MORTGAGE AND RELATED TRANSACTIONS

(1) A MORTGAGE AND A PLEDGE

A pledgee’s right originates from possession. A pledge involves actual or constructive delivery of possession to the pledgee on the condition that the property would be returned when loan is repaid. In other words, a pledge is hinged on possession. This is not the case with a mortgage. A mortgagee, though may enter into possession in some circumstances, is not encouraged to do so because if he does, he will account to the mortgagor for the profits he has made and also for the profits he ought to have made on the property.

Credit - oml.org.uk

(2) A MORTGAGE AND A LIEN

A lien is a right to detain the chattel until a debt is satisfied; hence a mechanic has a common lien over a motor car repaired by him. Unlike in a mortgage, there is no general right of sale in lien in order to realise the indebtedness neither can the lienor otherwise deal with the property. It is merely a means of coercing the debtor into payment, rather than a security against repayment not being made. A lien does not vest any estate in the lienee, which he can transfer through sale whereas in a mortgage, the mortgagee/lender has an estate and it is possible for him to exercise his power of sale where the need arises. More often than not, lien arises not from agreement between the parties but by operation of law.

(3)A MORTGAGE AND A CHARGE

A mortgage is usually accompanied by a transfer of property rights whilst a charge is an appropriation of specific property for the discharge of an obligation without transfer of title or possession. The chargee only has limited right over the property. Sometimes, a charge may arise by operation of law (statutory charge), unlike a mortgage. Note however that where a charge by Deed expressed to be by way of legal mortgage is created, the mortgagee has all the powers of a legal mortgagee. In this respect, a charge has some similarity with a mortgage

(4)A MORTGAGE AND A SALE

A mortgage is not a sale. InOwoniboys Technical Services Ltd v. Union Bank of Nig Ltd (2003) SCNQR 58,the court pointed out that “once a mortgage, always a mortgage; there must be no clog on the equity of redemption.”The law does not divest the mortgagor of his title in the property; he remains the owner, whilst the mortgagee is the custodian of the property as a form of security to ensure repayment of the mortgagor’s indebtedness. But it is pertinent to note that while a mortgage is not a sale, the mortgagee reserves the right in some instances to sell the mortgage property where the mortgagor defaults in his obligations under the mortgage.

Source: www.lawrepository.com.ng

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