There are certain general principals that apply and they are essentially statutory requirements.

A Charge/Mortgage must be evidenced in writing under Cap 23 and any purported instrument that is intended to pass as charge/mortgage is ineffective unless it is in written form;
Mortgage/Charge must be in a prescribed form or instruments provided for under various legislations which allow for creation and they must be registered under section 59 of ITPA and 65 of RLA
Instrument must contain acknowledgment signed by borrower to the effect that he understands the effect of the transaction in particular the fact that upon default in repayment, the property will be subject to sale as applied under S. 74 of RLA.
where the repayment date is not fixed within the instrument creating the particular encumbrance, it is the case that the date arising in the case of a mortgage created under ITPA shall be payable within 6 months after receipt of demand notice and in the case of charge created under RLA within 3 months after receipt of demand notice.

The obligations of the parties are standard and the lender is confined to having the security and realising it in case of default or reconveying the property back to borrower if security offered has been dealt with.  The bulk of obligations are with the borrower if the transaction is to work along the rules created.  The borrower must honour his obligations which may have arisen prior to the charge.  The borrower must also pay all rates and taxes because the question of ownership remains with him and he must ensure that the property is in good repairable condition a requirement meant to safeguard the lender’s interest so that it does not lose value.  Property value is central to the institution since for the statutory powers of sale bank on the property being the same or better than when the transaction was done.


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