INTRODUCTION

This task require us to discuss the topic of Mortgage and specifically we look on The Land Act
and the form explained on it. We start by defining the Mortgage itself then the forms or
classification of Mortgage before enactment of The Land Act of 1999 and the forms of
Mortgage which are inside the Land Act of 1999.

The concept of Mortgage

The concept of mortgage comes from French term “MORTUS” which means death or slow
death. Mortgage is a practice of killing a debt slowly. Under early English and U.S. law, the
mortgage was treated as a complete transfer of title from the borrower to the lender. The
lender was entitled not only to payments of interest on the debt but also to the rents and
profits of the real estate1.

Mortgage means an interest in a right of occupancy or a lease securing the payment of money
or money’s worth or the fulfilment of a condition and included a sub-mortgage and the
instrument creating a mortgage 2. Therefore Mortgage is a security and the loan secured by
mortgage is mortgage loan/mortgage money.

Therefore Mortgage is a conveyance of title to property that is given as security for the
payment of a debt or the performance of a duty and that became void upon payment or
performance according to the stipulated terms3.

Parties to a Mortgage

Mortgagor
A mortgagor is a person who has mortgaged a right of occupancy or a lease and includes a
transferee of a right of occupancy or lease subject to a mortgage and a person to whom such

1
https://www.encyclopedia.com/social-sciences-and-law/law/law/mortgage accessed on 15/05/2023 at 06:34am

2
Section 2 of the Land Act, Cap 113 R.E. 2019

3
Brayan Garner, (2004), Black’s Law Dictionary 8th Ed. Pg 3198
right of occupancy or lease so subject has passed by transmission 4. As such, a mortgagor is a
person who conveys his property by way of a security.
In order for the person to be Mortgagor only needs to be either an occupier of a right of
occupancy or a lessee5. In order to create a mortgage in favour of the bank, the borrower must
have title to the property being mortgaged. Title here means ownership and is evidenced by
possession or a certificate of title, or other documents evidencing ownership of title or lease.

Mortgagee
Mortgagee is a person in whose favour the mortgage is created or subsists 6. A mortgagee, also
referred to as s a “lender”, is a person to whom a mortgage has been given as security for the
repayment of an advance of money or money's worth or to secure fulfillment of a condition 7. In
other words, he is a person who obtains an interest in a mortgaged property subject to
redemption upon payment of the loaned money or fulfillment of a condition.

MAIN BODY

History of the mortgage

Before land Act came into force in May 2002, there was no single piece of legislation which
provided for creation of mortgage or changes of land in the country. We relied on the English
law, the law which was supposed to provide for dealing in property, that is Land(Law of
property and conveyancing) ordinance8, it did not proceed to the manner of creating instrument
of disposition.

It applied in the country, the law of mortgage which were in force in England in first day of
January, 1922, English laws were to apply in like manner as applied in England relating to the
mortgage applicable in Tanzania, after three, some changes also came into force through the

4
Sction 112(2) of the Land Act CAP 113 R.E. 2019

5
Section 113(1) of the Land Act, CAP. 113 R.E. 2019

6
Section 112 (2) of the Land Act Cap 113 R.E. 2019

7
Section 2 of the Land Act Cap 113 R.E. 2019

8
1970
Law of Property Act9 and those changes applied in Tanzania as Section 2(1) of the Cap 114
stipulated that “subject to the provisions of this Ordinance, the law relating to real and personal
property, mortgagor and mortgagee, landlords and tenants, and trusts and trustees in force in
England on the first day of January 1922 shall apply to real and personal property, mortgages
leases and tenancies, and trusts and trustees in territory in like manner as it applies to real and
personal property”.

The Land Act of 1999, as famous in impact on the law and practices of property, in fact that, it
is a main source of law in overall of administration of land matters, as per Section 180(1) of the
Land Act10, subject to the constitution and this Act, the land to be applied by courts in
implementing, interpreting and determine disputes about land arising under the Act or other
written laws shall be (a) customary law (b) common law and equity as applied from time time in
any other country of Commonwealth which appeared to the court to be relevant to the
circumstances in Tanzania.

