islamic law in tz

THE MODER LAW OF MORTGAGES I TAZAIA

THE ROLE OF THE LAD ACT, 1999

by

GEORGE NATHAN MWAISONDOLA

A thesis submitted to the School of Law of the University of Birmingham

for

the degree of Doctor of Philosophy

School of Law

The University of Birmingham

December 2007

University of Birmingham Research Archive

e-theses repository This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.

ABSTRACT

The thesis examines the law of mortgages in Tanzania following the enactment of new

land laws, in particular the Land Act 1999. In the study, we examine the statutory regime

introduced by the Land Act focusing on, among others, what the Act sought to address,

its weakness and achievement.

The study can basically be divided into two main parts. We discuss form of mortgages in

part one and enforcement of mortgages in part two. But we have nine chapters in the text.

Chapter one states the objectives of this work and highlights the research methodology.

We stressed in chapter one that this work is basically a theoretical analysis of the law. In

chapter two, we discuss the sources of land law and the choice of law in regulating

property transactions.

In chapter three, the concept of security in land is examined. Also a general overview of

land tenure and estate is considered in this chapter. In addition, an explanation of the

transferable interests in land both under customary law and granted right of occupancy is

considered. Chapter four provides an analysis of the form of mortgages which were

capable of being created before the enactment of the Land Act, 1999 and in chapter five,

we discuss form of mortgages capable of being created under the Land Act, 1999. In this

chapter, we have also highlighted matters related with the mortgage.

Chapter six provides an investigation of the rights of the parties under a mortgage. In

chapters seven and eight we discuss the enforcement of mortgages. We conclude in

chapter nine.

Focus, hard work and perseverance

ACKOWLEDGEMET

I would like to thank my supervisor Professor Gordon Woodman for his dedication,

guidance and tireless effort to advice me throughout this project. He was always there

during many difficult times. It was a privilege to work with him.

Also, I would like to thank the staffs of the School of Law for their assistance and the

School of Law for financial support. Also, I would like to thank the librarians at the

Harding Law Library for their assistance.

Furthermore, I would like to thank my friends and informants (not in the order of

importance) Ayoub Omary, Gaspar Nyika, Emmanuel Msengezi, Baltazar Mbilinyi and

Fredrick Mkatambo for their advice and assistance in conducting research. Also, I would

like to thank Felix Kibodya, Nziku Silas, Juma Abdul, Martha Maeda, Prosper Nambaya,

Atuganile Ngwala, Ebenezer Mshana and Dr R.W. Tenga for the useful discussion we

had during field research.

Lastly, I would like to thank my relatives for their encouragements, and my parents

Nathan and Enea Mwaisondola for their assistance, encouragement and prayers.

