Mortgages in the Registration of Title System

Nature of the Mortgage

All mortgages in Guyana are created by the way of a charge. Section 80 and Form C to the First Schedule indicate that
a mortgage under the Registration of Title system is equivalent to a charge. No specific cases on ROT mortgages discuss
charges; however, it is described in several Roman-Dutch Conveyancing cases (including Ramsamugh v Hand in Hand)
as a movable debt that never becomes the property of the creditor but can only be sold after a previous decision of the
court to realise the proceeds: Ramsamugh v Hand-in-Hand. The right to recover the debt is an action to recover money
and the property as security is subsidiary: Ramsamugh (supra).
Where there is a willing condemnation clause, the mortgagor by the instrument of mortgage consents that a willing and
voluntary condemnation should be decreed and adjudged against him: Dhanraj et al v NBIC. It is, therefore, a judgment
against the land under which the mortgagor admits he is justly and truly indebted to the mortgagee for the sum in the
instruments: Dhanraj et al v NBIC. Upon breach, the mortgagee is entitled to enforce: Ramsamugh (supra). And the
mortgagees have no defence.
In the ROT system, the charge is completed by the preparation and execution of Form C (Memorandum of Mortgage) and
registered by an entry of a memorial on the register: sections 54, 72 and 80.
Preliminary Matters
1. Valuation and Amount to be Lent.

● The Mortgagor must pay for a valuation of the property by a competent valuer appointed by the Mortgagee to
pay for a competent valuer. The resulting value will inform the amount to be lent by the bank.

● Usual conveyancing practice is a loan up to 2/3 of the value so that even if the property decreases in value or
the mortgage debt increases from insurance and repairs, the debt can still be recovered from the sale of the
property.
2. Preliminary Enquiries and Inspection

● The mortgagors must conduct a careful search and inquiry into the property to ensure there are no latent
defects or other issues that would prejudice the mortgagor’s interest.

● He should conduct a section 139 to obtain a certified copy of the Register under section 140 which is
conclusive evidence of all caveats, prohibitions and other registered instruments concerning the property.

● The mortgagee will need to facilitate an inspection of the property by a mortgagee representative.

3. Costs
The usual practice is the bank pays for no part of the procedure and will also charge an additional
commitment fee. So, note that acquiring a mortgage is expensive.
Contents of a ROT Mortgage 🡪 Section 80 and Form C
Under section 80, LRA, a mortgage is made in Form C of the First Schedule. The usual contents and covenants are as
follows:
1. Description of Property:
The relevant property is described by block and parcel number, location, and boundaries.
2. Description of Parties and Covenant to Repay:
The mortgagor (party borrowing the money), the mortgagee and any other relevant party (guarantor—co-
owner who is not borrowing) are described by name and full address. It is a covenant by the mortgagor to pay the
principal sum with interest at the agreed rate on the specified date, to the mortgagee. Default allows the
mortgagee to enforce the security.
3. Prepayment penalty
Equal to a certain percentage that would have been payable in interest if the principal is cleared before the
loan is scheduled to end.
4. Usual Covenants:
Covenants are implied under section 81; however, it is usual for parties to contract out of that and set out
all obligations expressly. Notwithstanding, the implied covenants indicate the usual express covenants, a breach
of which entitles the mortgagee to enforce the security. They include:
a. Rates and taxes
b. Good repair
c. Fire Insurance
d. Reasonable access to the mortgagee to view the property.
e. No Sale or Lease of property without consent.
f. No destruction or demolition without consent
5. Other usual covenants include:
a. Residential Use only
b. Life Assurance
c. Willing condemnation clause: this is considered a judgment permitting the mortgagee to apply for
execution sale if the mortgagor defaults or breaches the covenants: Ramsamugh (supra). If not included,
the mortgagee must sue for payment and enforce the judgment for the suit: Ramsamugh (supra). Service
of notice on default is a courtesy so the mortgagee should ensure to keep abreast of their payments and
inform the mortgagee of any challenges.
6. Execution Clause
The parties to the mortgage must sign the Memorandum in the presence of two subscribing witnesses and
the execution must be indorsed in either of the manners set out in section 152 by the Registrar or any other
specified officer.
7. Registration of the Mortgage
 The executed memorandum must then be registered for the property to be liable as a security for the
money lent subject to the terms of the mortgage: section 64. Registration occurs by a memorial of the mortgage
entered on the register for the property: section 54, LRA.
The Certificate of Title must be produced to the Registrar for the mortgage to be endorsed on it: section
72. Following this, the mortgagee will retain custody of the Certificate.
Enforcement of a Mortgage
Section 88 of the LRA provides that the provisions and practices concerning the enforcement of Roman-Dutch mortgages
equally apply to the enforcement of LRA mortgages.
1. Entitlement to Enforce
Is triggered by default in payment or breach of a covenant. As a courtesy, mortgagees usually send a letter
to the mortgagor indicating they are in default and requiring them to become compliant within a specific time.
The mortgagor may seek to negotiate for an extended period. If they do so and are again in default, the
mortgagee may enforce.
2. Procedure to Enforce:
Application to the Court
a. If a wilful and condemnation clause is included, apply to the court for execution sale order: British
Guiana Electrical v Conrad This clause renders the mortgage a judgment. This is because the mortgage is
a charge, and the mortgagee acquires no interest in the property beyond the right to an action for
recovery: Ramsamugh (supra).
b. If there is no such clause, the mortgagee must sue the debtor for payment of the debt and then the
property is declared executable: Ramsamugh (supra).
Affidavit proving Mortgagor’s Ownership
c. Before requesting the writ, the judgment creditor must deliver to the Registrar of Lands an affidavit
containing evidence that:
i. (i) the mortgage and the order upon which the claim is based (Memorandum of Mortgage No….
of … detailing required payment, Redemption Statement with a summary of payments and Court
order) and
ii. (ii) proof the judgment debtor is the owner of the immovable property or interest (supply original
Certificate of Title in their custody)
d. Registrar will annotate on the Affidavit once satisfied the mortgagor owns the property.
Application for Writ of Sale and Seizure
e. Mortgagor can now request the writ of execution, detailing the title of the action, the date of Judgment,
the order directing the execution and the Affidavit annotated by the Registrar of Lands that the mortgagor
owns the property.
Writ Issued
f. Registrar will issue the writ of seizure and sale by affixing the Registry Seal. They will then hand it to the
Marshall with an indorsement that he is authorised to levy the property to recover the debt. Section 120 of
the LRA requires the writ to be entered on the register.
Levy
g. The Marshall will then levy upon the mortgaged property as the mortgagee can only levy against the
mortgaged property: Hoggs v Butts.
 Advertisement
h. The sale must be advertised by the once publication of an advertisement signed by the Registrar in a
generally-circulated newspaper and the Official Gazette.

