LAW DEVELOPMENT CENTRE

POST GRADUATE BAR COURSE 2021/2022

TERM II WEEK IX

LAND TRANSACTIONS

WEEK OF 28th MARCH – 01st APRIL, 2022

FIRM D1, WORKSHOP TWO

GROUP 1
1. AGABA ANXIOUS
2. NABIRYE REHMA
3. BYIRINGIRO JACKLINE
4. KASOZI DICKSON
5. MUSIGIRE CHARLES
6. RWAKABISHA GOEFFREY

Task A

BRIEF FACTS

On 12.01.2019 Julia Nttuuyo signed a mortgage deed as the Mortgagor and Surety in favour
of Mark Ntuuyo to enable him secure a loan of UGX. 50 Million from M/s City Bank Ltd
using her certificate of title comprised in Kyaddondo Block Plot 88 land at Mbalwa,
Namugongo as security for repayment of the loan where upon the bank registered a legal
mortgage over Julia Ntuuyo’s land. On 12.08.2021 Mark completed repayment of the loan
and interest thereon. However, without the consent and knowledge of the surety (Julia
Ntuuyo), the Bank advanced another sum of money purporting to be a loan secured by the
Julia Ntuuyo’s title. Subsequently Mark Ntuuyo defaulted on repayment of the loan.

Issues
1. Whether Julia Ntuuyo is liable for the loan sum and interest advanced to Mark Ntuuyo
in excess after repayment of the first loan.
2. What remedies are available to Julia Ntuuyo

Law applicable
1. The Contracts Act 2010
2. The Mortgage Act, Act No.8 of 2009
3. Case law

Resolution of issues
Section 2 of the Mortgage Act 2009 defines a mortgage to include:
“… any charge or lien over land or any estate or interest in land in Uganda for
securing the payment of an existing or future or a contingent debt or other money or
money’s worth or the performance of an obligation and includes a second or
subsequent mortgage, a third party mortgage and a sub mortgage;
Section 2 of the Mortgage Act, 2009 defines a third party mortgage to mean a mortgage
which is created or subsists to secure the payment of an existing or future or a contingent
debt or other money or money’s worth or the fulfilment of a condition by a person who is not
the mortgagor, whether or not in common with the mortgagor;

A third party mortgage arises when security for the borrowing is given by an individual or
entity (a third party) for the liability of the borrower. It is a secondary obligation in the form
of a guarantee in which the mortgagor makes a contractual promise to ensure that a borrower
fulfils his or her obligations and/or pays an amount owed by the borrower if he or she fails to
do so himself or herself.
A guarantee was defined in the case of Barclays Bank of Uganda V. Jing Hong HCCS No.
35 of 2009 as a secondary agreement in which a person (Guarantor) is liable for the debt on
default of another (the principal debtor) who is the party primarily liable for the debt.
Under such arrangements, the Mortgagee (in this case the Bank) has a duty to explain to third
party mortgagor the liabilities which the borrower has to the bank under the loan agreement
for the avoidance of involving the mortgagor in securing a contingent liability which he or
she may be unaware of; and under Regulation of 4 (3) of The Mortgage Regulations, 2012,
the mortgagee has a duty to disclose information about the borrower in respect of the
mortgage to a surety of the mortgagor.
Guarantee contracts are governed by the Contracts Act 2010. Under section 74 of the
Contracts Act, any variance made to the terms of the contract between the principal debtor
and the creditor without the consent of the guarantor discharges the guarantor from any
transaction which is subsequent to the variance.
Section 76 of the Contracts Act further provides that a contract between a creditor and the
principal debtor where the creditor makes a compromise, or promise to give time, this
discharges the guarantor unless the guarantor assents to the contract.
The Supreme Court of Canada in the case of Manulife Bank of Canada vs. John Joseph
Conlin (1996) 3 S.C.R 415 the court while addressing the issue of a guaranteed loan held that
a guarantor would be released from liability on the guarantee in circumstances where the
creditor and the principal debtor agree to a material alteration of the terms of the contract of
debt without the consent of the guarantor.
Julia Ntuuyo was never consulted to ascertain whether she was agreeable to having her
property continue as security for the subsequent mortgage and therefore ought to be
discharged. Under the provisions of section 76 of the Contracts Act 2010, this is one of the
instance under the law where the surety/guarantor was discharged.
In case of Canadian Imperial Bank of Commerce Vs Patel (1990) 72 OR (2 nd) 109 Court
held that if the guarantor is to be treated as the principal debtor and not as a guarantor, then
the failure of the bank to notify the guarantor of the renewal agreement and the new terms of
the contract must release him from his obligations since he is not a party to the renewal.

