Tacking, Marshalling and Contribution.

There are some doctrines which are significant with regard to transactions in charges and mortgages, the doctrines of Tacking, Marshalling and Contribution.

TACKING: - this doctrine allows a subsequent lender to insist on the repayment of this loan before repayment is made to prior lenders.  That right where it obtains has to be specifically reserved in the mortgage instrument if it is to be exercised.  Failure would mean that the right is lost altogether.  It is a doctrine that allows for priorities in terms of who should be sorted out or paid first and the effect of reserving it in the instrument is that you supersede the mortgagee reserving such a right supersedes other mortgages in realising their dues.

MARSHALLING – this arises where there are competing mortgages.  It is a principle of equity which is given the force of law through the provisions of the ITPA Section81 basically each property out of several properties mortgaged to secure one debt is in the absence of the contract to the contract is made liable to contribute to the debt which has been secured by the mortgage property subject to any prior encumbrances which may affect the property in question as at the date of creating the mortgage.

The priority is based on the date of registration, mortgages and charges have to be formalised through the registration process so that the general rule is that the charge or mortgage which is first registered would be discharged in line with that order so that in situations where a subsequent borrower exercises the right of redemption there is a duty taxed on such a person to pay off the prior encumbrances before he can have his property discharged under the mortgage and priority is based on such times as the particular transaction creating the encumbrance would have been registered.  Accordingly the Charge or Mortgage first registered would have priority over all transactions of such a nature.

The exercise of statutory power of sale is a significant relief that avails to a mortgagee or Chargee both under RLA and ITPA.  This relief has attracted a lot of litigation over the years. There are notable judicial pronouncements with regard to statutory power of sale.  The courts have had to make pronouncements to clarify under what conditions the power of statutory sale arises.  These pronouncements should not just be taken in passing but these are issues that make a difference on whether the

On the issue of notice that required under S. 69(a) of ITPA that notice is significant since the courts have held that it is of no consequence if the instrument fails to state that the

Trust Bank Eros Chemist and Widestrong Auctioneers Civ Apo 133 Unresported

The court was unequivocal that failure to express the estate in clear terms the period within which the power would be carried out would be invalidated on the notice.  In making clear this point the court took some time to explain the purpose to be served by the notice and observed that the notice is to guard the rights of the mortgagor because if the power of statutory power of sale is exercised, the mortgagors interests would be extinguish and therefore the notice should serve to warn the mortgagor of the intended sale for the statutory right of sale to accrue a 3 months notice to lapse is provided.  A notice seeking to sell the charged property must expressly state that t he sale shall take place after the 3 months notice and to omit to say so, as by law required is to deny the mortgagor a right conferred upon him by statute and this must render the notice invalid. 


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