SCHOOL OF LAW
NAME: KARIUKI BETTY WAMBUI
REGISTARATION NUMBER: L95/3275/2016
UNIT: LAW OF PROPERTY IN LAND 2
UNIT CODE: LPL 208
LECTURER: MR STEPHEN AYIERA
CAT TWO TAKE AWAY ASSIGNMENT
DATE: May 26, 2018
A charge is defined as an interest in land securing the payment of money or money’s worth or the fulfillment of any condition and includes a sub and the instrument creating a charge as per Section 2 of the Land Act. From this it is therefore clear that the use of the term mortgage under the Kenyan conveyancing laws has since been replaced to charge. A mortgage is defined under section 3 of the Registered Land Act is defined as an interest in land securing the payment of money or money’s worth or the fulfillment of any condition and includes sub charge and the instrument creating a charge. Further a charge is defined under the Land Registration Act to mean an interest in land or a lease securing the payment of money, a sub charge or the instrument creating a mortgage or other charge.
Redemption refers to the act of rescuing something upon payment of a particular ransom. According to Lord Mac Naghten therefore it is necessary that when the money secured by a mortgage, hereby a charge, of land is paid off, the land itself and the owner of the land in the use and enjoyment of it must be as free and unfettered to all intents and purposes as if the land had never been made subject of the security . The device of a mortgage as Kevin Gray observes is designed to provide creditors with a valuable form of security for loan money advanced by them.
The idea of mortgage was founded on English Common law,Mohammedan Law, Hindu law and Roman law, however I will concentrate on the Common Law origin as Kenya has a strong grounding of various laws under the common Law. In common law the mortgage institution was originally characterized by a pledge of property to a lender which included transfer of possession and not title. This gradually developed to a conveyance known as the English mortgage in which the property would be re-conveyed by the mortgager upon payment of the loan. This brought about the consequence that the law of mortgage was marked by fiction. The practice had remained that if a borrower defaulted in paying of the loan then he had to forfeit the land which he had conveyed as security for the loan to the lender. This was quite harsh and thus equity intervened been guided by the principle that ‘once a mortgage always a mortgage’ which was interpreted by the court of equity to mean that the basic right of the lender was his money and his interest in land was only a security for the loan. The courts also developed the rule that failure to pay the loan on the agreed date did not extinguish the borrower’s interest in the land and the default in paying the loan did not necessarily have to cause him to forfeit his land the lender.
This led to the development of the equity of redemption and the equitable right to redeem by the courts of equity whereby the mortgager could redeem his property on or before the date of redemption. And the equitable right to redeem gave the borrower the right to redeem the property after the expiration of the agreed date of redemption. This was unlike in common law where if a borrower did not pay repay the mortgage debt on the legal date of redemption his right to redeem the property could be extinguished.
In the case cited in the question the mortgage had a stipulation that the mortgagor would only sell liquor provided by the mortgage. The mortgager sought relief from this clause on repayment and the court held that this was a clog to equity of redemption.
In Kenya the principle of equity of redemption has been stated I various statutes, for instance the Indian Transfer of property Act where the borrower is entitled to redeem his property in absolute terms and also it has been recognized under section 72 of the Registered Land Act. An important case is that of Saleh v Elijofri where the court held that a borrower’s equity of redemption was an essential element of every mortgage and failure to pay the mortgage debt on the contractual or legal date of redemption did not deprive the borrower of his right to redeem the mortgaged property. This right of redemption however, only subsists when the transfer is registered and thus failure to register the conveyance may deprive the borrower of this right.
Section 89 of the Land Act provides that any law written or unwritten that entitles a chargee to bar the equity of redemption is prohibited. Lord Parker in Krelinger V New Patagonia Meat and Cold Storage Company was of the opinion that the equity which arises on the failure to exercise the contractual right cannot be clogged by any stipulation contained in the mortgage or entered into as part of the mortgage transaction.
Section 102 Land Act and also section 85(1) gives right to discharge to the chargor upon payment of all money secured by the charge and performance of all obligations under the charge before the land has been sold by chargee or receiver appointed.
Section 85(3) a charge instrument may provide that a chargor who wishes to exercise their right of discharge before the expiry of the term of the charge shall give one month’s notice, shall pay not more than one month’s interest at the rate at which interest is payable as well as all other monies secured by the charge
Section 90(3) if the chargor does not comply within two months after service of notice, the chargee may, sue the chargor for money due and owing under the charge, appoint a receiver of the income of the charged land,lease the charged land, or if the charge is of a lease sublease the land, enter into possession of the charged land or even he may sell the charged land.