FORECLOSURE

Foreclosure is a judicial process through which the mortgagor’s equity of redemption is terminated and all the interests in the mortgagor property become vested in the mortgagee, subject to the right of other mortgages who rank in priority above him. Foreclosure is more effective when the mortgagee is in need of his capital which cannot be realised from rent or profit on the mortgaged property. An interim order called “a foreclosurenisi” is first decreed giving the mortgagor six months within which to redeem the mortgaged debt. At the expiry of the six months, the order is made absolute. All subsequent mortgagees and the mortgagor should be made parties to the action. There is no doubt that the remedy of foreclosure is available to a legal mortgagee. In Ogundaini V. Araba(SUPRA), the Supreme Court held that foreclosure is available to mortgagee in an equitable mortgage created by deposit of title deed if accompanied by an agreement by the mortgagor to give a legal mortgage when required to do so.Ideally, foreclosure, and not sale, is the appropriate remedy in an equitable mortgage (except the one created by a mere charge).

Commenting on the nature of foreclosure, Jessel, MR in Carter v. Wake (1877) 4 Ch D 605, that foreclosure“is no more than the court’s removing from the mortgagee’s title the stop which the court itself had imposed.”Foreclosure is the destruction of the equity of redemption which previously existed: Re Farnol, Eades, Irvine & Co (1915) 1 Ch D 22 at 24

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Because of the drastic nature of foreclosure, it is not every breach by a mortgagor that will warrant making of a foreclosure order. In appropriate cases, the court in an action for foreclosure may order the sale of the property instead of foreclosure (see section 114 (2) of the PCL). Where the property is sold to acquire the legal interest in the property, the purchaser must comply with the requirement of obtaining Governor’s consent under the Land Use Act. In Danjuma v. Mohamed Bai(1965) NMLR 455, the court held that“there shall be no transfer in the right of occupancy or any part without the Minister’s consent. Until that consent is obtained, the purchaser has no right at all in the property….”

QUESTION

When should action for foreclosure to recover cost be brought after which it will be statute barred?

ANSWER

An action for foreclosure to recover cost must be brought within 12 years of the date fixed for payment of the principal; otherwise it becomes statute barred. Note that an action for foreclosure to recover land must be brought within 12 years of the date fixed for payment of the principal; otherwise it becomes statute barred. See the Limitation law of Lagos State. The strict mode of enforcing a mere charge is by sale or appointment of receiver under an order of court but never by foreclosure. On the other hand, foreclosure and not sale is a better remedy in an equitable mortgage.

RE-OPENING OF A FORECLOSURE

Instances in which a foreclosure order made by the court can be reopened:

1.If the mortgagee, after obtaining a foreclosure order absolute still sues the mortgagor on his personal covenant to pay the loan.

2.If the mortgagor, after the foreclosure order absolute, applies to the court without delay stating that his inability to repay was due to circumstances beyond his control and that he is now able to pay.

3.Where the security far exceeds the outstanding mortgage sum and interest;

4.Where the security is of special value to the mortgagor, e. G. family property.

5.Where it is just and equitable to allow the mortgagor to redeem

To be continued with TAKING POSSESSION

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