Examining The Adequacy of the Mortgage Act in Protecting the Rights of the Mortgagor and Mortgagee

TABLE OF CONTENTS

DECLARATION ........................................................................................................................................... i

APPROVAL ................................................................................................................................................ iii

DEDICATION ............................................................................................................................................. iiii

ABSTRACT ................................................................................................................................................ iv

ACI

LIST OF CASES ......................................................................................................................................... vii

LIST OF STATUTES ................................................................................................................................. viii

TABLE OF CONTENTS .......................................................................................................................... vi iii

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

GENERAL INTRODUCTION ......................................................................................................... !

1.1 BACKGROUND ON MORTGAGES: ................................................................................................. 1

1.1.1 Legal Considerations ......................................................................................................................... 2

1.1.2 Land tenure ........................................................................................................................................ 2

1.2 STATEMENT OF THE PROBLEM .................................................................................................... 2

1.3 OBJECTIVES OF THE STUDY .......................................................................................................... 3

1.3 .1 General Objective ................................................................................................................................ 3

1.3 .2 Specific objectives ............................................................................................................................... 3

1 .4 PURPOSE OF THE STUDY ................................................................................................................ 3

1.5. SCOPEOFTHESTUDY .................................................................................................................... 4

1.6. RESEARCH METHODOLOGY ........................................................................................................ 4

1.7. SIGNIFICANCE OF THE STUDY ...................................................................................................... 5

1.8 HYPOTHESES ....................................................................................................................................... 5

1 .9 LITERATURE REVIEW ..................................................................................................................... 5

1.10 ARRANGEMENT OF CHAPTERS .................................................................................................... 8

1.11 LIMITATIONS OF THE STUDY ....................................................................................................... 8

CHAPTER T\VO ............................................................................................................................. 9

INTRODUCTION ............................................................................................................................ 9

2.0 NATURE OF MORTGAGES BEFORE THE ENACTMENT OF THE MORTGAGE ACT, 2009 .... 9

2.1 General retnarks on tnortgage ................................................................................................................. 9

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2.2 Mortgage at con11non law ..................................................................................................................... 10

2.2.1 Legalrnortgage .................................................................................................................................. 10

2.2.1.1 Mortgage of leasehold .................................................................................................................... 10

2.2.2 Equitable Inorigage ............................................................................................................................ 10

2.2.2.1 Contract to create a legal mortgage ................................................................................................ 11

2.2.2.2 Deposits of title deeds (deposits of documents of title) .................................................................. 12

2.3 The influence of equity on mortgages .................................................................................................. 12

2.3 .1 EQUITY OF REDEMPTION ............................................................................................................ 13

2.4 The forms of mortgages in Uganda before the enactment of the land act, 1998 .................................. 15

2.4.1 Mmigage of right of ownership under customary tenure and lease ................................................... 15

2.4.2 Defect offorn1 .................................................................................................................................... 16

2.5 A comparison between motigages and charges over land .................................................................... 17

CHAPTER THREE ....................................................................................................................... 20

MORTGAGE UNDER THE MORTGAGE ACT, 2009 ................................................................. 20

3.1 Introduction ........................................................................................................................................... 20

3.2 The impact of the Morigage Act, 2009 on the law of property ............................................................ 20

3.3 Forms ofMortgages under the Mmigage Act, 2009 ............................................................................. 21

3.3.1 Ordinary Mortgage ............................................................................................................................ 21

3.3.2 Infonnal Mortgage ............................................................................................................................. 22

3.3 .3 Lien by deposit of documents ............................................................................................................ 22

3.3 .4 Custon1ary Mortgage ......................................................................................................................... 23

3.5 Salient features ofmo1igages ................................................................................................................ 25

3.5.1 The requirement of writing in a mortgage ......................................................................................... 25

3.5.2 Registration ofMo1igage ................................................................................................................... 26

3.5.3 Effects of failure to register a mortgage ............................................................................................ 27

3.4 Extinction of the subject matter of the mortgage .................................................................................. 29

CHAPTER FOUR .......................................................................................................................... 30

RIGHTS OF A MORTGAGOR AND A MORTGAGEE ............................................................... 30

4.2 Rights of the tnortgagor ........................................................................................................................ 30

4.2.1 Creation of second and subsequent mortgages .................................................................................. 31

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4.2.2 Right ofredetnption ........................................................................................................................... 32

4.2.2.1 The termination of the equity of redemption .................................................................................. 35

4.3 Rights of a n101igagee ........................................................................................................................... 35

4.3.1 Right to consolidate ........................................................................................................................... 36

4.3 .2 Right to tack ....................................................................................................................................... 39

4.4 Variation of n1o1tgages ......................................................................................................................... 40

4.5 Transfer of interests under tnortgage .................................................................................................... 41

4.5.1 Transfer of equity of redemption ....................................................................................................... 41

4.5.2 Transfer of the motigage by the mortgagee ....................................................................................... 43

4.5 .2.1 A particular instance of transfer by the mortgagee ......................................................................... 43

4.5.2.2 Sub- Motigages ............................................................................................................................... 44

4.5 .3 Transfer by operation of law (transmission) ...................................................................................... 44

4.5 .3 .1 Devolution by Bankruptcy .............................................................................................................. 45

4.5 .4 Registration of a transferred mortgage .............................................................................................. 45

4.6 Priority of Motigages ............................................................................................................................ 46

4.6.1 Priority of ordinary (formal) mortgages ............................................................................................ 47

4.6.2 Priority of informal and other forms of mortgages ............................................................................ 47

4. 7 Discharge of n1ortgages ........................................................................................................................ 48

CHAPTER FIVE ........................................................................................................................... 49

ENFORCING MORTGAGES BY THE MORTGAGEE ............................................................... 49

5.1 Introduction ........................................................................................................................................... 49

5.2 The general impact of the Mortgage Act, 2009 on the enforcement of mortgages .............................. 52

5.3 Effects of enforcing mortgage .............................................................................................................. 52

5.4 Some facts on lending and borrowing and the role of the court in mortgage enforcement .................. 53

5.5 Appoint1nent of a receiver .................................................................................................................... 53

5.5 .1 Powers and duties of a receiver ......................................................................................................... 54

5.6 Lease of mortgaged land ....................................................................................................................... 55

5.6.1 Classes of properties for which power to grant a lease is subject to prior conditions ....................... 56

5. 7 Actions for possession (entry into possession) ..................................................................................... 56

5.7.1 Motigagee withdrawal from possession ............................................................................................ 58

5.7.2 The power and duty of the mortgagee in possession ......................................................................... 59

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5.8 Actions to recover the