A Review of Sierra Leone’s Laws on Mortgages
1. Introduction
The law of mortgages in Sierra Leone is the product of the common law, equity, and statutes. The common law is the body of customary law, based upon judicial decisions and embodied in reports of decided cases, that has been administered by the common-law courts of England [and its former colonies, the Republic of Sierra Leone being one]. The Common Law is recognised under the laws of Sierra Leone by virtue of Section 170(2) of the Constitution of Sierra Leone, Act No. 6 of 1991. Equity is a particular body of law that was developed in the English Court of Chancery. Its general purpose is to provide a remedy for situations where the law is not flexible enough for the usual court system to deliver a fair resolution to a case. The law relating to equity is largely built on precedent.
The doctrines of equity are applicable in Sierra Leone pursuant to Section 170(2) of the Nation’s Constitution. Statutes are laws that are passed by parliament and are formally written down. Under the laws of Sierra Leone, Statutes make up the body of laws known as the sources of law in Sierra Leone, enshrined in Section 170(1)(b) of the 1991 Constitution of Sierra Leone.
The former Chief Justice of Sierra Leone, the Honourable Justice Dr. Ade Renner-Thomas in his book Land Tenure in Sierra Leone, defined mortgages to mean the conveyance or other disposition of land as security for the payment of a debt or the discharge of some obligation for which it is given. Before now, mortgages in Sierra Leone were created in either one of four ways, which include:
• By adopting the form to be found in the schedule of the Conveyancing Act of 1881;
• By a deed of conveyance from the mortgagor to the mortgagee;
• By a charge by way of legal mortgage created over the property of a company under the Companies Act, Cap 249 (now amended by the Companies Act, Act No. 5 of 2009) ; or
• By depositing the title deed of the mortgagor, which fact may be evidenced in a memorandum of deposit.
However, the bulk of these previous procedures of creating a mortgage has been adopted and improved upon in the provisions of statutes enacted by the Parliament of Sierra Leone in the Conveyancing and Law of Property Act of 1881, the Home Mortgage Finance Act of 2009, Credit Reference Act of 2011, and the Borrowers & Lenders Act of 2019. The effects of the aforementioned Acts on mortgage agreements in Sierra Leone are assessed below.
2. 1. The Conveyancing and Law of Property Act 1881
The Conveyancing and Law of Property Act of 1881 is part of the laws of Sierra Leone, pursuant to Section 2 of the Imperial Statutes (Law of Property) Adoption Ordinance (Act), Cap 18. The Schedule to Cap 18 specifies the extent to which the Conveyancing and Law of Property Act of 1881 applies in Sierra Leone, and it expressly indicates that the whole Statute applies to Sierra Leone, except Sections 3(2), 6 (3), 30, 45, 48, 65, 72 and 73.
Effects of the Conveyancing and Law of Property Act of 1881 on Mortgage Agreements in Sierra Leone
The first effect the Act has on mortgage agreements is on the Consolidation of Mortgages, pursuant to Section 17 of the Conveyancing and Law of Property Act of 1881. There could be a move to consolidate where more than one estate is mortgaged. Before 1881, a mortgagee was at liberty to have a mortgage of two estates by the same mortgagor, and in such a case, he could consolidate both mortgages against the mortgagor and bring them together as one and will still have the right to insist on payment of both mortgages. Section 17 of the Conveyancing and Law of Property Act of 1881 enables a mortgagor not to be subject to consolidation unless there is a contrary intention in the deed of one of them. Where there is a right to consolidate and there are assignees, that right to consolidate will still be used.
