Document background
The Bailee Letter Mortgage is a crucial document in Nigerian secured lending practices, particularly used when valuable assets forming security are held by a third party. This arrangement is common in trade finance, warehouse financing, and industrial storage scenarios where physical assets need to remain with a custodian while serving as security. The document complies with Nigerian federal and state legislation, including the Secured Transactions in Movable Assets Act 2017 and relevant property laws. It establishes the bailee's acknowledgment of the security interest and their agreement to hold the assets to the mortgagee's order, creating an effective security interest without disturbing the commercial arrangement of third-party storage or handling. The letter typically includes detailed provisions about asset handling, release conditions, and the bailee's obligations, making it essential for secured financing transactions where assets remain in third-party custody.
