MORTGAGE VIS-A-VIS SIMILAR TRANSACTIONS

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MORTGAGE VIS-A-VIS SIMILAR TRANSACTIONS

Distinguishing mortgage from similar transactions may appear dicey. The article distinguishes mortgage from similar transactions.

I. Assignment: In assignment, there is a transfer of the totality of interest of a person in property while in a mortgage; title is transferred subject to redemption upon payment of the loan.

II. Lien: A lien is a claim or qualified right of a creditor over the property of a debtor, which serves as security for the debt. It is the right to retain possession of a property of another until a debt is paid - Afro Tech Services Ltd. v. Mia & Sons Ltd.

1. The holder of a lien does not have the right to sell the property unlike in mortgage, where the mortgagee has a right of sale.

2. A lien may be created over other properties and not necessarily on real property as in mortgages. Although on fewer occasions, mortgages may also be created on stocks and other equities of a borrower.

3. In a lien, the right is extinguished if the creditor parts with possession to the debtor or his agent.

4. A lien is a means of coercing the debtor to pay the money advanced to him, while mortgaged property serves as security against payment not being made.

III. Pledge: Pledge is a deposit of some personal property to a creditor as a security for some debt or performance of some act.

1. The pledgor only has a possessory right over the property while the mortgagee acquires ownership (proprietory security) in the property while the borrower retains possession. In Adetono v. Zenith International Bank Plc, the court distinguished a mortgage from a pledge thus: “…by mortgage the title is transferred. By a pledge, possession is transferred…”

2. In a pledge, pledgor retains general title and parts with possession, while in a mortgage, the mortgagor transfer general title and retains possession.

3. In a pledge, only possessory security is transferred, while in a mortgage, proprietary security is transferred.

IV. Charges: Charge is also like a mortgage but it involves the appropriation of property without transfer of interest. In mortgagees there is conveyance of interest while in charges, there is no conveyance of interest, rather the charge only has some rights over the property which serves as security for the money advanced by him. He can for example sell the property to recover his principal and interest.

V. Sale: This is the transfer or alienation of the total interest of a person in a property. Unlike a mortgage where a right to redeem exist, in the sale of interest in land, the vendor conveys his interest with the intention that the interest is acquired by the purchaser as the absolute owner in the estate for a consideration paid by the purchaser of the estate to the vendor

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com

WRITTEN BY CHAMAN LAW FIRM TEAM

EMAIL: chamanlawfirm@gmail.com

TEL: 08065553671, 08024230080