Secondly, another essential effect the Act has on mortgage agreements in Sierra Leone has to do with its guidelines with respect to Building Leases, and Transfer of Estates in Mortgage Agreements. Pursuant to Section 18 of the Conveyancing and Law of Property Act of 1881, where the mortgagee may be entitled to embark on a building lease on a mortgage agreement, the Act guides a prudent mortgagor to ensure that an exclusion clause is included in a deed of agreement or some other form of a deed. With the exclusion of a building lease, the mortgagee cannot engage with other persons to build on the land. With respect to the Transfer of Estates, pursuant to Section 30 of the Conveyancing and Law of Property Act of 1881, the legal estate will pass on to the personal representatives of the mortgagee, whether they are intestate or not. But a mortgagor still has his rights protected, in that by virtue of Section 15 of the Conveyancing and Law of Property Act of 1881, the Act gives the mortgagor the liberty to compel the transfer of the part of the property which is in the hands of the mortgagee to be passed to a third party. But nevertheless, the mortgagor is not at liberty to redeem before the stipulated time. He has to allow the mortgage to run for its full-time.
Furthermore, another notable effect that the Conveyancing and Law of Property Act of 1881 has on mortgage agreements in Sierra Leone is that Section 19 of the Act recognises the Power of Sale of the mortgaged property and provides for the Appointment of a Receiver. Notably, however, Section 20 of the Conveyancing and Law of Property Act of 1881 stipulates that before a mortgagee can take such steps to enforce his Power of Sale, he must have served the notice to the mortgagor for him to make payment. When the foreclosure arises, the Court will then be asked to set limits on its own magnanimity (kindness) and then decree that the mortgagor has left it too late in the day for him to continue to enjoy his equitable right of redemption. It was even brought in the Conveyancing Act to deny greedy mortgagors. A mortgage by deed confers on the creditor the statutory Power of Sale. A notable Sierra Leonean High Court Judgement wherein the effects of the provisions of the Conveyancing Act of 1881 were considered was the case of SIERRA LEONE COMMERCIAL BANK LIMITED V. MOHAMED B. SOW presided upon by the Honourable Justice Vivian M. Solomon (J.A. as she then was).
A final point to note in respect of the effect of the Conveyancing and Law of Property Act of 1881 on mortgage agreements in Sierra Leone is mirrored in Section 25 of the Act, which provides guidelines with respect to situations involving the Loss of Equity of Redemption in Mortgages. A prudent mortgagee will use Section 25 of the Conveyancing and Law of Property Act of 1881 to order a sale in an action for redemption or foreclosure, but such an action will be done only by anyone who has an interest in the money or has a right of redemption without previously allowing any time for redemption and without determining the priority of encumbrances to those who have a claim on the estate. Originally, the equity of redemption was just a right but as time progressed, it became an estate in law and in that case, any person entitled to it in equity had the liberty to exercise all rights of ownership and the right to resettle or mortgage the property. The fact that the equity of redemption may continue to exist does not mean it may not be lost. Situations in which it may be lost are:
When the mortgagee exercises the power of sale,
When there has been a foreclosure through a court order, among other things.
The doctrines and principles of equity ushered in the Right of Redemption. With equity any agreement that denied the mortgagor the right to redeem was void. And equity went further, in light of the fact that if the agreement only had a tendency to deny the right to redeem, that agreement would still be void and unenforceable. That principle came into existence when the House of Lords in England held so in the case of KREGLINGER V NEW PATAGONIA MEAT AND STORAGE LTD 1914. That case decided that there is no rule that can stop a mortgagee from stipulating a collateral advantage as long as it is:
• Not unfair or unconscionable (against conscience),
• Not a penalty or something like a penalty obstructing the equity of redemption, and
• Not in any way inconsistent with or repugnant to the contractual and equitable right to redeem and such applies to both equitable and legal charges.
The right to redeem of the mortgagor who is in default is always available on equitable terms but equity will not deviate from the principle that he who seeks equity must do equity. One of the demands of equity is that such a defaulting mortgagor must give the mortgagee reasonable notice of his intention to redeem or pay interest in lieu if the mortgagor has commenced an action for the repayment or has taken possession of the security. But a notice need not be given if the mortgagee has served a notice requesting payment or has taken steps to enforce payment such as to foreclose the mortgage. The equitable right to redemption may also be extinguished against the mortgagor’s will by lapse of time where the mortgagee remains in possession of the mortgaged land for twelve years without receiving any payment from the mortgagor pursuant to Section 13 of the Limitation Act, Act No. 51 of 1961. A Sierra Leonean case of some importance that raises several issues relating to the mortgagor’s equitable right of redemption is ALIE BUNDU V. GRANT SALLU BUNDU KAMARA.
