Chattel Mortgage (Nigeria)
CHATTEL MORTGAGE DEED
Bills of Sale Act Cap B5 LFN 2004 | CAMA 2020, Section 208 | Stamp Duties Act Cap S8 LFN 2004
This Chattel Mortgage Deed ("Deed") is made on [Effective Date] between:
(1) [Mortgagor Name] (TIN: [Mortgagor TIN]; RC No.: [Mortgagor RC Number]), of [Mortgagor Address] (hereinafter the "Mortgagor"); and
(2) [Mortgagee Name], of [Mortgagee Address] (hereinafter the "Mortgagee").
RECITALS
A. The Mortgagor has applied to the Mortgagee for a loan of [Loan Amount] for the purpose of [Loan Purpose].
B. As security for repayment of the loan and all interest and charges thereon, the Mortgagor has agreed to mortgage the chattel described herein in favour of the Mortgagee.
1. MORTGAGED CHATTEL
1.1 The Mortgagor hereby mortgages to the Mortgagee, as security for repayment of all sums due under this Deed, the following chattel (the "Chattel"):
[Chattel Description]
Current estimated value: [Chattel Value]
1.2 The Mortgagor warrants that the Mortgagor is the sole legal owner of the Chattel, that the Chattel is free from any prior mortgage, charge, or encumbrance, and that the Mortgagor has full power to mortgage the Chattel under this Deed.
2. LOAN AND REPAYMENT
2.1 The Mortgagee agrees to advance to the Mortgagor the sum of [Loan Amount] (the "Loan") subject to the terms of this Deed.
2.2 The Loan shall bear interest at the rate of [Interest Rate] calculated on the reducing balance.
2.3 The Mortgagor shall repay the Loan together with accrued interest as follows: [Repayment Schedule].
2.4 All payments shall be made in Nigerian Naira (NGN) to the Mortgagee's designated account, free of any deduction or withholding.
3. COVENANTS BY MORTGAGOR
3.1 The Mortgagor covenants that during the subsistence of this Deed, the Mortgagor shall: (a) maintain the Chattel in good repair and condition; (b) keep the Chattel comprehensively insured for not less than its replacement value with a reputable insurer and provide evidence of insurance to the Mortgagee on request; (c) not sell, transfer, assign, further mortgage, pledge, or otherwise dispose of the Chattel without the prior written consent of the Mortgagee; (d) not remove the Chattel from Nigeria without the prior written consent of the Mortgagee; and (e) allow the Mortgagee or its agents to inspect the Chattel upon 48 hours' written notice.
3.2 Where the Mortgagor is a company, the Mortgagor shall procure the registration of this Deed as a charge with the Corporate Affairs Commission (CAC) under Section 208 of the Companies and Allied Matters Act 2020 within 90 days of the date of this Deed.
4. DEFAULT AND REMEDIES
4.1 Each of the following shall constitute an event of default: [Default Events].
4.2 Upon the occurrence of an event of default, the Mortgagee may, without prejudice to any other remedy: (a) declare the entire outstanding Loan balance immediately due and payable; (b) seize and take possession of the Chattel; (c) sell the Chattel by public auction or private treaty at the best price reasonably obtainable; (d) appoint a receiver over the Chattel; and (e) sue for any deficiency balance remaining after application of sale proceeds.
4.3 The Mortgagee shall not be liable to the Mortgagor for any loss arising from a sale of the Chattel in good faith at market value.
5. STAMP DUTY AND REGISTRATION
5.1 This Deed shall be duly stamped by the Federal Inland Revenue Service (FIRS) or the relevant State Internal Revenue Service under the Stamp Duties Act Cap S8 LFN 2004 prior to or immediately after execution.
5.2 The cost of stamping and, where applicable, registration with the Corporate Affairs Commission (CAC) shall be borne by the Mortgagor.
6. DISCHARGE
6.1 Upon full repayment of the Loan and all interest and charges, the Mortgagee shall, within 14 days of written request by the Mortgagor, execute a Deed of Discharge releasing the Chattel from this mortgage and (where applicable) file a Memorandum of Satisfaction with the Corporate Affairs Commission.
7. GENERAL
7.1 This Deed is governed by the laws of the Federal Republic of Nigeria. Disputes shall be resolved by the courts of [Governing State].
7.2 This Deed constitutes the entire agreement between the parties regarding the security over the Chattel.
7.3 Any amendment to this Deed must be in writing and signed by both parties.
Mortgagor
________________
Signature
Mortgagee
________________
Signature
What Is a Chattel Mortgage (Nigeria)?
