HIGHLIGHTS OF THE MORTGAGE LAW IN UGANDA
Meaning of Mortgage
- Security of land for repayment of money or performance of obligation
- It is never a transfer to mortgagee
- It becomes void once the amount or the obligation for which it is created is paid.
- Clause to the effect that the land will become mortgagees when mortgagor fails to perform is void.
Creation of Mortgages
- Can be created on registered land – land with a certificate of title
- Such land could be Mailo, Freehold or Leasehold
- For Leasehold land, always read restrictive covenants – consent of lessor may be required to mortgage
- Can be created on land held under customary tenure.
- No mortgage on tenancy by occupancy on registered land. S.34 of the Land Act was amended by removing power to pledge
Mortgage of Matrimonial home
- Spouse must give genuine consent
- Evidence of marriage to be sought
- Married mortgagor to make statutory declaration confirming marriage
- Spouse to make statutory declaration confirming marriage
- Mortgagee to advise mortgagor in writing that spouse to seek independent advice
Tacking
- Right to create priority in rank by express notice.
- Once a mortgage has a provision of right to tack the mortgagee will always rank in priority to other mortgages created on that land by other mortgagees.
- Right to tack to be visible to Registrar
Foreclosure
- Read sections 19, 26, 27 and 28
- Where money is payable on demand, a demand in writing creates Act of default
- Default to persist for at least 30 days
- Serve Notice of default requiring rectification. Which must give mortgagor at least 25 working days. NB section mentions 2 durations, 45 and 21 working days
- After expiry of 45 days, serve notice of sale giving another 21 working days. Serve it on all parties privy to mortgage transaction
- Advertise for sale. Advert to run for 30 days
- Value the property as advert is running.
- Allow viewing of property as advert is running.
- Sell the property.
- Account for proceeds of sale
Duty to disclose info
- MDI as mortgagee to disclose all relevant info concerning intended mortgage
- Charges
- Interest rate
- Installment amount
- Intending mortgagor to disclose all relevant info on intended security
- Marital status, nature of security etc
- Offence to conceal relevant info
Mortgage of land under customary tenure
- If land is owned by family, spouse and children of mortgagor must give written consent
- Land owned by community is excluded from operation of Act
Remedy involving dispossession of mortgagor must first undergo mediation proceedings and on failure, court must sanction it.
Variation of Mortgage
- Notice of 15 working days must be given to the mortgagor of intention to vary rate of interest
- Memorandum of variation of mortgage required when:
- Amount secured is decreased or increased
- Duration is shortened or lengthened
- Expressed covenants are varied
Compiled by;
Nassuuna Rebecca Irene
Nassuuna & Company Advocates
Plot 4, Jinja Road, Social Security House
3rd Floor, Northern Wing
Tel; 256752648063