Mortgage under the land Act, 1999, part x of the land Act, 2004, borrowers and lender to
signify mortgagor and mortgagee respectively, as forms of mortgages, the amendment
provisions have been changed the forms of mortgage capable of being created in the country,
brought for the possibility of the creating ordinary mortgages, small mortgage, customary
mortgages, informal mortgage and spouse, formal mortgage, lien by deposit of certificates of
title.

After amendment of 2004, small mortgages was not specified in the Act, the amendment
created new something that is third party mortgages, the mortgages of matrimonial home and
including customary mortgages, were validity is based on signed to both spouses living at the
same matrimonial home as Section 114(1) of the Land Act, and portrayed in Mumbai Rashid v.
Abdallah Idd & Salem omari. Section 114(2) the amendment vested the responsibility for
mortgagee to take reasonable steps to ascertain whether the applicant for mortgage has

9
1925

10
CAP 113 RE 2019
spouse or spouses. But later on, this repealed by Part II amendment of 2008 through Section 8
of the Mortgage Financing Act11.

The applicant will commit an offense when he or she produce false information to mortgagee in
relation to existence of spouse or any third party. Hence the concept of mortgages has
appeared in the Act through various amendments.

Types of Mortgage

In Tanzania there are several types of mortgages, which are recognized in Land Act of 1999,
include the formal mortgage or ordinary mortgage, lien by deposit of documents, customary
mortgage, informal mortgage, third party mortgage, mortgage of a matrimonial home and a
customary mortgage. After Independence in 1999 Tanzania enact law which speciffically deals
with land matters in Tanzania where by also on the matter concerning Mortgage are covered in
the Land Act and explain the following as the classification of Mortgage in Tanzania.

Formal Mortgage/Legal Mortgage/Ordinary Mortgage

This is the main form of mortgage under the Land Act. It is created by an occupier of land under
a right of occupancy or lease by executing an instrument in a prescribed form whereby
mortgaging his interest in the land or a part thereof to secure the Payment of a debt or some
other obligations. In creating this kind of mortgage, one has to use a prescribed form. This is
provided under Section 113(1) of the Act12

It must be in writing and must be created using an instrument in a prescribed form, which is
Land Form No. 4013 There is also the requirement to follow other formalities like the
notification of the commissioner for lands 14, and requirement to register the interest 15.

11
2008

12
CAP 113 R.E. 2019

13
GN No. 355 of 2009(Land (Mortgage Financing) Regulations of 2009)

14
Section 36 of the Land Act

15
Section 41(1) of the Land Registration Act Cap 334
According to Section 113(4) of the Land Act 16, this kind of mortgage takes effect only when it is
registered in a prescribed register and a mortgagee shall not be entitled to exercise any of his
remedies under a mortgage if it is not so registered.This kind of mortgage is said to be legal
mortgage due to the fact that it is the creature of the law and it requires the observance of the
formalities for it to be enforceable.

Informal mortgage
This is another form of mortgage capable of being created under the Land Act 17. In creating this
type of mortgage no special form is needed therefore, the parties may use a simple document
by which a property will be charged for payment of money. This kind of mortgage is a creature
of Section 113(5) (a) of the Act 18 which proveds that “Nothing in this section shall operate to
prevent a borrower from offering and a lender from accepting a written and witnessed
undertaking, the clear intention of which is to charge the borrower's land with the repayment of
money or money's worth obtained from the lender”.

Lien by deposits of documents

Before enactment of Land Act of 1999 it was calles equitable mortgage . However, with the
current position, this kind of mortgage is a creature of the Land Act of 1999, and it can be
considered as a legal mortgage. This is created of Section 113 (5) (b) of the Land Act 19 and it can
be created by a deposit of any of the following documents;
“(i) a certificate of a granted right of occupancy;
(ii) a certificate of a customary right of occupancy;
(iii) a document of a lease;
(iv) any other document which may be agreed upon evidencing a right to an interest in land; or
(v) any other documents which may be agreed upon, to secure any payments which are
referred to in subsection (1)”.