Opposition to Execution
1. Right to Oppose

Unsecured creditors whose debt is not included in section 30(b) are entitled to file an opposition: Ramsamugh (supra).
These may include:
a. Parties with registered judgments since there is no system of registered judgments in Guyana.
b. Parties who made a monetary loan to the mortgagors
2. File a Notice of Opposition (Form 48) in the Registry by 3 pm on the fourteenth day.

The Notice with the particulars and requirements of the form, must be filed, including the reasons for opposition: Part 48,
CPAR 2020. This is the only form of opposition applicable to the ROT system. The right expires at the said time.
Failure to oppose after notice will result in the party losing his rights with respect to the sale: Ferreira v Ho.

Sale
i. After a period of 14 days lapse, the Marshall must sell the property by auction. If the property is being
sold for $500,000 or less, the purchaser must pay in full at the time of sale: Part 48, CPAR 2020.
j. If the purchase price exceeds $500,000, the Marshall must sell to the highest bidder, who must pay 25%
of the purchase money required under the Act. $500,000 of that sum must be paid at the time of sale and
the balance paid by manager’s cheque at 3 on the same day. If the highest bidder, fails to pay, the second
highest bidder must pay the full 25% by manager’s cheque by 3 the same day and the remainder of the
purchase price must be paid within 7 days: Part 48, CPAR 2020.
k. After the deposit of 25%, the second highest bidder must pay the balance in 3 equal instalments with
interest at 6% per annum at the expiration of 1, 2 and 3 months respectively from the date of the sale if
the purchase price is $5,000,000 or less.
l. If the purchase price exceeds $5,000,000, the purchaser must pay the balance with interest at 6% per
annum in three equal instalments at the expiration of 2, 4 and 6 months from the date of sale.

NOTE WHAT HAPPENS WHERE THERE ARE NO BUYERS

If the property is unsold for want of buyers, the Marshall must notify the mortgagee within 7 days of the attempt to sell
that the property was not sold and the Registrar will fix a new date for sale and publish an advertisement in a generally-
circulated newspaper: Part 48.

Pay Costs of Execution upon receipt of the full purchase price: Part 48, CPAR 2020.
Retain remaining proceeds for no more than 14 days: Part 48, CPAR 2020.

**the distribution of sale is governed by section 28(b) and 30(b) of the DRA. If there are claims after the mortgage
such as statutory claims (unpaid rates and taxes under the Authority of an Act: s. 2, DRA), registered
incumbrances or interest, they are discharged with the proceeds of the sale in order of priority. Accordingly, after
the payment of the statutory claims (if not brought to the Registrar’s attention), the costs of execution, the
discharge of the mortgage and the payment of any other subsequent registered encumbrances, the residue will go
to the owners of the property.
**consider advertisement opens the sale to the whole of Guyana and anyone may have the opportunity to
purchase. further, the Marshal is required to sell to the highest bidder.

Distribution of the Proceeds of Sale

The Registrar is responsible for the distribution of the proceeds of sale in Guyana.
1. Previous claims run with the sale.
The sale is subject to all statutory claims, registered incumbrances, interests and leases that preceded the registration
of the mortgage (unless presented for registration before the mortgage): section 28(b) and 30(b), DRA.
2. Claims after the mortgage are discharged: section 28(b), DRA.
Statutory claims, registered incumbrances, interests and leases after the sale are discharged.
3. The distribution of proceeds is in accordance with sections 28(b) and 30(b) of the DRA and section 124 of the
LRA.
a. statutory claims. These include unpaid rates or taxes under the Authority of any Act: section 2, DRA. Usually
if they are brought to the attention of the Registrar, they will be made subject to the sale.
b. the costs of the execution (section 30(b), the costs of registering the transfer (section 124, LRA) and the taxed
costs of enforcing the claim.
c. costs for discharging the mortgage including the payment of the discharge fees and any attorney’s drafting
fees.
d. satisfaction of any subsequent registered incumbrances in the order of priority.
e. the residue to any other entitled persons.

Types of Mortgages
1. Fixed-Term Mortgages
A mortgage for a fixed amount for a fixed period, usually for periods up to 15 or 20 years. To borrow
more money on this mortgage, the bank will revaluate the property and place a second mortgage on the property.
2. Demand Mortgages
These allow for advances of money for a specific period, but it is flexible since the mortgagor can apply
for more money during the lifetime of the mortgage. The full amount becomes due on the demand for the
mortgage.
3. Amortised mortgage
A mortgage in which the debt is reduced or paid off with regular payments and varying amounts of
interest and principal payments during the life of the loan.
“demand mortgage upstamped—further advancement” nothing changes except the amount now left to be repaid.