EQUITY OF REDEMPTION

   Equity of redemption is different from equitable right to redeem.Equity of redemption is the equitable interest which a mortgagor has in the land as the owner.The mortgagor can redeem his property by paying to the mortgagee the principal money and the interest that has accumulated on the principal money. Where the mortgagor has paid to the mortgagee the amount that is due, the mortgagee shall re-convey the property to the mortgagor. A Deed Of Release is usually prepared and the particulars of the document of title of the property that is being re-conveyed to the mortgagor shall be stated in the deed of release.The deed of release shall be registered in the Land Registry and from the date of registration the property of the mortgagor is free from encumbrance.

Credit - chrpalberta.ca 

This is the right of a mortgagor in law to redeem his property once the liability secured by the mortgage has been discharged. Historically, a mortgagor (the borrower) and a mortgagee (the lender) executed a conveyance of legal title to the property in favour of the mortgagee as security for the loan. If the loan was repaid, then the mortgagee would return the property; if the loan was not repaid, then the mortgagee would keep the property in satisfaction of the debt. The equity of redemption was the right to petition the courts of equity to compel the mortgagee to transfer the property back to the mortgagor once the secured obligation had been performed.

Equity of redemption arises simultaneously in favour of the mortgagor as soon as the mortgage is created, and continues until the property is sold or foreclosure occurs. Equity from the onset treats the mortgagor as continuing to be the owner of the property, which he has conveyed away to the mortgagee, subject only to the mortgagee’s interest which is not a right to the mortgaged property but to the mortgage debt. See Okonkwo v. CCB (2003) 8 NWLR (pt 822) 347; UBA v. Okeke (2004)7 NWLR (pt 872) 393. Consequently, the mortgagee’s beneficial interests in the security is only as a means of enforcing his right to the debt.

Note that the mortgagor’s equity of redemption must never be clogged or rendered nugatory by the mortgagee by inserting clauses in the mortgage deed that tend to restrict the mortgagor’s ability to redeem the mortgage. Traditionally, the courts have been astute to ensure that the mortgagee did not introduce any artificial stipulations into the contractual arrangements to impede a mortgagor's ability to satisfy obligations and reclaim their property. Such impediments are "clogs" on the equity of redemption, and the courts of equity were particularly astute to strike down any provision which was, or in later cases, which might be, a clog. See Fairclough v Swan Breweries Co. Ltd. 1912 A.C. 565. Equity will not allow an unreasonable suspension of the mortgagor’s right to redeem the mortgage security. See also Biggs v Hodinott(1898)2ch 307. Stanley v. Wilde(1899) 2ch 474.

Note further that if the mortgagee is in physical possession of the mortgaged property and he has been in possession of the mortgaged property continuously for more than 10 years, as required under the Limitation Law, before the mortgagor brings an action to recover possession, the claim will be statute barred.See Federal Administrator General And Ors V. Cardozo And Ors(1973) 1 ALL NLR (PT. 11) 169. Note finally that equity of redemption is more than a mere right; it is an estate in land. It is therefore possible in some instances for the mortgagor to mortgage his equity of redemption.

Finally, in giving credence to the potency of a mortgagor’s equity of redemption, the courts have placed it on the same footing as the equity of cestui que trust. See Re Sir Thomas Spencer Wells (1933) Ch 29

SEE THE FOLLOWING CASES ON “EQUITY OF REDEMPTION MUST NOT BE CLOGED”

1. Warring v. London & Manchester Assurance Coy Ltd. (1935) 1Ch 310, 318

2.Biggs v Hoddinoff (1898) 2Ch 307

3.Morgan v Jeffreys (1910) 1Ch 620

4.Bradley v Carrit (1903) AC 253

5.Noakes v Rice

6.G&C Krelinger v New Patagonia Meat & Cold Storage Coy. Ltd.

To be continued with MORTGAGEE’S RIGHT OF REDEMPTION (RIGHTS OF THE MORTGAGEE)

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