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2000721253.20/U/21253/PS.
The 1995 constitution1 confers a right of ownership of property as individual and in
association and by necessary inference a right to use or commercially profit from such
property and this includes mortgaging of such property. It is prudent to firstly define a
mortgage as "any charge or lien over land or any estate or interest in land in Uganda for
securing the payment of an existing or future or a contingent debt or other money or money's
worth or the performance of an obligation and includes a second or subsequent mortgage, a
third party mortgage and a sub-mortgage."2 It has also been defined by courts as was seen in
the case of Mutambulire V Yozefu Kimera3the plaintiff who urgently wanted to go to
Mecca mortgaged his land to the defendant on condition that incase he wasn’t able to pay in
the time required, the defendant would take up complete possession of the land. Eventually
the time lapsed and he failed to pay then the defendant took custody of the land and rejected
the plaintiff’s consequent attempts to redeem back his land. The court held that the plaintiff
was entitled to his right to redeem until such right was foreclosed by order of court or the
land was disposed of in a mortgage sale. The court agreed that mortgage is a transaction
where the owner uses his/her interest in land as security for the repayment of a loan.
Furthermore, a mortgagor(borrower) as defined by the Mortgage Act4 as a person who has
mortgaged land or an interest in land and includes any person from time to time deriving title
under the original mortgagor or entitled to redeem mortgage according to his or her estate,
interest or right in the mortgaged property. A mortgagee(lender) is according to section 2 of
the act means a person in whose favour a mortgage is created or subsists and includes any
person deriving title under the original mortgagee. In this case the applicable law is primarily;
The Mortgage Act5 and The Mortgage Regulations6 among others which govern the
transactions surrounding mortgages. At common law, a mortgagor and a mortgagee executed
a conveyance of legal title to the property in favor of the mortgagee as security for the loan. If
the loan was repaid, then the mortgagee would return the property; if the loan was not repaid,
then the mortgagee would keep the property in satisfaction of the debt. the purpose of the
agreement is to provide the mortgagee with security for the loan, equity came in to propose
that, as long as the advance and any interest was paid, the mortgagee should not be able to
object to redemption which birthed the concept of The Mortgagor’s Equity of Redemption.
1
Article 26(1) of The 1995 Constitution.
2
Section 2 of Mortgage Act 2009.
3
1975 HCB 150.
4
Cap 8.
5
Ibid.
6
No. 2 of 2012.
, 2000721253.
20/U/21253/PS.
It is prudent to note that among other things that the notion of a mortgage is premised on the
doctrines of equity which among other things are foreign concepts as prescribed by the
Judicature Act7. As it has been seen from the above statement that the involvement of equity
was prefaced on the statistic that many of the mortgagors were at the time needy people who
were easily manipulated and therefore the Mortgage Act serves protection for the mortgagor
from the mortgagee by striking a number of responsibilities on the mortgagee just before
closing a mortgage transaction. It also shows the mortgagor how to exercise the solutions at
the mortgagee’s disposal in regards to the recovery of the facility disbursed to the mortgagor.
Under Mortgage Act8, where a mortgagor signs a transfer as a condition for the grant of a
mortgage under this Act, the transfer shall be void ab initio and mortgagee who necessitates
such a transfer as a perquisite for the grant of a mortgage commits an offence under the
Mortgage Act9. Likewise, the mortgagee cannot insert a provision contrary to the mortgagor’s
right to discharge the mortgage. Incase such act are done; the mortgagor can still go ahead to
redeem his land. This shield finds its validation in the famous phrase by Lindley MR in
Santley v Wilde10 that “once a mortgage, always a mortgage” and that this protection of a
mortgagor is against crooked methods and unfair treatment by a mortgagee. Furthermore, the
Mortgage Act’s protection of the mortgagor makes it important to look at the link between
the mortgagee and the mortgagor, the solutions that can be availed to them both and how they
can be executed.
THE RATIONALE OF MORTGAGE ARRANGMENTS AS PRESCRIBED BY THE
MORTGAGE ACT.
After the mortgagor and mortgagee enter into an agreement, it is important to note that from
the commencement of the loan facility, the mortgage rendered shall only act as a security and
not as transfer of any right or interest in the land from the mortgagor to the mortgagee11. The
equitable maxim thereby comes in by thwarting any barriers on the mortgagor’s equity of
redemption and that the courts will not authorize the attempts by the mortgagee to eliminate
the mortgagor’s right to recover his or her property. This is further even pronounced in the
act where the mortgagor signs a transfer as a condition for the grant of a mortgage under the
7
Section 14 of the Judicature Act; which clearly states for the application of the Common Law and the
Doctrines of Equity, written law, it must be applied in conformity and as far as the circumstances shall render
necessary
8
Section (8)(2) of The Mortgage Act
9
Section (8)(3) of The Mortgage Act.
10
[1899] 2 Ch 474
11
Section (8)(1) of The Mortgage Act.
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