CREATING A LEGAL MORTGAGE: CONSENT

Section 22 of the Land Use Act, 1978 provides that where an equitable mortgage has been created in favour of a mortgagee and consent has been obtained, further consent is not required to a legal mortgage replacing the equitable mortgage. However, the Act does not require consent to a loan transaction nor does it make unlawful for a loan transaction to be effected without first obtaining the Governor’s consent. See OGUNDOLA V. NICON (SUPRA). But the prior consent of the Governor is required for the creation and registration of a legal mortgage or a charge by deed. See. SAVANNAH BANK OF NIGERIA LTD. V. AJILA(1989) 1 NWLR (pt 97) 305.

Apart from the legislative requirement of consent by the State Governor, consent of landlord or (sub lessor) may be required on the mortgage of a leasehold land or certificate of occupancy if there is a widely drawn covenant restricting a tenant/sub-lessee’s right to “assign, let, mortgage or otherwise part with possession of the demised property or any part thereof”.

Credit - llbindia.com 

A solicitor, mindful of the effect of such covenant, should have amended it by deleting the words “mortgage” and “charge” and by inserting a qualification that the provisions of the sub-clause do not prohibit an assignment or under letting by way of mortgage.

To be continued with TRANSFER OF MORTGAGES

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