CHARGES IN THE LAND ACT
CHARGEE IS THE BANK OR INSTITUTION
CHARGOR IS THE BORROWER
INFORMAL CHARGE Section 79(6) - an informal charge may be created where-
a) a charger accepts a written and witnessed undertaking from the chargor, the clear intention of which is to charge the chargor's land or interest in land, with the repayment of money or money's worth, obtained from the chargee.
b) the chargor deposit any of the following-
1. a certificate of title to land
2. a document of lease of land
3. any other document which evidences ownership
section 79(7)- a charger may only takes possession of or sell the land on obtaining an order of the court.
An informal charge is not registered.
FORMAL CHARGE
Must be registered.
section 79(5)- A formal charge shall take effect only when it is registered and the chargee shall not be entitled to exercise any of the remedies under the charge unless it is registered.
SECOND CHARGE- You borrow money from a different financier on the same security by the chargor.
FURTHER CHARGE- you borrow a loan from the same financier on the same security.
SUB-CHARGE- A chargee lends money to a chargor and then created another charge with a third party eg you borrow money to lend.
VARIATION OF INTEREST
SECTION 84
Where interest is varied, it is reduced or increased by a written notice served on the chargor by the chargee. Chargee must give a 30 days notice of the reduction or increase.
REMEDIES OF A CHARGEE
SECTION 90(1)- if chargor is in default of any obligations, fails to pay interest or any other periodic payment or under any charge or in performance or observation of any convenient, express or implied and continues to be in default for one month, the chargee may serve a written notice on chargor to either pay the money or to perform and observe the agreement.
if is for non-payment of money, notice should be for not less than 3 months.
if default is for any other than non-payment of money, notice should not be for less than 2 months.
1. POWER OF SALE
Should issue a notice to sell for not less than 40 days.
Auctioneers should give 45 days notification of sale.
chargee owes the chargor a duty of care to obtain the best price reasonable.
2. RIGHT TO SUE
3. APPOINT A RECEIVER
4. LEASE THE PROPERTY
5. TAKE POSSESSION OF THE CHARGED LAND
IN DUPLUM RULE
SECTION 44A OF THE BANKING ACT
It sets up the maximum amount of money a banking institution may recover on the original loan.
The institution is limited in what it may recover from the debtor with respect to non preforming loans.
section 44A (2) (b)" interest, in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non performing "
"Arrears interest ceases to accrue once the sum of the unpaid (accrued) interest equals the amount of capital outstanding at the time. The rule directly translates to "double the amount"