A Chattel Mortgage in Nigeria sets out the chattel mortgage and the obligations it places on the parties.
In Nigeria, chattel mortgages derive their legal foundation from the common law principles of personal property security, the Bills of Sale Act Cap B5 Laws of the Federation of Nigeria 2004 (which governs written security instruments over personal property), and the Companies and Allied Matters Act 2020 (CAMA 2020) where the mortgagor is a corporate entity. Under CAMA 2020, Section 208, a charge created by a company over its property — including movable assets — must be registered with the Corporate Affairs Commission (CAC) within 90 days of creation, failing which the charge is void against a liquidator and any creditor of the company.
The Mortgage Institutions Act Cap M19 LFN 2004 regulates institutions that grant mortgage finance in Nigeria, including chattel mortgages issued by licensed mortgage banks. The Central Bank of Nigeria (CBN) exercises regulatory oversight over mortgage institutions under the CBN Act 2007 and CBN Prudential Guidelines.
A chattel mortgage differs from a pledge in that the mortgagor retains possession of the chattel during the loan period, whereas in a pledge the creditor takes possession. A chattel mortgage also differs from a hire purchase arrangement under the Hire Purchase Act Cap H4 LFN 2004, where the hirer does not obtain title until all instalments are paid. Under a chattel mortgage, the mortgagor typically retains both possession and legal title, with the mortgagee holding an equitable security interest that crystallises on default.
Stamp duty on chattel mortgage instruments is assessed under the Stamp Duties Act Cap S8 LFN 2004 (as amended by the Finance Act 2020), administered by the Federal Inland Revenue Service (FIRS) for instruments executed between companies and by State Internal Revenue Services for instruments between individuals.
The legal framework governing the Chattel Mortgage (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Chattel Mortgage (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Secured Transactions in Movable Assets Act 2017 sets the foundational requirements.
When Do You Need a Chattel Mortgage (Nigeria)?
A Nigeria Chattel Mortgage is required whenever a borrower uses movable personal property as collateral security for a loan or credit facility, and the parties wish to create a formal, enforceable security interest documented in writing.
Individuals and businesses obtaining vehicle financing from Nigerian commercial banks, microfinance banks, or licensed finance companies need a chattel mortgage to secure the lender's interest in the vehicle. Without this instrument, the lender has no documented security over the asset.
Manufacturing and industrial companies borrowing working capital against their plant, machinery, and equipment require a chattel mortgage to pledge those assets as collateral. The instrument must be registered under CAMA 2020, Section 208 with the CAC within 90 days to be effective against third parties and in insolvency.
Agricultural businesses borrowing from the Bank of Agriculture or commercial agricultural lenders may use a chattel mortgage over livestock, farm equipment, and harvested produce to secure seasonal credit facilities.
Microfinance banks and cooperative lending institutions providing small business loans against movable business assets — such as generating sets, shop inventory, or trade equipment — require a chattel mortgage to document and perfect their security interest.
Where a company creates a floating charge over its entire undertaking (including movable assets) under CAMA 2020, a specific chattel mortgage over identified assets provides additional fixed-charge security ranked ahead of general floating charge holders in a liquidation under the Insolvency Act 2022.
Parties in Nigeria should prepare a Chattel Mortgage (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Chattel Mortgage (Nigeria)
A Nigeria Chattel Mortgage must contain the following key elements to be legally effective and enforceable.
Party Identification: Full legal names, addresses, and identity details of both mortgagor and mortgagee. For corporate parties, include the CAC registration number (RC number) issued under CAMA 2020 and the Tax Identification Number (TIN) issued by the Federal Inland Revenue Service (FIRS).
Description of Chattel: Precise identification of the mortgaged asset, including make, model, serial number, chassis number (for vehicles), registration details, and current estimated value. An imprecise description may render the mortgage void for uncertainty under Nigerian common law.
Loan Amount and Terms: The principal amount in Nigerian Naira (NGN), applicable interest rate (noting CBN guidelines on maximum lending rates), repayment schedule, and total amount repayable.
Security Interest Grant: Clear language granting the mortgagee a security interest over the chattel, specifying that the mortgagor retains possession but the mortgagee holds the security interest until discharge.
Covenants by Mortgagor: Obligations to maintain and insure the asset, not to dispose of or further encumber the chattel without consent, and to allow inspection by the mortgagee.
Default and Remedies: Definition of default events and the mortgagee's remedies on default — including right of seizure and sale of the chattel, appointment of a receiver, and right to claim any deficiency balance after sale.
CAC Registration: For corporate mortgagors, a clause confirming the mortgagee's right to register the charge with the Corporate Affairs Commission under CAMA 2020, Section 208 within 90 days.