Under section 14 of The Mortgage Act, 2009, a mortgage is redeemed by the mortgagor
repaying the sum advanced. Once the mortgagee acknowledges receipt of the money the
mortgage automatically terminates.
From the facts therefore, Julia Ntuuyo is not liable for the loan sum and interest advanced to
Mark Ntuuyo. After repayment of the first loan was made by Mark Ntuuyo on the
12.08.2021, it automatically terminated the mortgage in accordance with section 14 of
Mortgage Act. Julia Ntuuyo’s guarantee was only in respect of the first loan of 50 Million.
She was not aware of the second mortgage and did not consent to extending her guarantee to
the second transaction. It can therefore be said that she was not party to the second loan
transaction.

Issues 2; Remedies available to Julia Ntuuyo

Section 33 of the Mortgage Act provides for relief by a Mortgagor. It is to the effect that an
application may be made by the mortgagor to the court for relief against exercise by the
Mortgagee of any of the remedies referred to in section 20. The application for relief may be
made at any time after the service of a notice.
Section 34 of the Mortgage Act gives court power to review mortgages in the interest of
justice where the mortgage has been obtained through fraud or where it is obtained in a
manner or contains a provision which is unlawful.
The application may be made by a person or persons mentioned in section 35 of the Act and
this includes among others a mortgagor as well as a surety.
Section 36 of the Mortgage Act gives the court jurisdiction to declare the mortgage void
Julia Ntuuyo can therefore apply to court for a declaration that the manner in which the
second mortgage was executed or obtained was unlawful and should be declared void under
sections 34 and 36 of the Mortgage Act, 2009 and thus release her property

GROUP 2

1. LWANGA EUNICE
2. TWIKIRIZE ROSEBEL
3. AINEBYONA MARTIN
4. NANDALA NASUL
5. TALWANA PETER MERI
6. NAMUTEBI FLAVIA NATABIRWA
7. IKEE MARY

TASK B

Brief facts

Mikisa is a shareholder and director in N/s money solutions Hd. This company is a money
licensed lender. The company lent 20 million to Allen Bbora. The loan was to be repayable
within one year from 30/01/2021 at an interest rate of 22% per annum. Allen Bbosa paid only
10 million. She deposited certificate of title to her land known as Wakiso Block 98 plot 4567
land at Mende, valued at 90,000,000/= to Mikisa & should be considered as proof that she
was willing to repay the money.

A contract was signed which Allen Bbosa acknowledged her outstanding indebtedness to
M/s money solutions ltd. Her certificate of title was deposited to the director Mikisa
authorized the director to ledge a caveat upon the title as security for repayment of a loan and
interest. Caveat was lodged against the land Allen has not made any further payments since
August 2021.

Legal Issues

1. what are the lender’s rights against Allen Bbosa

2. What ways can be used by the lender to recover the money from Allen Bbosa?
Resolutions

what are the lender’s rights against Allen Bbosa

Section 3(8) (b) (ii) of the mortgage Act 2009 provides that nothing in this section shall
operate to prevent a borrower from offering and a lender from accepting a deposit of
certificate of title issued under the Registration of Titles Act to secure any payments which
referred to in subsection (i).

In the instant facts, Allen Bbosa is the registered proprietor of land known as Wakiso Block
98 plot 4567 land at Mende, valued at 90,000,000/= and upon the failure to pay the
outstanding amount to M/s Money Solutions ltd, pursiuant to the signing of contracts
acknowledging her outstanding indebtedness to M/s Money Solutions ltd willingly deposited
her certificate of title to the director and further authorized the director to accept it as
security for repayment of the amount outstanding.

At that point an equitable mortgage was created because the formalities to create a legal
mortgage were not conceded therefore the mortgage which is M/s Money Solutions did not
acquire a legal estate in the property which is subject of the mortgage but acquired an
equitable interest in the property.

In the case of Nile Bank ltd Richard Desmond Kaggwa (Supreme Court Civil Appeal No. 7
of 2004)/ (2005) UGSC it was stated that one of the conditions necessary for creation of an
equitable mortgage by deposit of title is that the registered proprietor must have the intent to
create a security thereof and that the equitable mortgage shall cause a caveat to be entered.

From the facts at hand, Allen Bbosa upon depositing her certificate of title with mikisa the
managing Director of M/s Money solutions a caveat was lodged against Allen Bbosa’s land
because they had acquired an equitable interest in the land.

The remedy is to give Allen Bbosa a notice of default.