i

COTETS

Table of contents ..i

List of cases ....viii

List of statutes .....xx

List of statutory instruments .........xxiv

Abbreviations ..xxvii

CHAPTER OE: ITRODUCTIO

1.1 Research question to be addressed ....1

1.2 Background to the problem ...5

1.2.1 The changes in political-economic policies and their impact on the

banking business 6

1.2.2 Liberalisation and the deregulation of the banking sector: The change

in borrowing and lending transactions ........10

1.3 Methodology ...14

CHAPTER TWO: SOURCES AD CHOICE OF LAW

2.1 Sources of Tanzania land law.....18

2.1.1 The Constitution ..19

2.1.2 Written laws ....22

2.1.3 Customary law and Islamic law ..24

ii

2.1.4 English law ..30

2.1.5 Indian law ....33

2.2 The role of English common law ......34

2.3 The choice of law to regulate transactions in land ........41

2.4 Creation of the common land law of Tanzania .44

CHAPTER THREE: THE COCEPT OF SECURITY I LAD

3.1 Introduction ...50

3.2 A general overview of land tenure ....54

3.3 Rights in land at common law ...64

3.3.1 Meaning of land at common law .64

3.3.2 The common law doctrine of tenure and estate and its application

in the Country ..69

3.4 Rights in land under customary law ......74

3.4.1 Forms of ownership of land in customary law 74

3.4.2 Transferable interests in land under customary law 80

3.5 Secured interests in land under the granted rights of occupancy ..83

CHAPTER FOUR: FORMS OF MORTGAGE BEFORE THE EACTMET

OF THE LAD ACT, 1999

4.1 General remarks on mortgage ...88

4.2 Mortgage at common law ......91

4.2.1 Legal mortgage ....92

iii

4.2.1.1 Mortgage of freehold ...92

4.2.1.2 Mortgage of leasehold .....96

4.2.2 Equitable mortgage ........100

4.2.2.1 Contract to create a legal mortgage .......100

4.2.2.2 Mortgage by deposit of title deed ......101

4.2.2.3 Mortgage of an equitable interest ..103

4.3 The influence of equity on mortgages .....103

4.3.1 Equity of redemption .....105

4.4 The Forms of mortgages in Tanzania before the enactment of the Land

Act, 1999..........................................................................................................108

4.4.1 Mortgage of right of occupancy and lease ....109

4.4.2 Equitable mortgage ....112

4.4.2.1 Agreement to create a legal mortgage .......112

4.4.2.2 Mortgage by deposit of certificate of title .....113

4.4.2.3 Defect of form ...116

4.5 A comparison between mortgage and charges over land ......116

CHAPTER FIVE: MORTGAGES UDER THE LAD ACT, 1999

5.1 Introduction .....120

5.2 Land administration and land law reforms ..120

5.2.1 The impact of the Land Act, 1999 on the law of property. ...127

5.3 Forms of mortgage under the Land Act, 1999 ......131

5.3.1 Ordinary (formal) mortgage ..132

5.3.2 Informal mortgage .134

iv

5.3.3 Lien by deposit of documents ...135

5.3.4 Customary mortgage .....136

5.3.5 Third party mortgages ...138

5.4 Mortgage of matrimonial home ...140

5.4.1 Mortgage by severance of interest in the matrimonial home ....145

5.4.2 Mortgage of matrimonial home entered by undue influence

or misrepresentation ..150

5.5 The impact of the Court of Appeals decision in Abualy Alibhai Azizi v

Bhatia Brothers Ltd on mortgages ....155

5.6 Salient features of mortgages ....159

5.6.1 The requirements of writing in mortgage ......160

5.6.2 The requirement of consent to mortgage ...164

5.6.3 Registration of mortgage ...171

5.6.3.1 Effect of failure to register a mortgage ......173

5.7 Extinction of the subject matter of the mortgage ......175

5.8 Mortgage of land as a security ..179

CHAPTER SIX: RIGHTS OF PARTIES UDER A MORTGAGE

6.1 Introduction ...183

6.2 Rights of the mortgagor .183

6.2.1 Creation of second and subsequent mortgages ..184

6.2.2 Right of redemption ...187

6.2.2.1 The termination of the equity of redemption .195

6.3 Rights of the mortgagee ....195

v

6.3.1 Right to consolidate ...196

6.3.2 Right to tack ..200

6.4 Variation of mortgages ......202

6.5 Transfer of interests under mortgage .203

6.5.1 Transfer of equity of redemption inter vivos .205

6.5.2 Transfer of the mortgage by the mortgagee ..207

6.5.2.1 A particular instance of transfer by the mortgagee ...209

6.5.2.2 Sub-mortgage ....211

6.5.3 Transfer by operation of the law ...212

6.5.3.1 Devolution by bankruptcy .213

6.5.4 Registration of a transferred mortgage ..214

6.6 Priority of mortgages .215

6.6.1 Priority of the ordinary (formal) mortgages ......216

6.6.2 Priority of informal and other forms of mortgages ...217

6.7 Discharge of mortgage ..220

CHAPTER SEVE: EFORCIG MORTGAGES BY THE MORTGAGEE

7.1 Introduction ...222

7.2 The general impact of the Land (Amendment) Act, 2004 on enforcement of

mortgages ..226

7.3 Effect of enforcing mortgage .228

7.4 Some facts on lending and borrowing and the role of the court in mortgage

enforcement ...229

7.5 Appointment of a receiver .237

vi

7.5.1 Powers and duties of a receiver .239

7.6 Lease of mortgaged land ...242

7.6.1 Classes of properties for which power to grant a lease is subject to prior

conditions ..245

7.7 Action for possession 247

7.7.1 Mortgagee withdrawal