LAW ON CREATION OF MORTGAGES- LAND LAW

The law on mortgages in Uganda was previously regulated by the RTA before the enactment of the Mortgage Act finally as well as its Regulations.

A mortgage was described as a conveyance of land or an assignment of chattels as security for the payment of a debt or a discharge of some other obligation for which it is given, as was described in the case of Santtley V Wilde A mortgage may further be defined as a conveyance of a legal or an equitable interest in property with a provision for redemption. Redemption means getting back property given as security.

Section 2 of the Mortgage Act provides for the power to create mortgages and provides that any person holding land under any form of land tenure, may, by an instrument in the prescribed form, mortgage his or her interest in the land or a part of it to secure the payment of an existing or a future or a contingent debt or other money or money’s worth or the fulfilment of a condition.

CREATION OF MORTGAGES
Sec. 115 of RTA empowers the proprietor of land registered under it to create a mortgage by signing a mortgage instrument in the prescribed form in the 11th schedule to the Act.
Upon registration of the instrument, the land becomes liable as security in the manner set forth in the instrument.
The mortgage is protected by the RTA and whoever deals with the land does so, subject to the mortgage. This is an exception to the principle of indefeasibility of title.
CREATION OF A LEGAL MORTGAGE
A mortgage is defined under section 1 of the Mortgage Act to mean any mortgage, a charge, a debenture, loan agreement or other encumbrance, legal or equitable which is registered under the Act.
Creation of a legal mortgage is provided for under Section. 115 of the RTA which provides that the proprietor of any land under the operation of the RTA may mortgage the land by signing a mortgage deed in the form in the 11th schedule to the Act. Upon registration of the instrument, a legal mortgage is created.
When the registered proprietor does deposit his certificate of title with intention to create security, accompanied by a memorandum in writing, if he goes ahead to register the instrument, it becomes a legal mortgage.
A legal mortgage is protected by the RTA which provides that whoever deals with the land subject to a mortgage, he takes it subject to that mortgage as an exception to the principle of indefeasibility of title.

This is provided under Section. 176 (9) of RTA which provides that the registered proprietor is protected against ejectment except for a number of cases inter alia the case of a mortgagee as against the mortgager in default.
In equity it is not only the legal mortgage that is considered but an equitable mortgage is also protected under equitable intervention.
CREATION OF AN EQUITABLE MORTGAGE
In equity a contract to create a mortgage was treated as a promise by the debtor to execute a legal mortgage when called upon to do so since equity regards as done that which ought to be done. Such an agreement creates an equitable mortgage.
For example, under the doctrine of equity, a deposit of title deed by way of security; whether or not accompanied by a memorandum was regarded as an agreement to execute a legal mortgage and carried as an equitable mortgage.
Sec. 129 of the RTA provides the mode of creation of an equitable mortgage by providing that an equitable mortgage on the land may be made by deposit by the registered proprietor of his or her certificate of title with intent to create security thereon, whether accompanied or not by a note or a memorandum of deposit.

An equitable mortgage just like a legal mortgage creates an interest in land. An equitable mortgage is registered by causing a caveat to be entered in accordance with Section 139 of RTA.
Can a mortgage be created over land which is owned under customary tenure?
Section 8 (2) of the land Act provides that a holder of a customary certificate of ownership of land has a right to mortgage his land. However, Section 1 (6) of the Mortgage Act in its illustrative definition of a mortgage talks of a mortgage in land registered under the RTA and the question to be answered is whether a holder of a mortgage in respect to customary land goes without any remedies.

The holder of such a mortgage cannot claim remedies provided under the Mortgage Act and the RTA. He can seek recourse to common law principles coupled with equitable intervention.
In the case of MATAMBULIREV.Y.KIMERA it involved mortgage of a Kibanja and the High court held that where the mortgaged land was not registered under the RTA, the applicable law was common law and doctrines of equity.
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