2.2 The Home Mortgage Finance Act, Act No. 4 of 2009
The Home Mortgage Finance Act, Act No. 4 of 2009 is a Sierra Leonean Act that seeks to regulate home mortgage financing and institutions that carry on home mortgage financing. It also provides for other related matters having a bearing on mortgages in Sierra Leone.
Effects of the Home Mortgage Finance Act of 2009 on Mortgage Agreements in Sierra Leone
A notable starting point with respect to the effect this Act has on mortgage agreements in Sierra Leone has to do with the fact that it changed the scope and context of the definition of mortgage agreements and transactions, varying the old definition encapsulated in the Conveyancing and Law of Property Act of 1881, to reflect modern day Sierra Leonean context of Mortgage agreements which the 2009 Act defined as an agreement in writing between a Mortgagor and a Mortgagee, granting the Mortgagee a charge over the mortgaged property as security for the loan and setting forth the terms and conditions of the loan.
Furthermore, pursuant to Section 2(1) of the Home Mortgage Finance Act of 2009, the Act serves as a guiding legislative framework that expands on the scope of application it has on banking and non-banking financial institutions, with respect to acquisition mortgages, such as providing mortgage finances for the construction and purchase of dwelling houses by individuals, and organisations engaged in the business of housing construction. The Act applies exclusively to home finance mortgages made after the commencement of the Act, by virtue of Section 3(1) thereto (to it). In consonance with Section 4(2) of the Home Mortgage Finance Act of 2009, the Home Mortgage Finance Act takes precedence where it conflicts with the provisions of the Conveyancing and Law of Property Act of 1881 as long as it provides for that particular transaction.
Quite importantly, Section 5(1) of the Home Mortgage Finance Act has enabled mortgage loans granted by financial institutions (in accordance with the provisions of the Act) are obliged to require security for such loans, which in effect shall include a mortgage over the property in respect of which the loan is granted. The mortgage will not be enforceable unless it is evidenced in writing in the form stipulated in Section 6(1) of the Home Mortgage Finance Act of 2009. The Act further stipulates the strong need for full disclosures as a prerequisite duty of the mortgagee to ensure that in not less than fourteen days before granting a loan to the mortgagor, he/she must detail the estimated annual percentage rate, bona fide (genuine) estimate of the charges and such other fees relating to the mortgage transaction, in accordance with Section 7(1) of the Act. Failure to make such full disclosures or the giving of an inaccurate disclosure shall make the mortgagee liable to the mortgagor for actual damages sustained due to the inaccurate disclosure, court costs, and legal fees, as encapsulated in Section 7(4) of the Home Mortgage Finance Act of 2009.
Furthermore, a mortgage made under this Act between the parties to the mortgage agreement, which was not registered under the Stamp Duty Act, Cap 274, and Section 24 of the Registration of Instruments Act, Cap 256, shall not be void in consonance with Section 8 of the Home Mortgage Finance Act of 2009 because it was not registered or stamped in compliance with the aforementioned Acts. However, if the interest in the mortgage is made by a third party, not privy to the initial agreement, who in good faith has paid some consideration, will be obliged to register the mortgage for it to be deemed valid in accordance with the Registration of Instruments Act, and the Stamp Duty Act. Another important effect the Act has on mortgage agreements is that where the mortgagor fails to perform an obligation under the agreement, consonant with the provisions of the Act, the mortgagee will be entitled to the remedy of suing the mortgagor to enforce the performance of any such personal covenant between them, and may realise the mortgagor’s security to his mortgaged property, in accordance with Section 10(a) and (b) of the Home Mortgage Finance Act of 2009.
