Mortgage
A mortgage on the land title: what must be cleared before you buy
You can’t see a mortgage on the front of a house. You see it on the title. Until it has been removed from the land register, the bank keeps a claim on the property, even after it is sold.
What a registered mortgage is
When an owner borrows money, the bank often takes security over a building: a mortgage (hypothèque). In Cameroon, as in the other OHADA countries, it is governed by the Uniform Act on Secured Transactions. For titled land, the mortgage is entered in the land register, and that entry is what makes it enforceable against everyone.
A mortgage follows the property. If the property is sold before it has been released, the lender can still enforce its claim on the property, now in the hands of the new owner.
“The loan has been repaid” is not enough
That is the answer buyers hear most often. It may be true, but repaying the loan does not erase the registration. Two more things are needed:
- a release (mainlevée), the document in which the lender gives up its security;
- removal of the entry from the land register (radiation), on presentation of that release.
Until the removal shows in the register, the mortgage exists for everyone, the notary included.
When the seller needs the sale price to repay
This is common, and it is not a problem if the sale is set up for it. The price is paid to the notary. The notary pays off the bank from that price, obtains the release, and the entry is removed before the title is transferred to you, or at the same time.
What you should never do: pay the seller directly and trust him to go and settle his loan.
Old mortgages
Some titles still carry mortgages taken out twenty or thirty years ago, sometimes by banks that no longer exist. Nobody is claiming anything any more, but the entry is still there, and a careful notary will refuse to complete the sale as it stands.
These files can be resolved, but not in a few days: you have to establish who holds the debt today, what the law provides for an entry that old, and what the Land Registry will require to remove it. This is a kind of file we know well.
What to ask the seller
Before making an offer, ask whether the property has ever been used as security for a loan, with which bank, and how far repayment has gone. Then have it checked against the register. What counts is what is registered, not what the seller remembers signing.
Have a land title you want checked? Send us a clear photo of it, the property’s location and the seller’s name. We’ll tell you what needs checking and how long it will take.
This article gives general information. It does not replace advice from a notary or a lawyer on your own file.
Manfred Gabriel Njoh
Founder of Henser Group, consultant in Douala since 2011. He follows each file himself, from the first visit to signing at the notary’s office.