The Legal Threshold of Rights and Liabilities of the Mortgagor, Mortgagee, and Lessee of a Mortgage Property in Relation to the Validity of a Lease

Abstract

The general position of the law is that, subject to the agreement of the parties to a mortgage transaction, both the mortgagor and mortgagee of a leased property have power to lease mortgaged property. The only condition that needs to be satisfied is that the party leasing must be in possession. While the rights and liabilities of the mortgagor and mortgagee in relation to the mortgage contract poses no problems, the various legislations on mortgage do not provide for the rights and liabilities of a lessee where the property, subject matter of a mortgage, is leased. It would seem that the lessee is subject to the terms of the contract between the mortgagor and mortgagee which he is not privy to. This situation may pose more challenges than is evident and recourse would be had frequently to equity. A threshold implies a boundary of a right. In the realm of property law, the Mortgagor, Mortgagee, Lessor, and Lessee have a multitude of individual rights. However, when these parties interact, not all of these rights are accommodated. Some are modified, and others are limited. The writer, in this paper, intends to conceptualize the interaction of leases in a mortgage transaction. The major jurisdiction explored is Nigeria, with a glimpse on how other jurisdictions comparatively handle similar transactions. This paper seeks to examine the limit of the rights and liabilities of a mortgagor, the mortgagee and lessee in relation to each other in the event of a valid lease of property subject to a mortgage with a view to proposing reforms in this important area of the law and property transaction.