This law enables mortgage finance companies to obtain possession more easily of property in respect of which they are able as mortgagees to exercise their power of sale or appoint receivers.
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· Section 3 of the Act provides that where immovable property is mortgaged to a company and the company as a mortgagee has power to sell the property or appoint a receiver and there has been a breach of the agreement by the mortgagor and further the property is in the occupation of the mortgagor or of some other person who is not an approved tenant, then the company may institute a suit in the High Court in accordance with this Act for the possession of the property. Upon filing the suit, the company shall file an affidavit verifying the plaint and testifying that the specified conditions exist in relation to the property and giving full particulars concerning them. The mortgagor, who is usually the defendant, may file an affidavit contesting the conditions if so.
· Section 5 of the Act further provides that at any time after the expiry of 21 days after service of summons on the defendant, the company may apply to the Court for a decree for possession of the mortgaged property, and on such application the Court shall read the affidavits filed and shall pass a decree for possession accordingly unless it is satisfied on such reading that the specified conditions do not exist, or that there is reasonable doubt whether they exist, in which case the Court shall grant leave to defend, either unconditionally or on such terms as to giving security or time of trial or otherwise as the Court may think fit.
· Under section 5(3) of the Act, the net consequence of the grant of decree of possession is to confer on the company (mortgagee) the sole right to possession of the mortgaged property, and, upon its being registered under the law under which the title to the property is registered, it shall have the effect of determining every lease, tenancy agreement and licence to occupy, whether registered or not, which is then subsisting in respect of the property (other than the lease (if any) under which the property is held by the mortgagor. Section 7 of the Act provides that the Act shall have effect notwithstanding the terms of a lease or tenancy agreement and notwithstanding any other written law.
· The implication of this statute is to expedite the process of taking possession on the part of mortgagees (financiers), pending sale or appointment of a receiver in case of loan defaults. It is however not entirely clear whether this Act is still in force, as there are not many cases that have been litigated since the enactment of new land laws in 2012 which in fact removed the word ‘mortgage’ from its lexicon. However, there is no explicit mention of the law having been repealed. Accordingly, it may be said to be in effect.
· The Court of Appeal in stated thus of the Act: “Section 5 (3) of the Mortgage (Special Provisions) Act sets out the rights that are conferred upon the decree-holder. In particular, the company shall have the right to exclusive possession of the property in question, and the decree shall have the effect of determining every tenancy which subsists at the time. This right shall however accrue upon registration of the decree against the title of the property.”
