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- Oct 5, 2017
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MORTGAGES IN LAND LAW IN TANZANIA
A mortgage may be referred as a security interest in real property held by a lender as a security for a debt, usually a loan of money. A mortgage in itself is not a debt; it is the lender’s security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed.
Mortgages in land law in Tanzania have been provided for under Part X of The Land Act, Cap113 R.E. 2002 as various aspects of mortgages are explained.
Creation of Mortgage
Section 112 (1) and (2) of The Land Act provides for the power to create mortgage that A occupier of land under a right of occupancy and a lessee may, by an instrument in the prescribed form, mortgage his interest in the land or a part thereof to secure the payment of an existing or a future or a contingent debt or other money or money’s worth or the fulfillment of a condition. That power shall include the power to create second and subsequent mortgages.
Types of mortgages
Matrimonial mortgage including customary mortgage of matrimonial home shall be valid only if (a) any document or form unused in applying for such a mortgage is signed by, or there is evidence from the document that it has been assented to by, the borrower and any spouse of the borrower living in that matrimonial home; (b) any document or form used to grant the mortgage is signed by or there is evidence that it has been assented to by the borrower living in that matrimonial home as per section 112 (3) of The Land Act.
Customary mortgages. Subject to section 113 (1) of The Act its creation and operation shall continue to be in accordance with the customary law applicable to the land in respect of which the customary mortgage is created.
Small mortgage subject to section 114 of the Land Act, is a mortgage for a period of years not exceeding three years to secure any sum of money not exceeding the sum set out in subsection (2) or which shall from time to time be set by order made by the Minister, after consultation with– a) the Commissioner; (b) anybody or organisation whose principal business is to advance or to represent those organisations whose principal business is to advance money on the security of a mortgage. The small mortgage instrument ought to be in a simple and clear language that the borrower is made fully aware.
Other forms of mortgages as provided for under the Land Act include; a third party mortgage, formal mortgage, and informal mortgage.
Rights of the parties
The mortgagor has right to redeem the property upon payment of principal sum, interests to the related cost in landed property, right to create mortgage, and right to sell the mortgaged property.
Mortgagee’s rights include right to transfer his interests to the third party, the right to enter into possession of the property or to exercise the power of sale if the mortgagor defaults in making the necessary payments under the mortgage, the right to sub-mortgage etc
Transfer of Mortgage
The mortgagor may transfer the mortgaged property to another person subject to seeking consent from the mortgagee as per section 122 of Cap 113 and section 12 of The Mortgage Financing (Special Provisions) Act, 2008. The mortgagee may also transfer the mortgage to another person subject to the consent of the mortgagor. Transfer in relation to mortgage is also provided for under section 21 of The Act, and section 50 of The Land Registration Act, Cap 334.
Discharge of mortgage
The law makes it clear under section 120 (1) of The Land Act that on payment of all moneys and the performance of all other conditions and obligations secured by the mortgage the borrower shall have right to discharge the mortgage at any time before the mortgaged land has been sold by the lender or a receiver under a power of sale and any agreement or provision in the mortgage instrument or otherwise which– (a) purports to deprive the borrower of this right; or (b) seeks to fetter the exercise for this right; or (c) stipulates for a collateral advantage which is unfair and unconscionable and inconsistent with the right to discharge, shall be void.
Section 137 of The Act provides that the borrower may discharge the mortgage in whole or in part by paying to the lender all moneys secured by the mortgage at the time of payment and where payment is made the lender shall deliver to the borrower– (a) a discharge of the mortgage in the prescribed form over the whole or that part of the mortgaged land to which the payment relates; (b) all instrument and documents of title held by the lender in connection with the mortgaged land.
However, subject to the provision of section 123 of The Land Act there shall be implied in every mortgage covenants by the borrower with the lender binding the borrower failure to comply with them the lender is entitled to exercise his remedies as provided for under section 125 of the Act preceded by notice in writing to the borrower.
A mortgage may be referred as a security interest in real property held by a lender as a security for a debt, usually a loan of money. A mortgage in itself is not a debt; it is the lender’s security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed.
Mortgages in land law in Tanzania have been provided for under Part X of The Land Act, Cap113 R.E. 2002 as various aspects of mortgages are explained.
Creation of Mortgage
Section 112 (1) and (2) of The Land Act provides for the power to create mortgage that A occupier of land under a right of occupancy and a lessee may, by an instrument in the prescribed form, mortgage his interest in the land or a part thereof to secure the payment of an existing or a future or a contingent debt or other money or money’s worth or the fulfillment of a condition. That power shall include the power to create second and subsequent mortgages.
Types of mortgages
Matrimonial mortgage including customary mortgage of matrimonial home shall be valid only if (a) any document or form unused in applying for such a mortgage is signed by, or there is evidence from the document that it has been assented to by, the borrower and any spouse of the borrower living in that matrimonial home; (b) any document or form used to grant the mortgage is signed by or there is evidence that it has been assented to by the borrower living in that matrimonial home as per section 112 (3) of The Land Act.
Customary mortgages. Subject to section 113 (1) of The Act its creation and operation shall continue to be in accordance with the customary law applicable to the land in respect of which the customary mortgage is created.
Small mortgage subject to section 114 of the Land Act, is a mortgage for a period of years not exceeding three years to secure any sum of money not exceeding the sum set out in subsection (2) or which shall from time to time be set by order made by the Minister, after consultation with– a) the Commissioner; (b) anybody or organisation whose principal business is to advance or to represent those organisations whose principal business is to advance money on the security of a mortgage. The small mortgage instrument ought to be in a simple and clear language that the borrower is made fully aware.
Other forms of mortgages as provided for under the Land Act include; a third party mortgage, formal mortgage, and informal mortgage.
Rights of the parties
The mortgagor has right to redeem the property upon payment of principal sum, interests to the related cost in landed property, right to create mortgage, and right to sell the mortgaged property.
Mortgagee’s rights include right to transfer his interests to the third party, the right to enter into possession of the property or to exercise the power of sale if the mortgagor defaults in making the necessary payments under the mortgage, the right to sub-mortgage etc
Transfer of Mortgage
The mortgagor may transfer the mortgaged property to another person subject to seeking consent from the mortgagee as per section 122 of Cap 113 and section 12 of The Mortgage Financing (Special Provisions) Act, 2008. The mortgagee may also transfer the mortgage to another person subject to the consent of the mortgagor. Transfer in relation to mortgage is also provided for under section 21 of The Act, and section 50 of The Land Registration Act, Cap 334.
Discharge of mortgage
The law makes it clear under section 120 (1) of The Land Act that on payment of all moneys and the performance of all other conditions and obligations secured by the mortgage the borrower shall have right to discharge the mortgage at any time before the mortgaged land has been sold by the lender or a receiver under a power of sale and any agreement or provision in the mortgage instrument or otherwise which– (a) purports to deprive the borrower of this right; or (b) seeks to fetter the exercise for this right; or (c) stipulates for a collateral advantage which is unfair and unconscionable and inconsistent with the right to discharge, shall be void.
Section 137 of The Act provides that the borrower may discharge the mortgage in whole or in part by paying to the lender all moneys secured by the mortgage at the time of payment and where payment is made the lender shall deliver to the borrower– (a) a discharge of the mortgage in the prescribed form over the whole or that part of the mortgaged land to which the payment relates; (b) all instrument and documents of title held by the lender in connection with the mortgaged land.
However, subject to the provision of section 123 of The Land Act there shall be implied in every mortgage covenants by the borrower with the lender binding the borrower failure to comply with them the lender is entitled to exercise his remedies as provided for under section 125 of the Act preceded by notice in writing to the borrower.
