Mortgagor’s Right of Redemption:
Mortgage
Mortgage is a security offered for a loan or money. In life, no man has it all, people continue relying on assistance from each other. In this scenario, Friends always run to friends for help and relations usually come to the help of each other. Time may come that they can no longer meet the needs of each other and this may give rise to borrowing from a bank or a registered institute. Going by the general adage that it’s easier to borrow money than to refund. The institution or the person that is in charge of borrowing the money will always demand for security or collateral in order to secure the easy refund of the money by the borrower and this usually give rise to what is called Mortgage.
Mortgage is the security or collateral offered and kept in the custody of the person lending the money or loan. The security in most cases is usually a landed property. However, chattel can be used as a mortgage but depends on the agreement of the parties. Some scholars tagged mortgage as an easier means of acquiring landed property by issuing loan to the owner and after the expiration of certain time without the full payment of the loan by the borrower, the property turns to be the property of the person to whom it was offered for a loan.
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Mortgage is usually between two or more parties called the Mortgagee and the Mortgagor. While the Mortgagor is the Borrower, the Mortgagee is the lender. The Mortgagor is the person that offers his property as a security for a loan while the Mortgagee is the person that accepts the collateral for the loan. The law is usually plain that if at the expiration of the period agreed by the parties for the loan, that if the Mortgagor fails to repay back the loan, that the Mortgagee shall be entitled to dispose the property or security that was offered for the loan.
Laws regulating Mortgage transactions
- Land Use Act
- Property and conveyancing Law
- Stamp duties Act
- Mortgages and property Law (Lagos State)
- Conveyancing Act
- Land Instruments Registration Law
- Illiterates Protection Act/Law
- Companies and Allied Matters Act
Mortgagor’s Right of Redemption
The Mortgagor has two types of rights, one legal and the other equitable. In a mortgage agreement, there is the legal right to redeem on a specified date agreed to by the parties and the equitable right exercisable anytime thereafter. While creating the Mortgage agreement, the parties usually agree on the loan and security and the date that the loan shall be redeemed. At common law, the Mortgagor shall not be entitled to redeem the loan at the expiration of the date agreed on by the parties. However, equity has a better placement for the Mortgagor in mortgage agreement.
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It states that the Mortgagor shall still be entitled to redeem the mortgage loan even when the time agreed upon by the parties has expired, the only thing is that the Mortgagor may be charged to pay certain interest. This is premised on the principle of equity of redemption. Equity of redemption which is otherwise known as equitable right of redemption is the right created for a mortgagor in equity that permits the Mortgagor to redeem the loan even when the time agreed on by the parties has elapsed.
Equitable right of redemption does not obviate the facts that the Mortgagor may still be demanded by equity to pay certain interest for the late payment of the loan. This equitable right only helps to secure the property of the Mortgagor and it also preserves the loan of the lender with some interest.