(ii). How can M/s Money solutions Ltd recover the money from Norah?

Section 4(d) of the Tire 4 Microfinance Institutions and money lenders Act 2016 establishes
community based micro finance institutions. These must be licensed by the authority in order
to perform microfinance activities like extending micro-loans other financial services as
provided founder this Act. (see sec. 8(7) of the Act)

Section 5 of the Tire 4 Micro finance Institution and money lenders Act 2016 defines
Authority to mean the Uganda Micro finance Regulatory Authority established by section 6
of the same Act.

According to the Facts, M/s Money solutions ltd which is a money lending company must
have a money lending license granted by the authority in order to extend loans to provide
people like Allen Bbosa (see sec. 77(2) (a) of the Tire micro finance institution and money
lenders Act 2016.

Furthermore, it must be a company incorporated with a certificate of incorporation as section

78(3) (a) of the Tire 4 micro finance and money lenders Act 2016 provides

Allen Bbosa has defaulted in payment of 10,000,000/= at interest rate of 22% but has only
paid 10,000,000/= by the due agreed date. These are some of the ways M/s Money solutions
ltd can recover the outstanding money from Allen Bbosa.

According to section 86(2) of the Tire 4 micro finance and money lenders act 2016, where a
borrower defaults to pay the sum payable to the money lender on the due date, the money
lender is entitled to charge simple interest on that sum from the date of default until the sum
is paid.

Prior to the above, a mortgage will be deemed to be in default warranting a mortgage to serve
upon him in writing of the default, if the mortgagor fails to meet any obligation to pay the
principal sum on demand or interest or any other periodic after a period of thirty (30) days
from the date when the obligation to pay become due. (See sec. 19(4) of the mortgage Act).

However the money lender must have complied with the requirements under section 87 of the
Tire 4 micro finance and money lenders Act 2016, namely:

(1) Issue a receipt to borrower for every repayment made.

(2) Receipt issued immediately after the payment is made.
(3) A record containing
(a) The date on which the loan was disbursed.
(b) The rate of interest and
(c) The sum repaid on the loan and date of repayment
The money lender may apply to court for recovery of any money lent, or the enforcement of
an agreement or security made or taken in respect of money lent, with production of records
under section87 above.

Section 88(2) of the Tire 4 micro finance and lenders Act 2016 is to effect that where court is
satisfied that the borrower has defaulted in payment of that sum with such interest as the
court may allow.

Order 37 Rule 4 of the Civil Procedure Rules S1 71-1 is to the effect that a mortgage of an
equitable mortgage having property subject to equitable charge has a right to sale, foreclosure
and take possession by an application by originating summons, returnable before a judge in
chambers.

Order 37 Rule 8 of the civil procedures Rules S1 71-1 provides that an originating summons
shall be in form 13 of Appendix B to these Rules and shall specify the relief sought.

It shall be presented ex parte to a judge sitting in chambers with an affidavit setting faith
concisely the facts upon which the right to the relief sought by summons is found, and the
judge if satisfied that the facts as alleged are sufficient and the case is a proper one to be dealt
with by originating summons, shall sign the summons and give such directions for service
upon persons.

According online Black’s Law Dictionary 2nd Ed. Foreclosure means a process in chancy by
which all further right existing in a mortgage to redeem the estate is defeat and lost to him,
and the estate becomes the absolute property of the mortgage; being applicable when the
mortgagor has fortified his estate by nonpayment of the money due on the mortgage at the
appointed, but still retains the equity of redemption.

In the of Eso Bank Ugtanda ltd V Kakooza Musa Trading Co. Limited (High Court
Originating Summons No. 14 of 2015) & (2016) UGHCLD 4-3 the suit was brought under
the provisions of order 37 rules 448 of the civil procedures Rules S1 71-1, one of the
questions for determination was, whether the applicant as a legal mortgage of property
comprised in Kyadondo Block 185, plot 2257 at Namugongo (the mortgage property) is
entitled to foreclosure and sell, to recover all the amounts due in respect of the principal debt,
interests and other charges incident thereto

GROUP 3.
1. ACHOL JOLLY
2. AMURON LUCY
3. AKAMPURIRA BRONIA
4. KUTESA DUNCAN
5. MUYINDA ROBERT DHATEMWA
6. MUZUNGU INNOCENT
7. NYENDWOHA EMMANUEL

