land pledge & mortgage

Pledge in the ordinary usage means a promise, a formal undertaking. In land related matters it is the promise, the securitirised undertaking that you will repay the loan of money given to with your land handed over to the lender to hold and be using pending when you will repay the loan. The possession and occupation of the pledged land is returned back to the borrower when he repays the money. The lender who takes and holds the land is referred to as the Pledgee, and the Borrower hands over his land is referred to as the Pledgor. See Ihunwo V. Ihunwo (2013) 8 NWLR (Pt. 1357) 550.

Yes, it is under Section 24 of the LUA. It is customary pledge that serve the indeginous people of Nigeria that which modern law does with mortgage. Zangina V. Comm. Of Works & Housing, Borno State (2001) FWLR (Pt. 79) 1368 @ 1391.

No, it is neither a lien nor a mortgage. A lien is the legal right of a person who is given possession of the property of another who borrows something of value from him, and who has an implied right in law to hold unto that which is in his possession until that which he is being owed by the owner of that property repays or refunds it. See the Supreme Court case of Afrotec Technical Services Nig.) Ltd. V. MIA & Sons (2000) 15 NWLR (Pt. 692) 730 @ 798. The land or landed property pledged will always be redeemed, no matter how long it takes, and only for the exact amount borrowed. A pledge also differs from Mortgage which is a formal transfer, handover or conveyance of the land (we are dealing with land here) to a Lender of money to him as security for the loan which if not repaid, capital and interest, on the certain agreed date, the title in that land passes completely and permanently to the borrower. See Intercity Bank Plc. V. Feed & Food Farms Nig. Ltd (2001) 17 NWLR (Pt. 742) 347 @ 364. A pledge transfers only possession to the pledgee, while in a mortgage, the title to the land is transferred.

Once a pledge, always a pledge. Once it is determined that the land is on a pledge, the length of time taken to redeem it or the use it has been put by the pledge, such as planting economic trees, is not a deterring issue, and cannot be relied on in proof of anything contrary to the title of the pledgor. See Okoiki & Anor. V. Esedalue & Anor. (1974) 3 SC 15; Ihunwo V. Ihunwo (2013) All FWLR (Pt. 674) p.75 particularly @ p.94, paras A – B; Eberuhe V. Ukapaka (1996) 7 NWLR (Pt. 460) 254.

No, it would not. The pledgor’s right to redemption is perpetual and cannot be clogged by use of subterfuge or delay or postponement by the pledgor or his successor’s right to redeem the land, and lapse or limitation would not bar redemption. See Mbubu V. Obori (2003) FWLR (Pt. 156) 844 @ 852; Ufomba V. Ahuchaogu (2003) FWLR (Pt. 157) 1013 @ 1033.

No. On redemption of a pledge land by a pledgor, a pledgee is not entitled to compensation for putting the land to extra-ordinary economic uses while in possession. See Okoiki & Anor. V. Esedalue & Anor. (1974) 3 SC 15.

No. A pledge is perpetually redeemable and the pledgor’s family is entitled to redeem the pledged land for the amount of the original loan and for nothing more. See Okoiki & Anor. V. Esedalue & Anor. (1974) 3 SC 15

It is not true that the pledgee gets nothing from the transaction. His use of the land all while it remained unredeemed serves as interest on the loan sum of money.

An arrangement with such terms would not more be a customary pledge. The parties would have their transaction adjudged as something other than customary pledge, in which case all the full ingredients of contract of sale of land would be looked for and relied upon to determine what happened between them. A customary pledge would not be countenanced as losing its character of forever redeemable. See Mainnage V. Gwamma (All FWLR (Pt. 222) 1617 @ 1626.

The burden rests with the person asserting a case of pledge to prove it by evidence of his title over the land, particulars of the pledge such how much it the land was pledged for, the parties to the pledge, witnesses thereof, date when it took place, and other relevant circumstances. Mbubu V. Obori (2003) FWLR (Pt. 156) 844 @ 852, Asologwu V. Nneji (2002) FWLR (Pt. 1186 @ 1194; Ezike V. Egbuaba (2019) HELAR ratio 1

The pledgee in possession must not do anything to clog the pledgor’s right of redemption of the pledged land. In other words, the concept of leasehold under common law is alien to customary pledge. Okoiki & Anor. V. Esedalue & Anor. (1974) 3 SC 15; Achilihu & Ors. V. Anyatonwu (2013) 12 NWLR (Pt. 1368) 256.

