DISCHARGE OF MORTGAGES

The discharge of a mortgage means that the loan plus interest has been redeemed. The mortgagee/lender is ready to release the property and return to the mortgagor documents deposited as security. The discharge of a mortgage terminates and releases the mortgagor from his obligations under the mortgage.The mode of discharge of a mortgage depends on the type of mortgage and how it was created.That is:

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1.A LEGAL MORTGAGE CREATED BY ASSIGNMENT OR SUB DEMISE

This is discharged by the reconveyance by deed of discharge, release or surrender of the interests in the property to the mortgagor.The deed should be registered at the Lands Registry as evidence of discharge.

2.A MORTGAGE CREATED BY A CHARGE BY WAY OF A LEGAL MORTGAGE

This is discharged by a statutory receipt which states the name of the person who pays the money and is executed by the chargee by way of legal mortgage or the personh in whom the mortgaged proerty is vested and who is legally entitled to give a receipt for the mortgage money.

3.A MORTGAGE OF A REGISTERED CHARGE UNDER THE REGISTRATION OF TITLES LAW

This is discharged when its registration is cancelled at the Registry by lodging the Charge Certificate and the Land Registry Form 6 at the Registry.

4.AN EQUITABLE MORTGAGE

A simple receipt under hand discharges an equitable mortgage unless payment is made to the mortgagee’s solicitor in which case, the receipt should be by a deed, so as to protect the mortgagor or the person paying the money.

5.WHERE THE MORTGAGOR/BORROLWER IS A CORPORATE ENTITY OR A JURISTIC PERSON

Where the mortgagor is a corporate entity upon the redemption of the debt, a memorandum of satisfaction under Section 204 of the Companies and Allied Matters Act should be filed at the Corporate Affairs Commission.

6.DISCHARGE BY COMPLYING WITH SECTION 135 OF THE PCL, 1959

An alternative method of the discharge of mortgages is where a receipt is either endorsed on, written at the foot of, or annexed to, a mortgage for all money secured by it which states the name of the person who pays the money and is executed by the mortgagee or the person in whom the mortgage property is vested and who is legally entitled to give a receipt for the mortgage money. The receipt shall operate without any reconveyance, surrender or release as a discharge of the mortgaged property from all principal money and interest secured under the mortgage. This method dispenses with the use of a deed of discharge, surrender or release.

EXCEPTION TO THE RULE

SECTION 171 OF THE COMPANIES AND ALLIED MATTERS ACT

This rule of equity does not apply to a debenture. A debenture is an instrument usually issued by a corporate entity as evidence of a debt or as security for facility.It contains a promise to pay the amount stated on the face of it.Section 171 of CAMA provides that:

“A company may issue perpetual debentures and a condition contained in any debenture or in any deed for securing any debenture shall not be invalid by reason only that the debenture are made irredeemable only on the happening of a contingency, however remote, or on the expiration of a period, any rule of equity to the contrary notwithstanding.

To be continued with SIMILARITIES BETWEEN MORTGAGE DEBENTURE AND MORTGAGE

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