MORTGAGOR’S RIGHT TO REDEEM

In Ndaba Nig Ltd v. UBN (2007) NWLR (pt 1040) 439, the court held thus:

“The right to redeem a mortgaged property is so inseparable an incident of mortgage that it cannot be taken away either expressly or by implication, nor can such redemption be limited to time or particular persons. The right of equity of redemption continues until the mortgagor’s title is extinguished or the interest destroyed by sale either under the process of court or by the mortgagee.”

Credit - studypoint.blogspot.com 

Thus court of equity will not allow the mortgagee to take any undue advantage of the mortgagor, equity will not give effect to any clause in a mortgage deed that is a clog to the mortgagor’s right to redeem; this principle has been extended to include any clause that delays redemption ( See Morgan v. Jefferys (1910) 1 Ch. 620), hence the maxim “once a mortgage, always a mortgage, there must be no clog on the equity of redemption” 

In Ejikeme v. Okonkwo (1994) 8 NWLR (pt 362) 266,theSupreme Court held, inter alia, thus:

“It is a settled rule of equity that any agreement, which directly bars the morgagor’s right of redemption is ineffectual. Similarly, stipulations, which, even indirectly tend to have the effect of making a mortgage irredeemable, are equally void and unenforceable as clogging the equity o redemption.”

This principle does not mean that the court will unduly interfere with the genuine bargain of the parties; but where the circumstance is such that the agreement of the parties is so oppressive and unconscionable that the mortgagor’s right to redeem is rendered nugatory, the court of equity will intervene on the ground that the clause is unreasonable and a clog to the mortgagor’s right of redemption. There is no general rule to determine when a clause in a mortgage instrument will be held to be oppressive and unconscionable.The court will usually look at other extraneous factors such as:

a)the bargaining power of the mortgagor, and

b)The length of time for which the contractual right to redeem is postponed.

However, every case should be treated on its merit. In Fairclough V. Swan Brewery Company(1912) AC 565,where in a mortgage of a lease of twenty years the contractual right to redeem was postponed until six weeks before expiration, the Privy Council held that the provision for redemption is nugatory.

Upon creation of a valid mortgage, legal or equitable, a mortgagor possesses three distinct potential rights to redeem the mortgaged property. One of these rights is in law while the other two are rights in equity. The rights are:

1. Legal right to redeem; and

2. Equitable right to redeem;

3. Equity of redemption.

To be continued with LEGAL RIGHT TO REDEEM

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