Description
Loan facility – facility letter – loan secured by a mortgage over a landed property owned by a third party – value of the security sufficient to cover the amount specified in the facility letter – statutory power of sale.
- Careful consideration need to be given when determining the outstanding amount on the loan facility particularly court has to consider the wording used in the clause defining conditions and warranties (p. 5).
- Although the Plaintiff’s bank may be entitled to recover some of the legal costs incurred in recovery measures, but at least not by dumping them in the Defendant’s loan account and treat them as part of the monies advanced to her under the facility letters tendered in evidence (pp. 5-6). Some of these costs for instance instruction fees are recoverable through presenting a bill of costs for taxation in accordance with the relevant laws (p.6).
- Loan secured by a mortgage over a landed property owned by a third party – by signing the mortgage agreement the bank had accepted that the security was sufficient to secure all or such sums that would be due and owing by the borrower to the bank (p. 6).
- Since it was agreed in the Mortgage Agreement that the security was for unspecified amount which shall not at any time exceed the amount specified in the facility letter – the assumption is that the value of the security was sufficient to cover the amount specified in the facility letter. If consequently it is found that the value of the security does not cover or it falls short the amount specified in the facility letter or if the bank disposes the security at the price less than the specified amount, then the bank has to blame itself for undervaluing the security either before accepting or at the time of sale. It cannot come back to the court to seek to recover the loan by other means other than the security it accepted (p. 6).
- It is high time now for the banks to be aware that once they decide to exercise their Statutory Power of Sale under the Mortgage Agreement and the sale does not realize the amount secured they cannot come to court with the view of having recovered the unrealized amount by attaching and auctioning other properties of the Mortgagor. Only the property mortgaged is liable for realization of the amount secured under the Mortgage Agreement and Facility letter concerned (P. 7).