TASK C
Brief facts.
On 02.01.2018, Maggaga Musa got a loan of (800) million Uganda shillings from M/s City
Bank LTD to enable him complete a commercial complex. The loan was repayable with an
interest of 18% per annum and recoverable in (80) equal monthly installments over a period
of (8) years. The Bank registered a mortgage over Muggaga's land known as Block 145 plot
85 at Najja, on which that commercial complex is. Muggaga has not paid any money on the
loan or interest despite formal reminders and meetings with bank officials.
Issues
1. What remedies are available to the bank?
2. What steps will the bank take for each remedy?
Resolution.
1. Remedies available.
Section 20 of the Mortgage Act 2009 provides for the remedies available to the mortgagee
in case of mortgagor’s default and non-compliance to the notice served on him pursuant to
section 19 and these remedies are;
1. Require the mortgagor to pay all monies belonging owing to mortgagee.
2. Appoint a receiver of the income of the mortgaged land.
3. Lease mortgaged land / sublease the land incase mortgage is of a lease
4. Enter in to possession of mortgaged land
5. Sell mortgaged land
Steps
Payment of monies
a) The Bank will serve notice on Mr. Muggaga in accordance with Section 19 of the
Mortgage Act.
b) The notice shall be in writing notifying the Mortgagor requiring him to rectify the
default within (45) working days.
c) In this case, Muggaga has been given all formal reminders of the default but he has
not responded. Therefore, this notice will require him to pay all the monies owing on
the mortgage.
d) The Notice shall also notify Muggaga that if he fails to pay the monies, the Bank shall
be entitled to appoint a receiver of the mortgaged land, lease the land, enter into
possession or sell the mortgaged land.
e) The form of this Notice is provided by regulation 22 of the Mortgage Regulations,
2012 as shall be in form 6 in schedule 2.
Appointment of a receiver
.Section 22(1) of the Mortgage Act provides that it is an implied condition in every mortgage
that the mortgagee has the power to appoint a receiver of the income of the mortgaged land.
a) The Bank shall serve a notice on the mortgagor and shall not proceed until (15)
working days have lapsed from the date of the service of the notice of appointment of
receiver(S22(2)).
b) Regulation 22 of the Mortgage Regulations 3012 provides for the notice to the
mortgagor for appointment of receiver which is in form 7 schedule 2 to the
regulations.
c) Appointment of a receiver shall be in writing signed by the mortgagee as per section
22(3).
d) Section.22 (4) Mortgage Act 2009 is to the effect that a Mortgagee may apply to the
court for appointment of a receiver and the mode of appointment is by interlocutory
application.
Section 22(6) of the Mortgage Act defines a Receiver as the agent of mortgagor for purposes
for which he is appointed. As such, a mortgagor is solely responsible for acts and defaults of
the receiver for which he is appointed unless mortgage instrument provides otherwise.
Leasing the mortgaged land.
Section 23(1) of the Mortgage Act is to the effect that a mortgagee shall have power to lease
mortgaged land unless the mortgage instrument expressly provides to the contrary.
Therefore, tell bank can grant leases, accept a surrender of any lease so granted and of any
lease granted by the mortgagor in respect of the mortgaged land or any part of the land and
may, for that purpose, execute, in place of the mortgagor any instrument required to execute
that lease or surrender.
- The bank shall first serve a notice on Mr. Muggaga in the form prescribed by
regulation 24 of the regulations.
- The bank shall then wait until (15) working days have lapsed from the service
of the notice before proceeding with the granting or execution of that lease.
Taking into possession of the mortgaged land.
Section 24 of the Mortgage Act provides that a mortgagee may after serving a notice of not
less an (05) working days of his intention to do so, enter into possession of the whole or a
part of the mortgaged land.
- Regulation 26 requires the mortgagee to give notice to the mortgagor in form
10 of schedule 2 before taking possession of the mortgaged land.
- The mortgagee may enter into possession by taking physical possession of the
land or a part of it during day time only using such force as shall be reasonable
in the circumstances, asserting control over the land y serving a notice
requiring any lessee of the mortgagor to pay the rent to the mortgagee, by an
order of court( section 24(2).
- The mortgagee shall be regarded as being in possession on the day he enters
into possession or on which he first receives rent or profit from the land.
Selling the mortgaged land.
The power of a mortgagee to sell mortgaged land is provided for under section 26 of the
Mortgage Act. This power is exercised where the mortgagor is in default and remains so at
the expiry of the time provided for the rectification of that default in the notice served on him
under section 19(3) .
- Before the sale, the mortgagee shall serve a notice on the mortgagor and the
form of this notice is provided for under regulation 25 of the Mortgage
regulations, 2012.
- After this notice, the mortgagor shall not continue to complete any contract for
the sale of the mortgagee land until (21) working days have lapsed from the
time of the service of the notice to sell.
- A copy of the notice to sell shall be served on the mortgagor, any spouse or
spouses of the mortgagor in respect of a matrimonial home, a surety, an
independent person and in case of customary land, the children and the spouse
or spouses as required by section 26(3).
PART B