“Once a pledge, always a pledge” summarises the nature of a Customary Pledge. The length of time taken to redeem it, or what development the pledgee has effected on the land over time, changes nothing – Okolie V. Esedalue (1974) 3 SC 15. Other governing principles include that (i) a customary pledge is always redeemable; time changes nothing. (ii) The exact amount of money for which the land was pledged remains what the pledgor’s family will be obliged to refund whenever they are ready to redeem their pledged property. The pledgee cannot claim more to cover either for the development he has effected thereon, or to cover for change in money value by inflation. The pledgee is not entitled to any other extra compensation for anything whatsoever. (iii) At the time of redemption, the pledgee must give account of benefits he has derived from making use of the land for the period he was in occupation. (iv) The pledgee must not do anything that will clog or undermine the pledgor’s right to redeem the pledged land. See Achilihu v. Anyatonwu (2013) 12 NWLR (Pt. 1368) 256.

“Once a pledge, always a pledge” summarises the nature of a Customary Pledge. The length of time taken to redeem it, or what development the pledgee has effected on the land over time, changes nothing – Okolie V. Esedalue (1974) 3 SC 15. Other governing principles include that (i) a customary pledge is always redeemable; time changes nothing. (ii) The exact amount of money for which the land was pledged remains what the pledgor’s family will be obliged to refund whenever they are ready to redeem their pledged property. The pledgee cannot claim more to cover either for the development he has effected thereon, or to cover for change in money value by inflation. The pledgee is not entitled to any other extra compensation for anything whatsoever. (iii) At the time of redemption, the pledgee must give account of benefits he has derived from making use of the land for the period he was in occupation. (iv) The pledgee must not do anything that will clog or undermine the pledgor’s right to redeem the pledged land. See Achilihu v. Anyatonwu (2013) 12 NWLR (Pt. 1368) 256.

Mortgage is a usual and common legal arrangement entered into between a lender and a borrower as a means of securing the loan, capital and interest. It is usually made in formal written form of a Conveyance of the title to the mortgaged property (usually land) by the borrower (Mortgagor) to the lender (Mortgagee). It is much used by banks to secure loans they give out to their customers. There are two types – the Mortgage by Demise and Mortgage by Legal Charge. Under the former the title is formally and legally demised and transferred to the lender (Mortgagee) who holds and owns it until the loan is repaid and he returns same back to the borrower. Under the latter category, the arrangement is that the title and possession remains in the borrower until the agreed date of redemption of the loan. If on that date of redemption the borrower is unable to repay the loan, title in the mortgaged property automatically (the agreement is made in such a way that the date of redemption becomes the date of transfer of title) passes unto the lender. For the protection of the interest of the lender, the Mortgage documents are, in practice, usually registered in the public register, Land Instrument Register (under the mortgage section) so that the world would be thereby given a formal legal notice of the existence of the legal charge mortgage to prevent the same property being used in another such arrangement after it had become thus encumbered. See Songhai Ltd V. UBA (2004) FWLR (Pt.189) 1244 @ 127, Intercity Bank Plc. V. Feed & Food Farms Nig. Ltd (2001) 17 NWLR (Pt. 742) 347 @ 364 Because of the conditional nature of mortgage agreement, it is treated as an equitable interest. For this condition or status, the Mortgagee can only sell the mortgaged property and legal right on the buyer if same was made pursuant to a Court Order. That is that, a bank, for example, would not have the right, on its own, decide that the mortgage is foreclosed and then go on, all by itself, to assume the power to say off the property so as to get back its capital and interest thereupon. It will need the court to so authorize it by an Order of the Court. See Majekodunmi V. AIB Ltd (2005) All FWLR (Pt. 254) 933 @ 948

Mortgage is a usual and common legal arrangement entered into between a lender and a borrower as a means of securing the loan, capital and interest. It is usually made in formal written form of a Conveyance of the title to the mortgaged property (usually land) by the borrower (Mortgagor) to the lender (Mortgagee). It is much used by banks to secure loans they give out to their customers. There are two types – the Mortgage by Demise and Mortgage by Legal Charge. Under the former the title is formally and legally demised and transferred to the lender (Mortgagee) who holds and owns it until the loan is repaid and he returns same back to the borrower. Under the latter category, the arrangement is that the title and possession remains in the borrower until the agreed date of redemption of the loan. If on that date of redemption the borrower is unable to repay the loan, title in the mortgaged property automatically (the agreement is made in such a way that the date of redemption becomes the date of transfer of title) passes unto the lender. For the protection of the interest of the lender, the Mortgage documents are, in practice, usually registered in the public register, Land Instrument Register (under the mortgage section) so that the world would be thereby given a formal legal notice of the existence of the legal charge mortgage to prevent the same property being used in another such arrangement after it had become thus encumbered. See Songhai Ltd V. UBA (2004) FWLR (Pt.189) 1244 @ 127, Intercity Bank Plc. V. Feed & Food Farms Nig. Ltd (2001) 17 NWLR (Pt. 742) 347 @ 364 Because of the conditional nature of mortgage agreement, it is treated as an equitable interest. For this condition or status, the Mortgagee can only sell the mortgaged property and legal right on the buyer if same was made pursuant to a Court Order. That is that, a bank, for example, would not have the right, on its own, decide that the mortgage is foreclosed and then go on, all by itself, to assume the power to say off the property so as to get back its capital and interest thereupon. It will need the court to so authorize it by an Order of the Court. See Majekodunmi V. AIB Ltd (2005) All FWLR (Pt. 254) 933 @ 948