16
CAP 113 R.E. 2019

17
CAP 113 R.E. 2019

18
CAP 113 R.E. 2019

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CAP 113 R.E. 2019
in most cases the deposit must be accompanied by a memorandum of deposit thus satisfying
the requirements of Section 64(1) (a) and (b) of the Land Act20. The deposit of document
signified an intention on the part of the depositor that the lender should hold the document as
his security for a loan of money, and constituted a sufficient act of part performance to create a
mortgage. In Guaranty Discount Co vs. Credit Finance Ltd 21 it was stated that where title deeds
were handed over by a debtor to a creditor against the payment of money a very strong
presumption arises that the deposit has been made with a view to the creation of an equitable
mortgage over the entire interest of the debtor in the properties concerned and for the entire
mount then due by the debtor to the creditor.

Third party mortgage

A third party mortgage is a mortgage executed to secure a debt of another. In this form of
mortgage there are three parties involved - the mortgagee (lender), the borrower and the
mortgagor. The possibility of creating a third party mortgage is important because of some
peculiar facts associated with borrowing and borrowers in Tanzania.

This is a kind of a mortgage created by one person in order to secure the debt of another
person. This is provided under Section 113 (2)22 which provides that; -“The power conferred by
subsection (1) shall include the power to create thirdparty mortgages and second and
subsequent mortgages”.
Mortgage of matrimonial homes
Matrimonial home means the building or part of a building in which the husband and wife
ordinarily reside together and includes where a building and its cartilage are occupied for
residential purposes only, that cartilage and any outbuildings thereon and where a building is
on or occupied in conjunction with agricultural land or pastoral land, any land allocated by the
husband or the wife, as the case may be, to his or her spouse for her or his exclusive use 23

20
CAP 113 R.E. 2019

21
(1963) EA 345

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CAP 113 R.E. 2019

23
Act No. 2 of 2004
When creating a mortgage of matrimonial home there are special conditions that require to be
observed. These conditions inter alia include the consent of the applicant’s spouse or spouses
and duty to ascertain marital status as per Section 114 (1) (a) and (b) and Section 114 (2) of the
land Act24 respectively.

Customary mortgage
A customary mortgage is mortgage of a land held under customary tenure. Section 115 (1) of
the Land Act25 allows creation of mortgages over customary right of occupancy, only that the
creation and operation thereof must be in accordance with the customary law applicable to the
land in respect of which the customary mortgage is created.

The following are the forms which must be drafted on the process of mortgage

I. Mortgage of a right of occupancy form no. 40 of The Land Regulations

II. Mortgage of a lease form no. 41 of The Land Regulations

III. Contract of Mortgage form no. 54 of The Land Regulations

Conclusion

Mortgage has shown above, it is seen to enable people to facilitate economical development for
the lenders and borrowers. What is important is that, there must be proper systems specifically
legal systems that may control all the matters concerning so as to prevent infringing rights of an
individual or unfairness that can be made towards both the lenders, borrowers or mortgagors.
Also after the change that has taken place throughout history of the development of mortgage,
then it is also important to check if there is a need to actual change its functionality or if not to
add for facilitating its effectiveness without disturbing the legal boundaries.

24
CAP 113 R.E. 2019

25
CAP 113 R.E. 2019
BIBLIOGRAPHY

Statute

The Land Act [CAP 113 R.E. 2019]

The Land Regulations 2001

Mortgage Financing Act 2008

The Land(Law of property and conveyancing) ordinance 1970

Case Law

Guaranty Discount Co vs. Credit Finance Ltd (1963) EA 345

Online Material

https://www.encyclopedia.com/social-sciences-and-law/law/law/mortgage

Dictionary
Brayan Garner, (2004), Black’s Law Dictionary 8th Ed