Brief facts

Mikisa is a shareholder and director in N/s money solutions Hd. This company is a money
licensed lender. The company lent 20 million to Allen Bbora. The loan was to be repayable
within one year from 30/01/2021 at an interest rate of 22% per annum. Allen Bbosa paid only
10 million. She deposited certificate of title to her land known as Wakiso Block 98 plot 4567
land at Mende, valued at 90,000,000/= to Mikisa & should be considered as proof that she
was willing to repay the money.

A contract was signed which Allen Bbosa acknowledged her outstanding indebtedness to
M/s money solutions ltd. Her certificate of title was deposited to the director Mikisa
authorized the director to ledge a caveat upon the title as security for repayment of a loan and
interest. Caveat was lodged against the land Allen has not made any further payments since
August 2021.

Legal Issues

3. what are the lender’s rights against Allen Bbosa

4. What ways can be used by the lender to recover the money from Allen Bbosa?
Resolutions

what are the lender’s rights against Allen Bbosa

Section 3(8) (b) (ii) of the mortgage Act 2009 provides that nothing in this section shall
operate to prevent a borrower from offering and a lender from accepting a deposit of
certificate of title issued under the Registration of Titles Act to secure any payments which
referred to in subsection (i).

In the instant facts, Allen Bbosa is the registered proprietor of land known as Wakiso Block
98 plot 4567 land at Mende, valued at 90,000,000/= and upon the failure to pay the
outstanding amount to M/s Money Solutions ltd, pursiuant to the signing of contracts
acknowledging her outstanding indebtedness to M/s Money Solutions ltd willingly deposited
her certificate of title to the director and further authorized the director to accept it as
security for repayment of the amount outstanding.

At that point an equitable mortgage was created because the formalities to create a legal
mortgage were not conceded therefore the mortgage which is M/s Money Solutions did not
acquire a legal estate in the property which is subject of the mortgage but acquired an
equitable interest in the property.

In the case of Nile Bank ltd Richard Desmond Kaggwa (Supreme Court Civil Appeal No. 7
of 2004)/ (2005) UGSC it was stated that one of the conditions necessary for creation of an
equitable mortgage by deposit of title is that the registered proprietor must have the intent to
create a security thereof and that the equitable mortgage shall cause a caveat to be entered.

From the facts at hand, Allen Bbosa upon depositing her certificate of title with mikisa the
managing Director of M/s Money solutions a caveat was lodged against Allen Bbosa’s land
because they had acquired an equitable interest in the land.

The remedy is to give Allen Bbosa a notice of default.

(ii). How can M/s Money solutions Ltd recover the money from Norah?

Section 4(d) of the Tire 4 Microfinance Institutions and money lenders Act 2016 establishes
community based micro finance institutions. These must be licensed by the authority in order
to perform microfinance activities like extending micro-loans other financial services as
provided founder this Act. (see sec. 8(7) of the Act)

Section 5 of the Tire 4 Micro finance Institution and money lenders Act 2016 defines
Authority to mean the Uganda Micro finance Regulatory Authority established by section 6
of the same Act.

According to the Facts, M/s Money solutions ltd which is a money lending company must
have a money lending license granted by the authority in order to extend loans to provide
people like Allen Bbosa (see sec. 77(2) (a) of the Tire micro finance institution and money
lenders Act 2016.

Furthermore, it must be a company incorporated with a certificate of incorporation as section

78(3) (a) of the Tire 4 micro finance and money lenders Act 2016 provides
Allen Bbosa has defaulted in payment of 10,000,000/= at interest rate of 22% but has only
paid 10,000,000/= by the due agreed date. These are some of the ways M/s Money solutions
ltd can recover the outstanding money from Allen Bbosa.

According to section 86(2) of the Tire 4 micro finance and money lenders act 2016, where a
borrower defaults to pay the sum payable to the money lender on the due date, the money
lender is entitled to charge simple interest on that sum from the date of default until the sum
is paid.

Prior to the above, a mortgage will be deemed to be in default warranting a mortgage to serve
upon him in writing of the default, if the mortgagor fails to meet any obligation to pay the
principal sum on demand or interest or any other periodic after a period of thirty (30) days
from the date when the obligation to pay become due. (See sec. 19(4) of the mortgage Act).