The law used to be that parties to any alienation, assignment or mortgage which transfers title in land to another must seek and obtain the Governor’s otherwise it will be null and void. Union Bank Nig. Ltd. V. Ayodare & Sons Nig. Ltd. (2007) 13 NWLR (Pt. 1052) 567; Awojugbagbe Light Industries Ltd. Chinukwe (1995) 4 NWLR (Pt. 390) p.379. Savannah Bank of Nig. Ltd. V. Ajilo (1989) 1 S.C. (Pt.ii) 90 @ 105.

But that has all changed with the Supreme Court decision in the case of Ibrahim v. Obaje (2019) 3 NWLR (Pt. 16600 389 @ 412 now limits the mandatory requirement of the Governor’s consent to land title conveyance that the government is involved in or has some element of overriding public interest in it.

A building erected on a mortgaged land during the life span of the mortgage forms part of the mortgaged property by virtue of the maxim, “quic quid plantatur solo lsolo cedit”, meaning “he who owns a land owns what is on it”. Where the Plaintiff erected flats on the mortgaged land, the Defendant acted rightly by the disposing of the flats alongside the land. Babatunde V. Bank of the North (2012) All FWLR (Pt. 608) p.828, paras A-B.

A building erected on a mortgaged land during the life span of the mortgage forms part of the mortgaged property by virtue of the maxim, “quic quid plantatur solo lsolo cedit”, meaning “he who owns a land owns what is on it”. Where the Plaintiff erected flats on the mortgaged land, the Defendant acted rightly by the disposing of the flats alongside the land. Babatunde V. Bank of the North (2012) All FWLR (Pt. 608) p.828, paras A-B.

The only obligation incumbent on a mortgagee in the exercise of his power of sale is that he should act in good faith. Babatunde V. Bank of the North (2012) All FWLR (Pt. 608) p.798; A.C.B Ltd. V. Ihekwoaba (2003) 16 NWLR (Pt. 846) 249.

Before a mortgagee can pass a good title to a purchaser free from the equity of redemption, the right to exercise the power of sale under a mortgage must have arisen. The mortgage debt must have fallen due and not paid. Babatunde V. Bank of the North (2012) All FWLR (Pt. 608) p.828; A.C.B Ltd. V. Ihekwoaba (2003) 16 NWLR (Pt. 846) 249; Ibrahim V. First Bank of Nig. (2013) All FWLR (Pt. 694) 135.

No. Any purchaser who bought a property sold by a legal mortgagee upon a default in repayment of a loan by the mortgagor is not a trespasser. Hence, once the precondition of notice of sale is given to the mortgagor by the mortgagee or his agent, preceded by a notice of demand of repayment of money lent to the mortgagor and the mortgagee proceeds to sell in good faith, subsequent purchasers in good faith gets a good title and a court will not intervene in the sale only because the sale did not meet with the satisfaction of the mortgagor. See Babatunde V. Bank of the North (2012) All FWLR (Pt. 608) p.828; A.C.B Ltd. V. Ihekwoaba (2003) 16 NWLR (Pt. 846) 249; Ekaeteh V. Nigeria Housing Development Society Ltd. (1973) 6 SC 183; Rafukka V. Kurfi (1996) 6 NWLR (Pt. 453) 235.

Yes, a mortgagee whether he is in possession or not has the right to preserve and protect the mortgaged property from being wasted in the hands of the mortgagor or against any other person with an inferior title. Where acts that will depreciate or diminish the value of the mortgaged property are carried on it, a mortgagee in such circumstances cannot sit idly and watch his security being wasted. Adetono & Anor. V. Zenith Bank Int’l Plc. (2011) 18 NWLR (Pt. 1279) 627