Moreover, another effect of the Home Mortgage Finance Act is that it gives the mortgagee the right to possess the mortgagor’s mortgaged property where he/she fails to perform and fulfil his obligation to repay the loan, by virtue of Section 12(1) of the Act. For the mortgagee to enforce the right to possession of the mortgaged property, he/she shall make an ex parte application to the High Court of Sierra Leone in accordance with Section 12(2) of the Act.
Such an order by the High Court shall be enforceable by writ of possession pursuant to Section 12(3) of the Act. Equally, a noteworthy effect of the Home Mortgage Finance Act of 2009 is that it enables the mortgagee to enforce the sale of the mortgaged property where the mortgagor has failed to fulfil his performance obligation in the mortgage as posited in Section 13(1) of the Act. The Act further provided a cardinal effect on the sale of a mortgaged property by the mortgagee in that it gives the mortgagee the power to enforce the sale of the mortgaged property by public auction or by private contracts, and the mortgagee shall not be required to initiate any court proceeding pursuant to Section 13(3) of the Home Mortgage Finance Act of 2009. In accordance with Section 13(5) of the Home Mortgage Finance Act of 2009, the Act provides for the procedure for the mortgagee to give fourteen days’ notice to effect the sale of the mortgaged property to the mortgagor and such other encumbrancers to the property.
To prevent injustice, the Home Mortgage Finance Act of 2009 prevents the mortgagor from purchasing his/her mortgaged property which has been put on sale by the mortgagee, and where the mortgagee intends to purchase the property placed on sale, he may be able to do so at a public auction, subject to the approval of the mortgagor, in line with Section 13(8) of the Home Mortgage Finance Act of 2009. Also, where a sale of the mortgaged property is to be effected, the property price shall not be less than 85% of the market value, as may be indicated by a Certified Valuer, in accordance with Section 14(3) of the Home Mortgage Finance Act of 2009. However, after two failed attempts to effect the sale, the mortgaged property may be sold below the 85% market value pursuant to Section 14(4) of the Home Mortgage Finance Act of 2009. Notably, Sections 10, 11, 12, and 13 of the Home Mortgage Finance Act of 2009 have been considered and judgement has been given on the implications of the effects of these provisions by the Honourable Justice Lornard Taylor (J) in the High Court of Sierra Leone, in the case of COMMERCE AND MORTGAGE BANK V. UMARO KAMARA AND ANOTHER at page 4.
Similarly, the Honourable Justice M. P. Mami (J as he then was) ordered the entitlement of a mortgage to the mortgagee where the mortgagor failed to comply with the provisions of Section 12 of the Home Mortgage Finance Act of 2009 in the High Court of Sierra Leone decision between HFC MORTGAGE & SAVINGS (SL) PLC V. KARIFALA TARAWALLIE at page 5 of the ruling.
Another effect the Act has on a mortgage agreement is that the Mortgagor is obliged to get consent in writing from the mortgagee when he intends to transfer an interest in the property to a third party as embodied in Section 17 of the Home Mortgage Finance Act of 2009. The Act also bars the mortgagor from creating a charge in the mortgaged property unless he obtains consent in writing from the mortgagee, pursuant to Section 18(1) of the Home Mortgage Finance Act of 2009.
Conclusively, a notable effect the Home Mortgage Finance Act of 2009 has on mortgage agreements in Sierra Leone is that it bars the mortgagor from using the loan for an unauthorised purpose, whether wholly or in part, which was not agreed upon in the mortgage agreement between the parties, by virtue of Section 19 of the Act. Such a loan, in effect, will become immediately payable to the mortgagee, inter alia.
2.3 The Credit Reference Act, Act No. 4 of 2011
The Credit Reference Act, Act No. 4 of 2011 is an Act that provides for the setting up of credit reference bureaus and makes provisions for the procedures to follow for credit reference reporting.