However the money lender must have complied with the requirements under section 87 of the
Tire 4 micro finance and money lenders Act 2016, namely:

(4) Issue a receipt to borrower for every repayment made.

(5) Receipt issued immediately after the payment is made.
(6) A record containing
(d) The date on which the loan was disbursed.
(e) The rate of interest and
(f) The sum repaid on the loan and date of repayment
The money lender may apply to court for recovery of any money lent, or the enforcement of
an agreement or security made or taken in respect of money lent, with production of records
under section87 above.

Section 88(2) of the Tire 4 micro finance and lenders Act 2016 is to effect that where court is
satisfied that the borrower has defaulted in payment of that sum with such interest as the
court may allow.

Order 37 Rule 4 of the Civil Procedure Rules S1 71-1 is to the effect that a mortgage of an
equitable mortgage having property subject to equitable charge has a right to sale, foreclosure
and take possession by an application by originating summons, returnable before a judge in
chambers.
Order 37 Rule 8 of the civil procedures Rules S1 71-1 provides that an originating summons
shall be in form 13 of Appendix B to these Rules and shall specify the relief sought.

It shall be presented ex parte to a judge sitting in chambers with an affidavit setting faith
concisely the facts upon which the right to the relief sought by summons is found, and the
judge if satisfied that the facts as alleged are sufficient and the case is a proper one to be dealt
with by originating summons, shall sign the summons and give such directions for service
upon persons.

According online Black’s Law Dictionary 2nd Ed. Foreclosure means a process in chancy by
which all further right existing in a mortgage to redeem the estate is defeat and lost to him,
and the estate becomes the absolute property of the mortgage; being applicable when the
mortgagor has fortified his estate by nonpayment of the money due on the mortgage at the
appointed, but still retains the equity of redemption.

In the of Eso Bank Ugtanda ltd V Kakooza Musa Trading Co. Limited (High Court
Originating Summons No. 14 of 2015) & (2016) UGHCLD 4-3 the suit was brought under
the provisions of order 37 rules 448 of the civil procedures Rules S1 71-1, one of the
questions for determination was, whether the applicant as a legal mortgage of property
comprised in Kyadondo Block 185, plot 2257 at Namugongo (the mortgage property) is
entitled to foreclosure and sell, to recover all the amounts due in respect of the principal debt,
interests and other charges incident thereto
GROUP 4
1. GALANDI EMMY PAUL
2. KIWUHDU JEMIMAH
3. SSEMWOGERERE ROBERT MUTYABA
4. YIGA ISAAC 
5. MUTONI CREAM
6. KASOZI SHUBRAH NAYIGA
 

Task D

Contract of sale.

IN THE MATTER OF THE REGISTRATION OF TITLES ACT CAP. 230

AND

IN THE MATTER OF THE MORTGAGE ACT NO.8 OF 2009

LAND SALE AGREEMENT

This Agreement is HEREBY ENTERED INTO on this 28th day of March 2022.

BETWEEN

M/S EXPEDITIOUS COURT BAILIFFS & AUCTIONEERS of C/O P.O Box…

Kampala (Hereinafter called the “Auctioneer”) for and on behalf of M/s City Bank Ltd
(Hereinafter called the “Bank/Morgagee”) of the one part

AND

M/S ZAIN PROPERTY DEALERS LIMITED (Hereinafter called the “Buyer” which
expression shall where the context so require include its agents, assignees, transferees,
successors and legal representatives) of the 2nd part.

AND WHEREAS under a mortgage agreement executed between the Bank and Nina Banda
subsequently registered Vide instrument Number MKN 000236799 on 2nd April 2016 on
property comprised in Buikwe Block 274 plot 222 land at Ngogwe has not been discharged
as a result of the mortgagor’s default, the mortgagee recalled the same and exercised its
powers of sale in the deed without recourse to Court.

NOW THIS AGREEMENT WITNESSETH and it is hereby declared and agreed as follows;
1. The purchaser hereby buys land comprised in Buikwe Block 274 Plot 222 land at
Ngogwe.
2. Consideration.
The agreed total consideration shall be UGX 800,000,000/= (Eight Hundred Million
shillings only ) for the demised land which at the execution of this Agreement has
been fully paid.
3. The Bank shall handover the duplicate certificate of the purchased land to the buyer and
execute instruments of transfer of the title to the buyer, but the incidental financial costs,
taxes and levies shall be met by the Buyer.
4. The Seller guarantees that the buyer shall have vacant possession of the demised land on
the execution of this Agreement.
5. The buyer shall be introduced to all the neighbours and local authorities where the
subject land is situated as the new proprietor.
6. The Seller has sold and subsequently passed on good Title to the Buyer.
7. This agreement shall be confidential except in cases of disclosure as may be required by
any legal or regulatory authority or as may be necessitated for the performance thereof.