Stamp Duty: Acknowledgement that the instrument will be stamped by the Federal Inland Revenue Service (FIRS) or the relevant State Internal Revenue Service under the Stamp Duties Act Cap S8 LFN 2004.
Discharge: The obligation on the mortgagee to execute a deed of discharge and (where applicable) file a memorandum of satisfaction with the CAC upon full repayment.
Governing Law: The laws of the Federal Republic of Nigeria, with specified state jurisdiction for dispute resolution.
Additional compliance elements for a Chattel Mortgage (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
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title = {Chattel Mortgage (Nigeria) (Nigeria)},
year = {2026},
howpublished = {\url{https://forms-legal.com/nigeria/financial/agreements/chattel-mortgage-nigeria}},
note = {Free legal document template. Based on Secured Transactions in Movable Assets Act 2017}
}Also available for these jurisdictions:
Frequently Asked Questions
A chattel mortgage is legally enforceable in Nigeria provided it meets the requirements of a valid contract under the Contracts Act (applicable common law principles), is properly documented in writing, stamped under the Stamp Duties Act Cap S8 LFN 2004, and — where the mortgagor is a company — registered with the Corporate Affairs Commission (CAC) under CAMA 2020, Section 208 within 90 days of creation. Failure to register a charge created by a company renders it void against a liquidator and any creditor of the company, though it remains valid as between the parties themselves. Nigerian courts, including the Court of Appeal and the Supreme Court of Nigeria, have consistently upheld properly constituted chattel mortgages as valid security instruments, provided the description of the charged asset is sufficiently precise and the agreement is not tainted by unconscionable terms.
Registration requirements for a chattel mortgage in Nigeria depend on who the mortgagor is. Where the mortgagor is a company incorporated under CAMA 2020, the charge must be registered with the Corporate Affairs Commission (CAC) under Section 208 of CAMA 2020 within 90 days of the date of creation. The CAC maintains a register of charges, and a search of this register provides constructive notice to third parties. Where the mortgagor is an individual, registration is not mandated by a single national statute, though some states require registration of bills of sale instruments. In both cases, the instrument must be stamped by the Federal Inland Revenue Service (FIRS) or the relevant State Internal Revenue Service under the Stamp Duties Act Cap S8 LFN 2004 to be admissible in evidence in Nigerian courts.
On default by the mortgagor under a Nigeria chattel mortgage, the mortgagee has several remedies available under Nigerian law. The primary remedy is the right to seize and sell the mortgaged chattel — this right of self-help is recognised in Nigeria, though the mortgagee must exercise it without breach of the peace. The mortgagee may also appoint a receiver over the chattel under the terms of the mortgage deed. Where the proceeds of sale are insufficient to cover the outstanding debt, the mortgagee may sue for the deficiency balance as an unsecured creditor. For corporate mortgagors, the mortgagee holding a registered fixed charge may appoint an administrative receiver under the Insolvency Act 2022. The mortgagee may also apply to the Federal High Court or the relevant State High Court for a court-ordered sale or for a declaration of entitlement to the chattel.
Stamp duty on chattel mortgage instruments in Nigeria is governed by the Stamp Duties Act Cap S8 LFN 2004 as amended by the Finance Act 2020. The applicable rate for a mortgage or charge instrument is 0.125% of the loan amount (or such rate as currently prescribed by the FIRS), administered by the Federal Inland Revenue Service (FIRS) for instruments involving a corporate party and by the relevant State Internal Revenue Service for instruments between individuals only. An unstamped or insufficiently stamped instrument is not admissible in evidence in any proceedings in Nigeria under Section 22 of the Stamp Duties Act. Stamping should be completed promptly after execution to avoid penalties for late stamping. Under Nigeria law, the Secured Transactions in Movable Assets Act 2017, parties should seek independent legal advice from a qualified lawyer to confirm compliance with all applicable requirements. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.
A chattel mortgage and a hire purchase agreement are both security instruments over movable property in Nigeria, but they differ fundamentally in structure. Under a chattel mortgage, the mortgagor owns the asset outright and grants a security interest over it to the mortgagee as collateral for a loan; the mortgagor retains possession and continues to use the asset throughout the loan period. Under a hire purchase agreement governed by the Hire Purchase Act Cap H4 LFN 2004, the owner (finance company) retains legal title to the asset and the hirer pays instalments with an option to purchase; title passes to the hirer only on payment of the final instalment and option fee. A hire purchase creditor therefore holds stronger security because it retains title, while a chattel mortgagee holds a security interest over an asset owned by the mortgagor.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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