Effects of the Credit Reference Act of 2011 on Mortgage Agreements in Sierra Leone
The first effect the Credit Reference Act of 2011 has on mortgage agreements in Sierra Leone borders on the lines that mortgage transactions (which involves giving out loans that go hand in glove with the mortgagor bringing his property as security for a loan) has been embodied in the Act in Section 2(1) that no natural person can operate as a credit reference company. Instead, the Act embodies that only body corporates or companies recognised under an enactment under the Laws of Sierra Leone are recognised as Credit Reference Bureaus, as provided in Section 2(1)(a) of the Act. The Act also enshrined the guideline that for a Credit Reference Bureau to operate and conduct its business in Sierra Leone, it must have acquired a license from the Central Bank for the purpose of conducting its activities as a Credit Reference Bureau (Institution) under Section 2(1)(b) of the Credit Reference Act of 2011. Failure to license such an institution would amount to an offence of up to thirty million Leones or to imprisonment or both, pursuant to Section 2(2) of the Credit Reference Act of 2011. The essence of discussing the above provision’s effect, on mortgage agreements, is that, in Sierra Leone, the business of mortgage transactions is often carried out by Crediting Institutions, and it is quintessential to cite the enabling provision that gives the mandate for these institutions to engage in these transactions. This legal opinion submitted herein has been equally established in good authority by the draftsmen of the Credit Reference Act of 2011 in the Interpretation Section of the Act (Section 1), wherein they interpreted a Credit Reference Bureau to mean:
an institution licensed under the Act to carry out reference bureau activities.
Also, Section 10(1) of the Credit Reference Act of 2011, details the activities to be carried out by credit reference bureaus in Sierra Leone. Section 3 of the Credit Reference Act of 2011 is important to note herein as it sets out the procedures to be followed to license a Credit Reference Bureau which includes, but not limited to applying for the license from the Central Bank, making such specified payments which are submitted with all supporting documents, and complying with such other formalities. This procedure has an effect on mortgage agreements in Sierra Leone as it primarily seeks to protect the citizens and legal persons in Sierra Leone from going into business with unconscionable mortgagee corporations, whose sole aim may be founded on bad faith (mala fide) as embodied in Section 3(8), (9), and (10) of the Credit Reference Act. For the purpose of Revoking a credit reference license, Section 9(1) of the Act makes provision for it, and for the purpose of Suspending the license of a Credit Reference Bureau, Section 9(2) of the Act sets out the grounds for doing so. This submission herein (as to unconscionability, though in other legal relations) has been similarly considered in the English case of WESTDEUTSCHE LANDESBANK V ISLINGTON.
Additionally, the Credit Reference Act of 2011, has another crucial effect on mortgage agreements in Sierra Leone as it makes provision in Section 5(1) for a safeguard on potential mortgagors who would intend to solicit loans on credit (mortgage loans) from a credit bureau by virtue of the fact that the provision mandates mortgagees (Credit Reference Bureaus) to display their license (obtained from the Central Bank) to operate their business as a credit reference institution in Sierra Leone. This display of license by such institutions serves the purpose of reassuring members of the general public who intends to enter into mortgage agreements with them by affirming their credit worthiness, merely by the conspicuous display of license. Failure to comply with this provision in Section 5(1) of the Act (supra) would attract an offence under Section 5(2). It is noteworthy also to add here that the credit reference license issued to a Credit Reference Bureau shall not be transferable to another, in accordance with Section 6(1) of the Act.
Also, the Act has laid down standards for Credit Reference Bureaus to comply with that give them the onus to perform their duties in good faith under Section 12(1). This effect of the Act is significant as it meets the cardinal principles of contract, mortgage agreements being one. An essential point to highlight here that the Credit Reference Act of 2011 has on mortgage agreements in Sierra Leone, happens to be that it obliges credit reference bureaus to maintain the privacy and confidentiality of persons’ information within their purview. This is encapsulated in Section 14(1) of the Credit Reference Act. The Act has also empowered the credit information subject to receive credit information concerning his person, as of right, held by the credit reference bureau, pursuant to Section 20(1) of the Credit Reference Act. He is also by law under the obligation to challenge the accuracy of any information held about his person, pursuant to Section 22(1) of the Act. Consequently, the Credit Reference Bureau will be obliged to correct such inaccuracies of information on any credit information subject, in line with its mandates under Section 24(1) of the Credit Reference Act of 2011. Finally, the Credit Reference Bureau shall not be under any obligation to investigate frivolous complaints as encapsulated in Section 24(2) of the Act.
