Realizing A Mortgaged Property without a Mortgage Deed – Insights from the Borrowers & Lenders Act, 2020

Introduction

The introduction of the Borrowers and Lenders Act, 2020 (Act 1052) marked a significant shift in Ghana’s legal framework governing secured credit transactions. One of its more innovative features is the streamlined process for realizing security interests, particularly without reference to court action.

Yet, despite its clarity in certain respects, Act 1052 still leaves unanswered questions. A recent matter before the High Court[1] raised a core issue under this regime: where a lender seeks to realize a security interest over landed property in circumstances where a new facility has been advanced but no new security instrument (mortgage deed) is executed.

Realization of Securities Without Court Action – Section 64 in Context

Before diving into the case itself, it helps to understand that under Act 1052, lenders have the right to realize a security interest without initiating court proceedings. 

However, a lender who wants to enforce a registered security interest without going to court must first file a notice of intention with the Collateral Registry of the Bank of Ghana. Once all legal requirements are met, the Registrar will issue a ‘Memorandum of No Objection’ to certify the realization process.

Section 64 becomes relevant where possession cannot be taken peaceably. It provides:

“(1) Where a lender is unable to enforce a right of possession in a peaceable manner, the lender may upon a warrant issued by a court use the services of the police to 

(a) remove the collateral; or 

(b) evict the borrower where the collateral is immovable property, subject to the rights of third parties or other persons in possession of the collateral.”

This provision is part of a broader legislative scheme aimed at enhancing the enforcement rights of secured creditors while avoiding the delays and costs associated with full-scale litigation. 

The Role of the Court in Section 64 Applications

It is critical to note that section 64 proceedings are not intended to be mini-trials on the recovery, enforceability or validity of debt. Rather, they are administrative enforcement mechanisms available to a creditor who has already established a right to possess the secured property but cannot do so peaceably. In such proceedings, the court’s primary inquiry should be limited to whether:

• A valid security interest exists;
• The borrower has defaulted; and
• Peaceful possession has been obstructed.

Questions surrounding the propriety of the security or the quantum of the debt, unless plainly defective on the face of the application, are best reserved for a substantive trial. Accordingly, under section 64(2), where the lender applies to court for a warrant to evict the borrower (or anyone else in possession), the defences available to the borrower include him leading evidence to show that the:

1. full payment of the amount owed has been made
2. the default has been cured; or
3. the default has not occurred.

The Facts and the Legal Dispute

Now to the case under discussion, the bank had previously executed a legal mortgage over the borrower’s landed property in connection with an earlier facility. The borrower later benefited from subsequent loans under separate facility agreements, without executing fresh mortgage deeds. When the borrower defaulted under the latest facility[2] and resisted peaceful recovery, the bank applied for police warrant under section 64, relying on the existing registered mortgage as security.

The borrower opposed the application, arguing that the mortgage was not linked to the most recent facility in default and that, in the absence of a new mortgage deed specific to that facility, enforcement could not lawfully proceed.

The Commercial Practice: Continuing Mortgages/Securities

In the banking sector, it is commonplace for lenders to rely on existing security interests to secure not only current but also future or subsequent obligations of the borrower. Such reliance is typically underpinned by “all-monies” clauses in the security instrument and facility agreements.

These clauses express the parties' intention that the security is to cover all present and future indebtedness of the borrower to the lender, without the need for a new deed with each facility. The economic and commercial rationale is compelling: re-registering security instruments for recurring facilities creates avoidable cost, delay, and administrative burden for both banks and borrowers.

Thus, in practice, a single mortgage may serve as continuing security for multiple credit facilities over a borrower’s lifecycle. The borrower and lender often intend for the original security to cover all present and future indebtedness. From a practical standpoint, it reduces transaction costs, speeds up loan disbursement, and avoids duplicative registration processes.

The Legal Position: Is a Fresh Deed a Legal Necessity?

The Respondent (borrower) in this case argued strongly that the Applicant (the Bank) could not take possession of the mortgaged property because no deed of mortgage existed in respect of the most recent facility in default, and that such a deed was required to ground the application for a police warrant. The Applicant bank, however, maintained that its application was not brought under the Mortgages Act, 1972 (NRCD 54), which necessarily requires the existence of a deed of mortgage, but rather under the Borrowers and Lenders Act, 2008 (Act 773), which provides a distinct statutory framework for the realization of security.

In support, the Applicant referred to HFC Bank Ghana Ltd V. Oga Flodela Company Ltd[3]where the court observed that Parliament deliberately distinguished the two pieces of legislation, even though both aim to protect the rights of lenders, borrowers, and guarantors.

His Lordship after discussing the above case concluded as follows:

“My own understanding of the issues as stake is that there are two pieces of legislation both touching the procedure for the realization of security used the as collateral to secure a credit facility from a financial institution:

1. Under the Mortgages Act, 1972 (NRCD 54), there must necessarily be existence a deed of mortgage which must have been duly registered and stamped as an instrument that requires registration and 
2. Under the Borrowers and Lenders Act, 2020 (Act 1052), there must be a security which must be registered with the Collateral Registry of the Bank of Ghana.
3. If a [Lender] wants to realize its mortgaged security under NRCD 54, it must first go to court to get a judgment to do so
4. But if a [Lender] wants to realize its security under Act 1052, it may or may not go to court at all to secure a judgment to do so; he may take the security peaceably and that it is only when the borrower fears that it cannot peaceably realize the security, (as in this case) that it will then go to court.”

At another part of the judgment, His Lordship further stated

“...I am satisfied that the Application before this court is under the auspices of act 1052 and does not necessarily require the existence of registered mortgage deed as a condition precedent for its grant.”

What the court’s reasoning shows is that under Act 1052, where a lender seeks to realize a security interest in a collateral in circumstances where a new facility has been advanced but no new security instrument was executed, what matters is that a valid and enforceable security interest exist—properly created and registered in accordance with the law.

Provided these requirements are met, and there is no evidence of the security being extinguished or discharged, the security can lawfully be realized under the Act either without going to court or, where peaceful enforcement is not possible, by applying for a police warrant.

Implications for Lenders and Practitioners

This case serves as a wake-up call for financial institutions, lawyers, and other officers dealing with secured credit enforcement to:

1. Document Intention Clearly: Facility letters and security instruments like mortgage deeds should expressly state that the security is to apply to all present and future obligations.
2. Cross-reference Existing Securities: Each new facility agreement should refer to the existing security and reiterate that it continues to secure the borrower’s indebtedness.
3. Register Variations Where Necessary: While not always required, material changes to facility terms and security instrument should be reflected through registration of addenda or supplemental charges to avoid challenges.

Conclusion

The decision in this case, although not yet appellate authority, contributes to an emerging body of practice on the enforcement of security interests under Act 1052. It reinforces the need for Ghanaian courts to interpret enforcement provisions in ways that align with commercial realities. Requiring a new mortgage deed for every facility where a continuing mortgage already exists would inject unnecessary rigidity into our credit market and erode legal certainty.

Going forward, it is hoped that further judicial clarification, especially from the apex court, will strengthen the legal framework governing secured transaction. This will not only give lenders greater certainty but also build borrower confidence, creating a fair and predictable credit environment in the country.

[1]First National Bank Ltd. V. Racy Ventures (Suit No.LD/0180/2025) High Court, Accra (Land Division 6)

[2] The borrower had also defaulted on the earlier facilities, prompting the Bank to call in all outstanding facilities

[3] (2017) JELR 63984 (HC)