Mortgage Act

Provides definitions and meanings of key terms used in the Act (interpretation section).

Defines 'consolidation' and states that rules of equity no longer apply to a mortgage; limits exercise of a right to consolidate so it does not prejudice persons who acquired land before that right is recorded.

Allows variation of mortgage terms: mortgagee may change interest rate by notice (with specified notice content and at least fifteen working days' written notice); amounts, term/currency, and covenants may be varied by a memorandum signed and annexed/endorsed as specified.

A mortgagor who intends to start court action on mortgaged land must notify the mortgagee of the intention and nature of the action; on receipt of that notice a mortgagee may require joinder, take over the action (in which case the mortgagor must stop pursuing it), or take no action; a mortgagee may apply to court for sums awarded as damages to be paid to reduce or discharge the mortgage.

Persons holding land may mortgage their interest (including to secure existing, future or contingent debts); mortgages take effect when registered but unregistered mortgages are enforceable between the parties.

Mortgagees and mortgagors must act honestly and in good faith and must disclose all relevant information about the mortgage; refusal to disclose is an offence punishable by a fine (48–120 currency points) or imprisonment (2–5 years), or both.

An intending mortgagee must take reasonable steps to determine if an intending mortgagor is married and whether the property is a matrimonial home; an intending mortgagor must fully disclose marital status and whether the property is the matrimonial home.

When a matrimonial home is being mortgaged, the mortgagee must ensure a spouse's consent (section 4) is informed and genuine; compliance is deemed if specified explanation or written advice plus a signed witnessed document (or waiver) is obtained. "Independent person" is defined, mortgagee may take additional steps, and false holding out as independent adviser is punishable by fine or imprisonment.

Mortgagors may apply to court to re-open mortgages on customary land after attempting mediation; mortgagees seeking remedies that may dispossess must apply to court after mediation; courts are to be guided by section 32; the section does not apply to community-owned customary land.

Mortgages operate as security only; a mortgagee may exercise powers and remedies subject to the Act; requiring a transfer as a condition is an offence punishable by a fine; in lease mortgages the mortgagee's liability to the lessor is limited.

Mortgages rank by registration order for registered land; the recorder must register customary-tenure mortgages when presented; informal mortgages rank by date and time; a prior mortgagee's repayment right is postponed where a later mortgagee lends as a result of the prior mortgagee's fraud or misrepresentation.

A mortgagee may include terms in a mortgage to allow further advances or credit on a continuing account, subject to this section.

The mortgagee must, at the mortgagor's request and cost and upon payment of all sums and fulfilment of secured obligations (including costs properly incurred by the mortgagee), release the mortgage; clauses attempting to deprive, fetter, or secure an unfair collateral advantage inconsistent with that right are void.

The Registrar of Titles or recorder must enter a release on the original and duplicate certificate of title or certificate of customary ownership when a prescribed-form release, signed and attested and discharging the land wholly or partly, is presented for registration and the prescribed fees are paid.

Where a mortgagee cannot be found the Secretary to the Treasury may receive the mortgage money in trust; registrars must record receipts and the Secretary must deposit and pay out funds on requisition; mortgagors of informal mortgages may apply for discharge and courts may order discharge if obligations are met.

Sets rules for transfer of mortgages: eligible persons may request a transfer in writing; the mortgagee must transfer when requested and paid and must give notice; the mortgagor's consent must not be unreasonably withheld and the court may dispense with consent on appeal.

Lists covenants implied by the mortgagor in every mortgage (unless third‑party mortgage), including payment of principal and interest, payment of rates and taxes, repair and insurance obligations, restrictions on leasing and transfers without the mortgagee's written consent (not to be unreasonably withheld), obligations for lease mortgages, obligations in subsequent mortgages to pay prior charges, and the mortgagee's power to remedy breaches and add costs to the principal provided notice is given.

If a mortgagor defaults the mortgagee may serve a written notice requiring the mortgagor to rectify the default (typically within 45 working days); for non-payment defaults the notice must state the amount and give at least 21 working days to pay; if not rectified the mortgagee may exercise remedies in section 19.

If the mortgagor defaults and does not comply with the notice under section 18, the mortgagee may take several remedies including requiring payment, appointing a receiver, leasing or subleasing, taking possession, or selling the mortgaged land.

The mortgagee may sue for the money secured by the mortgage only in the specific cases listed; the court may order a stay of proceedings on application by the mortgagor or a surety, subject to conditions.

Sets rules for appointment and conduct of a receiver: mortgagee must serve notice (wait 15 working days) and appoint in writing; receiver must apply income in stated priority, may retain costs and commission (not exceeding 5%), may demand and recover income; mortgagee may apply to court; mortgagor generally responsible for receiver's acts unless mortgage says otherwise.