2.4 The Borrowers & Lenders Act, Act No. 4 of 2019
The Borrowers & Lenders Act, Act No. 4 of 2019, provides for the expansion of the scope of the Collateral Registry to comprise the registration of encumbrances in immovable assets, to provide for lenders who are not licensed and supervised by the Bank of Sierra Leone, to enable them to register their security interests, inter alia.
Effects of the Borrowers & Lenders Act, Act No. 4 of 2019 on Mortgage Agreements in Sierra Leone
The first effect it has on mortgage agreements in Sierra Leone is that by virtue of Section 3(1) of the Act, the Act is applicable to mortgage transactions, and such other security interests in moveable and immoveable property. Similar to the other Acts earlier discussed above, the Borrowers & Lenders Act of 2019 also mandates parties to act in good faith and in a commercially reasonable manner, pursuant to Section 5 of the Act. This is essential to prevent unscrupulous persons from defrauding innocent citizens. In effect, Section 5 is crucial to the discussion of mortgage agreements in Sierra Leone as it seeks to uphold, protect and promote the rights of both the mortgagor and the mortgagee and as of corresponding obligation to conduct themselves scrupulously (uberrimae fidae/in good faith).
Another effect the Act has on mortgage agreements is that it encumbers any type of moveable or immoveable property which forms part of a security interest under Section 6(4) of the Borrowers & Lenders Act, and in effect, this is reflected in acquisition mortgages and such other types of mortgages. The Act also affirms the need for formalities to be complied with in creating a valid mortgage agreement in Sierra Leone as the Act mandates that mortgages (security interest agreements) must:
be in writing,
state the identity of the lender and the borrower,
details the collateral and secured duties to be performed [in the mortgage agreement],
and
the agreement must be signed, in consonance with the provisions of Section 6(2) of the Act.
Similar to the Home Mortgage Finance Act’s effects on mortgage agreements in Sierra Leone, the Borrowers & Lenders Act of 2019 encapsulates that mortgage agreements (security agreements) in Sierra Leone, shall not be invalidated by the non-payment of stamp duties or any other tax, in accordance with Section 6(3) of the Act.
Notably, however, the Act, pursuant to Section 20 does not have an effect on security interest agreements that are by law required to be registered in accordance with the Registration of Instruments Act, and the Companies Act, Act No. 9 of 2009. Notwithstanding this point of law, the Act will prevail on the aforementioned Acts where the security interest agreement is perfected or is done in cognisance of the priority requirements of the current Act, consonant with Section 20 of the Borrowers & Lenders Act of 2019.
Moreover, in respect of collateral and secured obligations in a mortgage agreement, the Borrowers & Lenders Act of 2019 by virtue of Section 12(1) of the Act has encapsulated the need for the secured obligations and the collateral to be described in the agreement and shall take the form specified in subsection 3 of Section 12. Notably, however, the Act is also essential in that it has an effect on mortgage agreements in Sierra Leone by virtue of the fact that it mandates that a mortgage (security interest) must be perfected by having a notice of the interest registered with the Collateral Registry in accordance with Section 15(1) of the Act. The Collateral Registry is a Unit in the Bank of Sierra Leone, which has the mandate to register notices of security interests on moveable and immoveable property in accordance with Section 18(1) of the Act.
From the foregoing, another important effect the Borrowers & Lenders Act has on mortgage agreements in Sierra Leone involves the fact that it enables the registration of a single notice to a security interest to be sufficient for more security interests found in one or more security agreements, in line with the express provision of Section 22 of the Act. The Act also empowers the registrar of the Collateral Registry to reject registration notices and search requests, where the mandatory fields are not filled or are illegible, contrary to Section 25(1) of the Act. It is worth noting that where there are competing interests created by the same borrower, priority between the security interests that were perfected by registration of a notice in the Collateral Registry is determined by the order of registration of the competing security interests in consonance with Section 42 of the Borrowers & Lenders Act.
