APPOINTMENT OF A RECEIVER

Section 19(1)(iii) of the Conveyancing Act and Section 123(1) of the PCL provide for the power of the mortgagee, when the mortgage money has become due, to appoint a receiver of the income of the mortgaged property or any part of it.This statutory right is implied in every mortgage, legal or equitable, created by a deed where the circumstances would allow the mortgagee to exercise a power of sale.

The mortgage money must have become due before a receiver can be appointed.In other words, the legal due date must have expired. The remedy for the appointment of a receiver is open to both legal and equitable mortgages. The legal mortgagee himself may appoint a receiver if he has such power under the mortgage deed. If that power does not exist in the mortgage deed, he can apply to court for the appointment of a receiver. An equitable mortgagee, whose is not by deed, must apply to the court for the appointment of a receiver. The receiver though appointed by the mortgagee, is the agent of the mortgagor hence the mortgagee is not liable to account to the mortagor.

The duty of the receiver is to

Credit - indiatimes.com 

take the mortgaged property out of the control of the mortgagor and to apply the income therein; any rent or profit that he can get from the property in offsetting the mortgaged debt. Please, note that the receiver is the agent of the mortgagor where appointed under the mortgage contract by the mortgagee. He is an officer of the court when he is appointed by the court and on no occasion is he an agent of the mortgagee.

Appointment of receiver is very good for equitable mortgagee since he has no legal estate. Therefore, he cannot enter into possession; possession is synonymous with legal title. He cannot enter into a legal estate for the receipt of the rent and profit. What an equitable mortgagee cannot do directly by entering into possession, he can do by appointing a receiver. In AWOJUGBAGBE’s case, the mortgagee, that is, NIDB appointed a receiver and the receiver took possession by force and the court held that they were not liable in damages.

NOTE:

The rights discussed above are enforceable against the mortgaged property and they are not mutually exclusive; they are cumulative.Thus, the mortgagee may appoint a receiver who will take possession and sell. Nothing prevents the mortgagee from bringing an action against the mortgagor on his personal covenant to repay the loan.

EQUITABLE MORTGAGE BY OPERATION OF LAW

See the case of SAVANNAH BANK NIGERIA LTD. V. AJILO (SUPRA).The Court in this case that legal mortgage was void for lack of Governor’s consent but there is equitable mortgage.

To be continued with CAPACITIES OF PARTIES TO A MORTGAGE

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