A Deed of Gift, a Caution and a Dead Bank Mortgage
Your client, a pension fund, wants to buy a 2.5-hectare site in Abuja for a clinic. The vendor’s root of title is a deed of gift dated 1968 from a village head to the vendor’s father. The deed is registered, but there is no survey plan attached and no certificate of occupancy. The land is now within the Federal Capital Territory. A search at the Lands Registry discloses: (i) a caution registered in 2010 by a man claiming the land belongs to his family; (ii) an unsatisfied mortgage to a defunct bank registered in 1992; (iii) a road setback line shown on the registry’s map that cuts off 0.4 hectares. The vendor says the caution is “just a warning” and the mortgage is “dead” because the bank closed. The vendor offers an indemnity covenant in the deed.
1. Is the 1968 deed of gift a good root of title?
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Issue. A good root of title must be a document that deals with the whole legal and equitable interest and is capable of proving the vendor’s title.
Analysis. A deed of gift can be a root of title, but it is weaker than a conveyance on sale or a mortgage because gifts invite questions about the donor’s capacity, the donee’s acceptance, and whether the donor had any title to give. The 1968 deed is old enough to satisfy the usual “at least 30 years” expectation, but age alone is not enough. There is no survey plan, so the identity and extent of the land are uncertain. There is no certificate of occupancy, which matters in the Federal Capital Territory where statutory allocation and consent are central. The village head’s capacity to make a gift of land that may have been family or community land must be investigated. The deed must also be properly executed, stamped and registered. On the present facts, the root is not a good root: it raises more questions than it answers.
Conclusion. The deed of gift is not a good root of title as it stands. The vendor must supply a survey plan, evidence of the village head’s capacity and the family’s consent, and a certificate of occupancy or a credible chain of statutory allocation.
2. What is the effect of the caution and the unsatisfied mortgage?
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Issue. Both entries affect the marketability of title, though in different ways.
Analysis. A caution is a warning registered against the title. It does not itself create or defeat a title, but it gives notice of a competing claim and may prevent registration of a dealing without the cautioner’s consent or a court order. The vendor’s description of it as “just a warning” is misleading: a buyer cannot safely ignore a claim by a family asserting ownership. The caution must be investigated, and either withdrawn, removed by the Registrar after notice, or litigated. The 1992 mortgage is more serious. A registered mortgage is an encumbrance. The fact that the bank is defunct does not extinguish the debt or the charge. The vendor must produce a discharge, a deed of release, or evidence that the mortgage was assigned or satisfied. An indemnity covenant is only a contractual promise by the vendor; it does not clear the register or bind the bank’s successors.
Conclusion. The caution must be resolved and the mortgage discharged before completion. An indemnity covenant is useful as a fallback but is not a substitute for a clean title.
3. What requisitions and completion steps should the purchaser’s solicitor insist on?
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Issue. The solicitor must convert a doubtful title into a marketable one before the fund parts with money.
Analysis. The solicitor should raise requisitions on: the village head’s capacity and the family’s consent to the 1968 gift; the identity of the cautioner and the basis of the family claim; the original mortgage documents, discharge or release from the defunct bank; the survey plan and the exact setback; and the vendor’s chain of title from 1968 to date. The purchaser should also search the probate registry, the companies registry if the vendor is a company, and the FCT land registry for any statutory allocation. Before completion, the vendor should discharge the mortgage, procure removal of the caution, provide a current survey plan, and obtain any necessary Governor’s consent or FCT allocation. The purchase price should be held in escrow pending registration, and the deed should include warranties, a retention, and a covenant to produce the discharged mortgage. The 0.4-hectare setback should be reflected in the price and in the clinic’s design.
Conclusion. The solicitor should not complete on an indemnity alone. The fund should make completion conditional on a clean search, a discharge, removal of the caution, and a survey that confirms the usable site.