Comparison Between Ghanaian and English Mortgage Law
Mortgage law governs the legal relationship between borrowers and lenders in
property financing arrangements. Both Ghanaian and English mortgage laws have
roots in English common law, but significant differences exist due to varying
socio-economic contexts, legislative frameworks, and judicial interpretations.
This comparative analysis highlights key similarities and differences between
the two legal systems while examining how Ghanaian mortgage law relates to the
broader African context.
1. Historical Origins
English Mortgage Law:
English mortgage law is rooted in common law and equity principles.
Historically, mortgages in England were established as absolute conveyances of
land, with the right of redemption allowing the mortgagor (borrower) to reclaim
the property upon repayment of the debt. Over time, equity evolved to ensure
fairness, introducing doctrines such as the equity of redemption.
Ghanaian Mortgage Law:
Ghana’s mortgage law derives from English common law, introduced during
colonial rule. Over the years, Ghana has localized its mortgage laws through
statutes like the Mortgages Act, 1972 (NRCD 96) and the Land
Act, 2020 (Act 1036). These laws incorporate both common law
principles and local adaptations to address Ghana’s unique land tenure system
and socio-economic conditions.
Comparison:
Both systems emphasize the borrower’s right to redeem mortgaged property.
However, Ghanaian mortgage law reflects local adaptations to address challenges
such as customary land ownership and limited access to formal financial
services.
2. Creation and Types of Mortgages
English Mortgage Law:
Mortgages in England can be created either through a legal mortgage (outright
transfer of legal title to the lender) or an equitable mortgage (created by
contract or deposit of title deeds). Legal mortgages are governed by the Law
of Property Act, 1925, which outlines the formalities for creation and
registration.
Ghanaian Mortgage Law:
The Mortgages Act, 1972, recognizes two types of mortgages:
legal and equitable. Legal mortgages involve the formal transfer of an interest
in land, while equitable mortgages can be created through informal agreements
or the deposit of title deeds. The Land Act 2020 emphasizes the
registration of all mortgages to ensure enforceability.
Comparison:
While both jurisdictions recognize legal and equitable mortgages, Ghana’s
reliance on land registration as a mandatory requirement for enforceability
reflects the need to address land tenure complexities and enhance security of
title.
3. Equity of Redemption
English Mortgage Law:
The equity of redemption is a fundamental principle in English mortgage law,
ensuring borrowers can reclaim their property upon repayment of the debt. The
courts strictly enforce this principle, invalidating any contractual provisions
that attempt to clog or fetter the right of redemption.
Ghanaian Mortgage Law:
Ghanaian law also upholds the equity of redemption. The Mortgages Act,
1972, prohibits terms that restrict the borrower’s right to redeem the
mortgaged property. This principle is particularly significant in a system
where informal and customary land transactions are common.
Comparison:
Both legal systems strongly protect the equity of redemption, but in Ghana, its
application often requires navigating the complexities of customary land law,
which may not have direct parallels in England.
4. Foreclosure and Power of Sale
English Mortgage Law:
In England, mortgagees have a statutory power of sale under the Law of
Property Act, 1925, allowing them to sell the mortgaged property
without court intervention if the borrower defaults. However, the mortgagee must
act in good faith and obtain a fair price for the property.
Ghanaian Mortgage Law:
The Mortgages Act, 1972, grants mortgagees the right to
foreclose or sell the property upon default, subject to compliance with
statutory procedures. Unlike in England, Ghana’s system emphasizes judicial
oversight to prevent abuse, although non-judicial foreclosure is also
recognized in certain cases.
Comparison:
Both systems recognize the power of sale, but Ghana’s emphasis on judicial
oversight reflects a precautionary approach to prevent exploitation in a market
with varying levels of financial literacy.
5. Land Tenure and Mortgage Transactions
English Mortgage Law:
In England, land ownership is well documented through a centralized land
registry system. This simplifies mortgage transactions by ensuring clear title
and reducing disputes.
Ghanaian Mortgage Law:
Ghana’s dual land tenure system—comprising customary and statutory land
ownership—creates complexities in mortgage transactions. The Land Act,
2020, seeks to streamline land registration and improve transparency,
but challenges remain in areas where customary ownership dominates.
Comparison:
The clarity and efficiency of England’s land tenure system contrast sharply
with the complexities of Ghana’s dual system. These differences significantly
impact the ease of creating and enforcing mortgages.
6. Consumer Protection and Interest Rates
English Mortgage Law:
England has robust consumer protection laws, including regulations under the Financial
Conduct Authority (FCA) and the Consumer Credit Act, 1974.
These laws regulate interest rates, ensure transparency, and protect borrowers
from predatory lending practices.
Ghanaian Mortgage Law:
Consumer protection in Ghana’s mortgage sector is less developed. High interest
rates and limited access to affordable credit are major barriers for borrowers.
While the Bank of Ghana regulates financial institutions, enforcement of
consumer protection laws remains inconsistent.
Comparison:
Consumer protection is more robust in England, where regulators ensure fair
practices. Ghana’s mortgage sector still faces challenges in affordability and
regulatory enforcement.
7. Judicial Oversight and Dispute Resolution
English Mortgage Law:
Courts in England play a significant role in resolving mortgage disputes,
particularly those involving foreclosure or the equity of redemption. Precedent
from case law ensures consistency and fairness.
Ghanaian Mortgage Law:
Judicial oversight in Ghana is crucial for resolving disputes, particularly
given the complexities of customary land ownership. The courts often intervene
to ensure compliance with statutory and equitable principles.
Comparison:
While both systems rely on judicial oversight, Ghana’s courts often address
additional challenges arising from the interplay between customary and
statutory land systems.
Conclusion
Ghanaian and English mortgage laws share foundational principles rooted in
common law and equity, including the protection of the equity of redemption and
the recognition of legal and equitable mortgages. However, Ghanaian mortgage
law reflects significant adaptations to address local realities such as dual
land tenure systems, high interest rates, and limited financial literacy. By
learning from England’s robust consumer protection framework and efficient land
registration systems, Ghana and other African countries can enhance their
mortgage laws, fostering greater accessibility and fairness in property
financing.
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