News
Witnessing Mortgage Instruments
Thursday, 21 February 2019
Ishmael Tumusiime
"Mortgages "
On the 08 February 2019
in the case of Hon. Justice Anup Singh Choudry v Bank of Baroda, Justice
Richard Wejuli Wabwire of the High Court of Uganda (Commercial Division)
clarified and restated the law on execution of mortgage documents before bank
officials.
The Practice
More often than not,
mortgages and other security documents are attested/witnessed by credit
managers or other relationship managers.
The Law
The Registration of
Titles Act Cap 230 mandates only a bank
manager to attest/witness mortgage instruments on behalf of the Mortgagor.
Court Position
Only a mortgagor’s bank
managers or bank branch managers are competent to attest/witness signatures on
a Mortgage Deed.
A ‘bank manager’ for purposes of witnessing mortgages is one who is
vested with oversight responsibility over an institution or a branch thereof,
but not an official only clothed with functional responsibility for instance a
credit manager.
What banks must do to comply with the law
1. Mortgage Instruments must be attested/ witnessed
only by Bank Managers/Branch Managers. The law excludes any other bank
officials from this duty.
2. The mortgage documents must contain a “Certificate
of Attesting Witness”. It is to the effect that the mortgage instrument was
read over to the person who signed it and he/she appeared fully to have
understood it.
3. Names and capacities of individuals executing/witnessing
the mortgage instruments must be legible and identifiable with those persons. Simply
scribbling signatures without disclosing names or capacity in which one
witnessed the documents invalidates a mortgage instrument. In its final
decision however, court refused to nullify the transaction on account that the
mortgagee/Plaintiff had actually obtained benefit out of the mortgage hence he
could not be permitted to turn around and disclaim the liabilities imposed by
the same mortgage.
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