Dated at Kampala this______day of________2022

Signed and delivered by M/S EXPEDITIOUS COURT BAILIFFS & AUCTIONEERS

FOR AND ON BEHALF OF M/S CITY BANK:
____________________
“SELLER”
In the presence of:
…………………………………… ____________________
“WITNESS”

Signed and delivered by the said purchaser M/S ZAIN PROPERTY DEALERS LIMITED
(PURCHASER)
In the presence of:
…………………………………… ____________________
“WITNESS”

Signed and delivered by:

……………………….. __________________________
AREA L.C.1
 (WITNESS)

You now represent M/s Zain Property Dealers Ltd. How will M/s Zain Property Dealers
acquire a Certificate of title to this land?
Under section 3 of the Mortgage Act, 2009 (1) A 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.
Further section 20 of the Mortgage Act, 2009 provides for rights of the mortgagee and
specifically paragraph (e) provides that the mortgagee may sell the mortgaged land where
the mortgagor is in default of the mortgage.
Therefore, it was not only a lawful mortgage but the mortgagee, M/s City Bank has a right to
sell such mortgaged property where there is default in payment.
Under section 28 of the Mortgage Act, 2009, (1) Where a mortgagee becomes entitled to
exercise the power of sale, that sale may be—
, (d) by public auction, unless the mortgagor consents to a sale by private treaty. According
to the facts the land was sold by public auction which was in conformity with the Act. The
sale by public auction is further provided for as a requirement under Regulation 8 of the
Mortgage Regulations 2012, which provides under sub-regulation (1) A mortgagee exercising
a power of sale under the Act shall subject to the Act and these Regulations, sell the
mortgaged property by public auction.

A sale of land is considered complete upon full payment of the purchase price.

Regulation 15 of The Mortgage Regulations 2012 provides that after the payment of the
full purchase price, the mortgagee shall execute instruments of transfer of the property in the
name of the purchaser or the person named by the purchaser.

Section 28(3) of the Mortgage Act provides that a transfer of the mortgaged land by a
mortgagee in exercise of his or her power of sale shall be made in the prescribed form and the
registrar or recorder, shall accept that form as sufficient evidence that the power has been
duly exercised.

The form mentioned in section 28 (3) of the Act is provided for under Regulation 21 of
the Mortgage Regulations 2012, (2) A transfer of mortgaged land by a mortgagee to a
purchaser after exercising the power of sale in accordance with section 28 (3) of the Act shall
be in Form 5 in Schedule 2.
After execution of the transfer instrument, it should be lodged with the registrar of titles for
registration.

The Act also provides under Section 28 (4), Upon registration of the transfer by a registrar or
recorder, the interest of the mortgagor as described in it shall pass to and vest in the purchaser
free of all liability on account of the mortgage, or on account of any other mortgage or
encumbrance to which the mortgage has priority, other than a lease or easement to which the
mortgagee had consented in writing.

S. 29 of the Mortgage Act 2009 provides that the purchaser obtains good title except where
procured by fraud or misrepresentation.

From the instant facts, M/s Zain property Dealers Ltd purchased the land comprised in
Buikwe Block 274 Plot 222 land at Ngogwe from M/s Expeditious Court Bailiffs and
Auctioneers who were selling such land on behalf of M/s City Bank. The bank had a right to
sell without recourse to court and the land was sold by public auction and in conformity with
the law.
For M/s Zain property Dealers Ltd to become the registered proprietor of the land, they mu
must be registered on the title and acquire a certificate of title to that effect. Under section 59
of the Registration of Titles Act Cap 230, a certificate of title is prima facie conclusive
evidence of ownership.
Therefore, a representative of the company must be in possession of the following and
present them to the Registrar of titles in order to be registered as the proprietor of the land
comprised in Buikwe Block 274 plot 222 land at Ngogwe;
 A copy of the duplicate certificate of title of the mortgagor who defaulted.
 A copy of the newspaper advertisement that was placed to advertise the mortgaged
land for sale. - S.28 mortgage Act and Regulation 8(2), (4)
 A copy of the notice served upon the defaulting mortgagor in compliance with
section 19 of the mortgage Act
 A copy of the mortgage deed executed between the Bank and Nina Banda.
 Passport photos of the purchaser (A representative in this case)
 A copy of the certificate of the bailiff who carried out the execution.
 The transfer form under Regulation 21 (2) which is Form 5 in the 2nd schedule.
 A notice of Release from M/s City Bank to be able to show that the title is not
encumbered by the mortgage – S.15 Mortgage Act
 Pay stamp duty and Registration fees

All the above documents shall be lodged upon proof of payment of stamp duty and
registration fees, with the Registrar who will peruse the same and if satisfied that the
documents are in order, the Registrar will proceed to transfer the land into the names of the
company and issue a certificate of title to that effect.