Moreover, in accordance with Section 47 of the Borrowers & Lenders Act of 2019, security interests that were perfected under the Act, prior to the commencement of insolvency proceedings remain perfect and have priority over the commencement of the insolvency proceedings, save for where the proceedings were commenced under such other insolvency law. This effect speaks volumes in respect of the scope of the Act on mortgage agreements in Sierra Leone. Another effect the Act has on mortgage transactions is that it ensures that the priorities of security interests extend to all secured obligations, including future advances and collaterals, pursuant to Section 51(1) of the Act. This echoes the futuristic effect the Act has on mortgage agreements in Sierra Leone.
Furthermore, the Act upholds the cardinal maxim of Pacta Sunt Servanda, which underpins the principle that Agreements must be observed as encapsulated in Section 53 therein. Section 53 affirms the need for the respect of the terms and conditions agreed upon by the parties at the time of entering into the security interest agreement [mortgage agreement]. As such, the Act also imposes a duty of care on the borrower or lender to take reasonable care to preserve the collateral in his possession, pursuant to Section 54 of the Act. Equally, it obliges the lender to return whatever collateral he has in his possession to the borrower upon the conclusion of a security interest agreement, in accordance with Section 55. The Act also obliges the lender to inspect and also use the collateral in his possession. However, it must be done reasonably in consonance with Section 56(1) and (2) of the Act.
Essentially, where there is a default in the fulfilment of payment of the security interest loan, the Act has a core effect on the borrower which is analogous to that which obtains with the other Acts earlier discussed above. This is embodied in Section 63(2) of the Borrowers & Lenders Act of 2019, which obliges the borrower to appoint a receiver or manager, apply to the Court for the appointment of the manager or receiver for the purpose of taking possession and protection of the property, taking the rents or such other profits arising from the mortgaged property, and enforcing the security interest (or mortgage) on behalf of the lender (mortgagee). Another effect that the Act has on defaulting parties to a mortgage agreement (security interest) is that it obliges the lender to notify the borrower of his default in performance and this shall be done in writing and the borrower would be requested to pay the sum owed within 30 days of the issue date of the Notice, in line with Section 64(1) of the Borrowers & Lenders Act of 2019, and where the lender intends to impose any period below 30 days on the borrower’s immovable property, the borrower is obliged to object to it, in accordance with Section 63(3).
It is worth noting that after a default by the borrower (mortgagor), the lender is entitled to propose in writing, his right to acquire the collateral (mortgage) totally or partially to satisfy the secured obligation, in accordance with Section 72 of the Act. Notably, where foreclosure is ordered, the mortgagor’s equitable right to redeem is declared by the court to be extinguished and the full beneficial title of the mortgagor in the mortgaged land becomes vested in the mortgagee.
Conclusively, Section 74 of the Borrowers & Lenders Act of 2019 posits provisions governing situations wherein the lender is entitled to collect payments from the debtor when the debtor defaults in payments, and this can be enforced also on the debtor’s personal property in accordance with Section 74(3) of the Act.
3. Conclusion
The body of work catalogued above discusses the effects of the respective Acts on mortgage agreements in the Republic of Sierra Leone. The work commenced by discussing the effects of the Conveyancing and Law of Property Act of 1881, which happens to be the first statute that had effects on mortgage agreements in Sierra Leone. The Home Mortgage Finance Act of 2009 expressly introduced modern-day approaches towards creating mortgages and amended specific provisions of existing Acts that had implications on mortgages in Sierra Leone. The Credit Reference Act of 2011 provides guidelines for Credit Reference Bureaus to keep records of detailed information on credit information subjects, inter alia. Finally, The Borrowers & Lenders Act of 2019 provides for situations governing lenders’ as well as borrowers’ relationships in the creation of security interest agreements.
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