MORTGAGES
• S.2 Mortgage Act also gives a definition of a
mortgage
• In the case Matambulire v Yozefu Kimera
[1975] HCB 150 a mortgage was defined as a
transaction where the owner uses his/her interest
in land as security for the repayment of a loan.
• Santley v Wilde [1899]12 Ch.474 A mortgage
is a conveyance of land or an assignment of
chattels as a security for the payment of a debt
or discharge of some other obligation for which it
is given.Cont’d
Who can create a mortgage
• S.3( 1)
Types of mortgages
i) Legal mortgages
ii) Equitable mortgages ( Informal)Legal Mortgages
• This is a mortgage that is registered
as provided under s.3(4) of the
Mortgage Act
• A legal mortgage is created by deed.
It is created by signing a mortgage
deed which is then registered as an
encumbrance on a certificate of title.Advantages of a registered
mortgage
• Rights are automatic e.g sale without
recourse to court
• Third party is put on notice of the
legal interest.
• Creates rights in rem and priority
over all subsequent mortgages.Equitable mortgages/ Informal
mortgages
• S.2
M.A
defines
an
informal
mortgage.
• S.3(5)
is
to
the
effect
that
unregistered mortgage shall be
enforceable between parties.
• There are two types of equitable
mortgages
i) Equitable mortgages on registered
land
ii) Equitable mortgages on customaryCont’d
• An informal mortgage is created according to
s.3(8) when the holder of registered land
deposits any of the following:
i) The certificate of title to the land
ii) A certificate of customary ownership
iii) A lease agreement
iv) Any other document which may be agreed
upon evidencing a right to an interest in
landCont’d
• Any other document which may be
agreed upon to secure any payments
• Barclays Bank D.C.O v Gulu
Millers [1959] EA 540 court held
that under the doctrines of
equity a deposit of title deeds by
way of security whether or not
accompanied by a memorandum
was equivalent to an agreement
to execute a legal mortgageCont’d
• Simon Kato Bugoba v S. Kigozi &
M. Mbabali HCCS No. 0543 of
2004 . Court noted that the law
provides that an equitable mortgage
of land may be made by the
registered proprietor of his/her
certificate of title with intent to
create security thereon whether or
not accompanied by a note or
mamorandum thereon.Dangers with unregistered
mortgages
• When
a
mortgagor
transfers
ownership of the property to an
innocent third party, the mortgagee
cannot enforce it to the third party.
• If the unregistered mortgage is
created
after
the
registered
mortgage, the latter takes priority
over the unregistered mortgage.Nature of Mortgages
• S.8 (1)(2)(3)
• In Erisa Wamala v Musa Musoke (1920)
3 ULR 120 court held that a mortgage is
always security and not a transfer Provisions
that property would revert to lender when
certain event occurs is void.
• In Muhindo Enterprises v Greenland
Bank H.C.C.S 125 of1987, court held that
a mortgage is a mere security for payment
of a debt and does not operate as a transferDuty to disclose
information
• S.4 (1) (2)Mortgage of matrimonial
home
• S.5 and S.6 of the Mortgage Act
• What makes mortgage of a
matrimonial home valid? ( S.5(1)(a)
(b)
• What are the duties of the intending
mortgagee and mortgagor? (S.5 (2)
(a)(b), S.6(1)
• How are the above duties discharged
(S.5(3), (1)a, S. 6(1)(a)(i)(ii) (b) (3)Mortgages on Customary
Land
• Which law is applicable to creation and operation
of mortgages on customary land? S.7 (1)
• Steps to undertake in exercising customary
remedies. S.7(2)
• On what grounds can the terms of a mortgage
on customary land be re-opened
• Which law is applied by courts in any case
concerning mortgage of customary land? S.
7(4)a
• Spousal and Children consent. S.7(6)Cont’d
• Waswa v Asumani Kikungwe
(1952-6)7 ULR court held that
where a contract resembling a
mortgage between natives is sought
to be enforced the courts could apply
the English law of equity applicable
to mortgagesImplied covenants by the
mortgagor
• S.18 (1)(2)(3)

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