Task E.
BRIEF FACTS:
Alex Okot would like to borrow (100) million Uganda Shillings from M/s Housing Finance
Bank (Mukono). The Bank has found the security he offered for repayment of the loan; land
known as Mukono Block 185 Plot 180 at Kasozi, Mukono inadequate because it is worth (70)
million Uganda Shillings only.
Okot is willing to offer further security, being his lorry, ‘Sinotruck’, registration Number
UBD 079D. Its market value is (150) million Uganda Shillings. However, he is afraid that the
Bank may not accept this truck as further security.
Give Alex Okot a comprehensive legal opinion on the possibility of using his truck as further
security for the loan.
ISSUES:
1. Whether Alex Okot can acquire the loan upon a further security of his lorry.
LAW APPLICABLE:
1. The Constitution of the Republic of Uganda 1995 as amended.
2. The Mortgage Act, No. 8 of 2009.
3. The Security Interest in movable Property Act, 2019
4. The Security Interest in movable Property Regulations, 2019
RESOLUTION OF THE ISSUE.
Yes, Alex Okot can acquire the loan upon further security of his lorry.
This will be achieved by execution of a Chattel mortgage over the lorry and combining it
with the security already given of Mukono Block 185 Plot 180 at Kasozi to secure the UGX
100M that Okot desires. This was the case as manifested in the case of Stanbic Bank V
Cellular Gallore & 2 Ors; HCCS (Comm. Div) No. 50 of 2010 wherein the Respondents’
prime property was amalgamated with the Chattel mortgage of the 1 st respondent’s car to
secure a total loan of UGX 900M

Section 2 of the Mortgage Act, 2009 defines a mortgage as “mortgage” includes any charge
or lien over land or any estate or interest in land in Uganda for securing the payment of an
existing or future or a contingent debt or other money or money’s worth or the performance
of an obligation and includes a second or subsequent mortgage, a third-party mortgage and a
sub mortgage;
This type of mortgage is created under Section 3 (1) of the Mortgage Act, 2009 which is to
the effect that; “A 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 fulfillment of a condition”.

Section 2 of The Security Interest in Movable Property Act 2019 defines a chattel as
“Chattel” means personal property that can be completely transferred by delivery or property
in respect of which a valid document of title exists.

Section 2 of The Security Interest in Movable Property Act 2019 defines collateral as
meaning movable property that is subject to a security interest and,
Section 2 of the same Act defines Security interest to mean property right in movable
property that is created by agreement to secure payment or other performance of an
obligation, any type of charge over movable property, chattel mortgage and consequential
lien.

In the circumstances, Alex Okot’s lorry is a chattel and movable property against which
security interest can be created in the terms of Section 2 & 4 of The Security Interest in
Movable Property Act 2019.
Creation of a security interest in movable property can be executed in accordance with
section 4 (3) (a&b) of The Security Interest in Movable Property Act 2019 and the
procedure is as below;

i. The parties i.e Creditor (M/s Housing Finance Bank) and the Grantor, Alex Okot are
required to execute a chattel mortgage Agreement in which the following should be clearly
identified;
a. The Parties; the Creditor and the grantor
b. Description of the collateral or the security which shall be the lorry, Reg No. UBD 079D.
This is in accordance with Regulation 7 of The Security Interest in movable Property
Regulations, 2019.
c. The Secured obligation. Under this clause, it is expected that the land comprised in
Mukono Block 185 Plot 180 at Kasozi and the lorry will be combined to secure the security
obligation of UGX 100M that Alex Okot wants to secure from the bank. This was the case as
manifested in Stanbic Bank V Cellular Galore (supra)
ii. The Chattel Mortgage should be witnessed by a third party.
iii. The parties shall be required to register the chattel mortgage in accordance with Section
19 of The Security Interest in movable Property Act, 2019.
After undertaking the above procedure, the Creditor will be expected to give the loan to the
grantor or mortgagor.
It is therefore possible for Alex Okot to use his truck as further security for the loan.