A mortgagee may, unless the mortgage instrument says otherwise and subject to law, grant leases or accept surrenders of leases; before doing so the mortgagee must serve the mortgagor with a prescribed notice and wait fifteen working days. Every lease must reserve the best reasonable rent, be for no more than fifteen years or the mortgage term (whichever is shorter), include reasonable terms protecting mortgagor and others, and, if a receiver was appointed under section 21 prior to granting, declare that appointment. Leases do not bind prior-priority mortgage holders unless they consent.

Mortgagee may enter into and remain in possession after notice; mortgagee in possession can manage the land and take profits but has liabilities and must apply receipts as in section 21(9); certain payments under section 21(9)(c) are not payable to the mortgagee in possession.

A mortgagee must withdraw from possession of mortgaged land in specified circumstances and, after withdrawal, may not re-enter possession except by complying with section 23.

If a mortgagor remains in default after the rectification period under section 18(3), a mortgagee may sell the mortgaged land but must first serve a notice to sell in the prescribed form and must not complete any sale contract until twenty-one working days have passed from service of that notice.

A mortgagee exercising a power of sale must take all reasonable steps to obtain the best price as prescribed in the regulations; the mortgagee is not entitled to compensation or indemnity for liability from breach of that duty.

When a mortgagee is entitled to sell, the mortgagee may sell the whole or part of the land (subject to conditions) and must publicly advertise an auction sale; transfers must be in prescribed form, Registrar accepts the form as evidence, and upon registration the purchaser takes the interest free of certain liabilities.

A purchaser who buys mortgaged land from a mortgagee generally acquires good title unless there is fraud, misrepresentation or other dishonest conduct by the mortgagee of which the purchaser had notice; the purchaser is not liable for misapplication of the purchase money and is not obliged to verify defaults, notices or regularity of the sale; a purchaser harmed by an unauthorised or irregular sale may claim damages against the mortgagee.

Certain persons (including the mortgagee and connected persons) may bid at a public auction but may not purchase the mortgaged land without the court's leave; the court must only grant leave if satisfied the sale is the most advantageous; if the court orders completion the mortgagee must attach the court order to the transfer; a sale in contravention is voidable by the mortgagor.

A mortgagee who has exercised a power of sale must apply the purchase money in a set order of priority; a mortgagee holding proceeds in trust may apply to court for directions and deposit proceeds if ordered.

A mortgagor (or other person entitled) may discharge the mortgage at any time before an agreement for sale by paying all money secured; where that payment is made the mortgagee must deliver a prescribed-form discharge and the title documents.

Certain persons (mortgagor, joint mortgagors, spouse(s), trustee in bankruptcy) may apply to court for relief against mortgagee remedies; making an application is not an admission.

Court may review mortgages obtained through fraud, deceit or misrepresentation by the mortgagor, or mortgages containing an unlawful provision.

Several named persons may apply to the court for powers under section 33; if not all joint mortgagors or mortgagees apply, the application must be served on the others unless the court orders otherwise; applications may be made before discharge or on a mortgagee's possession application.

On an application under section 33 the court may declare a mortgage void, modify its effect, or order repayment; but it shall not declare a mortgage void unless satisfied the circumstances justify it, and where unlawful, unconscionable or extortionate provisions are alleged the court should uphold the mortgage omitting those provisions.

If the Registrar of Titles is satisfied that a mortgagee's right to recover under a mortgage has been extinguished by the Limitation Act, the Registrar must give at least thirty days' notice to the mortgagee and remove the mortgage from the land title, which will be deemed cancelled from the date of removal; the court must grant an order on application by a mortgagee who satisfies the court.

The Registrar of Titles must require the mortgagee (or transferee) to surrender a certificate of title within thirty days; surrendered certificates are to be returned to the mortgagor; and if the mortgagee fails to comply the Registrar must issue a special certificate of title.

Creates offences for impersonation, presenting a false spouse, forgery, purchasing mortgaged property contrary to section 29, a mortgagee selling in breach of section 26(1), and a mortgagee refusing to release a mortgage under section 13; prescribes fines and imprisonment ranges for some offences.

If a mortgagor uses the form in column one of Schedule 2, the mortgage is treated as if the words in column two were inserted and that form is a covenant by the mortgagor to the mortgagee binding successors; exceptions or qualifications added to the first-column form carry over to the second-column form.

The Minister may make regulations (in consultation with the Bank of Uganda) to prescribe matters for carrying the Act into effect, including forms, conduct of mortgage business and auctions, persons to be served with notices, and penalties not exceeding seventy-two currency points or imprisonment up to three years, or both.

The Minister may, by statutory instrument and with the approval of Cabinet, amend Schedule 1 to this Act.

Common law rules and equitable doctrines that apply to mortgages operate according to the Judicature Act unless they are inconsistent with this Act.