UP-STAMPING, CONSOLIDATION, AND CREATION OF SUBSEQUENT MORTGAGE(S)

Where a mortgagor borrowed from the mortgagee and still want to borrow and money what is required, is that the mortgagee should draft a new agreement and the new document up-stamped.

CHAMAN LAW FIRM

6/3/2022 2 min read

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WHAT IS UP-STAMPING, CONSOLIDATION, AND CREATION OF SUBSEQUENT MORTGAGE(S)

THE CONCEPT OF UP-STAMPING

Up-stamping of mortgages can be said to mean the practice or process of payment of additional stamp duties on a mortgage document in satisfaction of the increased facility granted over an earlier mortgage. This happens where a mortgagor had earlier borrowed money from a mortgagee using a particular property as security for a loan. If subsequently the mortgagor wants additional loan from the same mortgagee using the same property as security; what is required, is that the mortgagee should draft a new agreement and the new document up-stamped.

According section 22 of the Stamp Duty Act a document is required to be stamped ad valorem within 30 (thirty) days of first execution. Where the instrument is void, unless it has been approved by a public officer, the 30 days run from the date of such approval – section 22(5) of the Stamp Duty Act.

PROCEDURE TO ACQUIRE A STAMP

Normally, documents are submitted to the Stamp Duty Commissioner of the State where the land is situated for assessment. The Commissioner, after checking the consideration for which the document is made, calculates the duty payable and endorses a certificate indicating the amount. Where the document is voluntary, it must be ad valorem, as if it were a document on sale, with the substitution of the value of the property conveyed for the amount or value of the consideration for sale, and the duty must be adjudicated (that is, presented to the Commissioner for an opinion as to the amount that is to be paid) before the document is regarded as properly stamped.

THE MAJOR FEATURES OF STAMPING-UP ARE –

  • If the property is the same;

  • If the parties are the same; but

  • If the new facility if different; hence

  • The new documents are paid to (‘up-stamp’) the document.


DISTINCTION BETWEEN CONSOLIDATION OF MORTGAGES, CREATION OF SUBSEQUENT OR SUCCESSIVE MORTGAGE AND UP-STAMPING

The parties for consolidation of mortgages, are always the same but different properties. Thus, the mortgagor is barred from redeeming the properties separately. Also, creation of subsequent or successive mortgagees is applicable only in the states where the Property and Conveyancing Law is operative, and involves mortgage by assignment of the same property to different parties.

In contradistinction to the duo above, up-stamping involves same parties, same property, additional facility, and need for stamp duty rather than fresh Governor’s consent on the addition facility.

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