POWER OF SALE IN MORTGAGE TRANSACTION.

Power of sale is the power of the mortgagee to sell the mortgage property upon the default of the mortgagor to repay the mortgage loan. The Mortgagor would always prefer to exercise the power of sale over  other remedies available to him such as foreclosure, action on debt, entry into possession and appointment of receiver because it is automatic. However, the extent to which a mortgagee can exercise this right depends largely on whether the mortgage is a legal (statutory) or equitable one created by a deed. S.19 (1) Conveyancing Act (C.A) 1881 and S.123 (1) Property and Conveyancing Law (PCL) 1959; provides that every mortgagee (legal or equitable) whose mortgage is created by deed, may enforce their security when the money become due by sale of the mortgaged property.

Power of sale is divided into two

When power of sale is arisen and when power of sale is exercisable. The two are similar but different from each other. When a power of sale is arisen, a mortgagee will still not have the full right to sell until the power becomes exercisable. When a purchaser buys a mortgage property when the right has not arisen, the sale will be void and the purchaser will not have good root of title. However, when the power of sale has arisen and it is not exercisable yet, the purchase will be treated as mere irregularity that can be waved.

Power of sale will arise when;

1. The mortgage must be by Deed: See K.K. Shoronmu vs. J.A. Dophin XV NLR 87.
2. Date for payment must have expired or instalment fallen due.
3. No agreement against sale must have been made.

READ ALSO: CONTRACT OF SALE

On the other hand Power of sale wilble when

1. Notice requiring payment of the mortgage money has been served on the mortgagor or one of the several mortgagors and default has been made in payment of the mortgage money or any part thereof for three months after such service.
2. Some interest under the mortgage is in arrears and unpaid for two months after becoming due.
3. There has been a beach of some provisions contained in the mortgage deed or in the Act (C.A. and PCL) on the part of the mortgagor or of some person concurring in making the mortgage, to be observed or performed, other than, and besides a covenant for payment of the mortgage or interest thereon.

It must also be noted that the Mortgagee cannot sell to himself or his agent. The mortgagee is not under any duty to obtain the best price for the property, however, sale must be done in good faith. Power of sale exercised by the Mortgagee can be set aside on the following conditions:

1. Where there is collution or corruption in the sale that can amount to fraud
2. Where the property is valued so low that it raises an interference of fraud
3. When the mortgage loan has been fully discharged prior to the sale.
4. When the Mortgagee sells to himself or his agent.

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