 ........................................................................ 48

4.2.1 Protection of the Matrimonial Home .............................................................................. 49

4.2.2 Validity of Spousal Consent. ............................................................................................ 52

iii

4.2.3 Variation of a Mortgage ................................................................................................... 56

4.2.4 The Need for regulation of Interest Rates .................................................................... 56

4.2.5 Mortgagee Exercising Power of Sale .............................................................................. 59

4.2.6 Mortgaging of Customary Land ....................................................................................... 6I

4.2. 7 Reinforcement of the Equity of Redemption ................................................................ 66

4.2.8 General Powers of Court to Grant Relief ....................................................................... 67

4.3 Conclusion ............................................................................................................................. 68

CHAPTER FIVE .......................................................................................................................... 69

CONCLUSION AND RECOMMENDATIONS ...................................................................... 69

5.1 Introduction ........................................................................................................................... 69

5.2 Recommendations ................................................................................................................ 71

5.2.1 Regulation of Interest rates ............................................................................................ 71

5.2.2 Lodging of a caveat by the spouse on the matrimonial home: Viable option to

impersonators .............................................................................................................................. 72

5.2.3 Guidelines for mortgaging of customary land .............................................................. 72

5.2.4 Formula determining quantum of compensation upon prepayment. ....................... 73

5.2.5 Provisions for consumer mortgages and commercial mortgages .............................. 73

5.2.6 Professionalisation of Valuation ...................................................................................... 74

5.2.7 Mortgagee's remedy against employees ....................................................................... 74

5.3 Conclusion ............................................................................................................................. 74

REFERENCES ................................................................................................................................ 75