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Land Law - > Chapter 9: Mortgages > Flashcards

Chapter 9: Mortgages Flashcards

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1
Q

Who is the mortgagor?

A

The borrower

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2
Q

Who is the mortgagee?

A

The lender

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3
Q

How must a legal mortgage be made?

A

A legal mortgage must be made by deed

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4
Q

How can an equitable mortgage be created?

A
  • Parties agree mortgage is to take effect in equity only
  • An unsuccessful attempt is made to create a legal mortgage
  • Borrower only holds equitable interest in property
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5
Q

A contract to create a legal mortgage gives rise to an equitable mortgage from what time?

A

Date of the contract

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6
Q

Does an equitable mortgage need to be by deed?

A

No, but it must be in writing and signed by mortgagor or their agent

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7
Q

How is a legal mortgage of registered land protected?

A
  • A legal mortgage must be completed by registration
  • Once registered, the mortgagee / lender has priority over competing interests (unless they are protected on the register as overriding interests)
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8
Q

How is an equitable mortgage of registered land protected?

A

Equitabe mortgages of registered land are protected by placing a notice on the property’s register of title

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9
Q

How is a legal mortgage of unregistered land protected?

A
  • If land is unregistered, the first legal mortgage is protected by the deposit of title deeds
  • A second legal mortgage is protected by registration of a C(i) land charge against the name of the mortgagor (borrower)
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10
Q

How is an equitable mortgage of unregistered land protected?

A

By registration of a class C (iii) land charge against the mortgagor’s name.

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11
Q

What is required if the equitable mortgage is over an equitable interest, e.g. a beneficiary’s interest under a trust?

A

Mortgagee should give notice to the trustees

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12
Q

There is usually an imbalance of bargaining power between mortgagor/borrower and the mortgagee/lender. How may the Courts respond to an imbalance of power?

A

The Court may intervene and strike down particular clauses in a mortgage to protect the borrower

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13
Q

What is the right to redeem the property?

A

The right to pay off the loan in full and regain rights over the property from the mortgagee / lender

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14
Q

What is the redemption date?

A
  • The earliest date upon which the loan can be repaid in full and the property redeemed
  • Usually six months after the start of mortgage
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15
Q

What will happen if a term postponing the right to redeem is illusory?

A

A term postponing the right to redeem will be void if it renders the right to redeem illusory

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16
Q

What is the repayment period?

A

The longest time that can be taken to pay off the mortgage in full

17
Q

Can a mortgage clause purport to give the mortgagee/lender the right to purchase the mortgage estate?

A

No, a clause purporting to give the mortgagee/lender the right to purchase the mortgaged estate will be void

Such a clause would conflict with the borrower’s right to redeem

18
Q

What is a collateral advantage in a mortgage agreement?

A
  • An additional advantage aside from the repayment of the loan
  • E.g. the borrower agreeing to sell only the lender’s petrol
19
Q

Are collateral advantages void?

A
  • A collateral advantage is not void in itself provided that they do not fetter the borrower’s right to redeem the property
  • Collateral advantages are usually void if they extend beyond the date of redemption
20
Q

What is an unconscionable term in a mortgage?

A
  • A term which is morally reprehensible or improper and unreasonable in light of all the circumstances
  • The Court will void an unconscionable mortgage term
21
Q

Which third-party interests will a mortgage be subject to?

A
  • Legal tenancy of unregistered land granted before the mortgage was created
  • A legal tenancy of registered land not exceeding seven years
  • Equitable tenancy of unregistered land which has been protected as an estate contract by registration of a C(iv) land charge
  • The interest of an occupier who doesn’t own the property, but has contributed to the purchase price
  • An equitable tenancy of registered land that does not exceed seven years and the tenant is in occupation
22
Q

What is required where an institution is lending money secured by co-owned property, but the proceeds are to be used by only one of the co-owners for a separate purpose?

A

Other co-owner must be:

  • Separately represented by another solicitor, and
  • Given full financial information
23
Q

Which 5 remedies are available for a mortgagee / lender when a borrower defaults on their legal mortgage?

A
  1. Sue for debt
  2. Take possession
  3. Foreclose
  4. Sell
  5. Appoint a receiver
24
Q

Whilst a mortgagee/lender can usually always take possession, the presence of what on the land adds an additional requirement, and what is this step?

A

If there is a dwelling on the land, possession can only be sought through the Courts

25
Q

What is foreclosure?

A
  • Extinguishes the right to redeem
  • Mortgagee (lender) becomes owner of property
  • Requires a Court order in order to transfer the legal estate from the borrower to the lender
26
Q

Only when will the right to foreclose arise?

A

Contractual date set to redeem the mortgage has passed (usually six months after creation)

27
Q

Does the mortgagee have a right to sell a mortgaged property if the mortgagor has defaulted on their legal mortgage?

A

Yes, the mortgagee has a right to sell the mortgaged property without the need to apply to a court provided that the contractual date set to redeem the mortgage has passed (usually six months after the mortgage was created)

28
Q

When will the power of sale become exercisable?

A

If one or more of the following are satisfied:

  1. Interest payments are more than two months in arrears
  2. There has been a written request for repayment of the capital and three months have passed without payment
  3. There is a breach of another term of the mortgage

If one or more of the conditions met, the right to sell automatically arises

29
Q

What is the right to appoint a receiver as agent of mortgagor?

A
  • The receiver acts as agent for mortgagor
  • Agent can manage or sell property
  • More often used in commercial mortgages
30
Q

Which 5 remedies are available for a mortgagee / lender when a borrower defaults on their legal mortgage?

A
  1. Sue for debt
  2. Take possession
  3. Foreclose
  4. Sell (but no power to convey or transfer the legal estate)
  5. Appoint a receiver (only arises if mortgage made by deed, otherwise application must be made to Court)
31
Q

What two things will have priority over a properly registered legal mortgage in the registered system?

A
  1. Charge registered before it, and
  2. Overriding interest if it existed before it
32
Q

If there is an equitable mortgage of registered legal estate and it has been protected by placing a notice or restriction on the property’s register of title, what will the equitable mortgage have priority over?

A

The equitable mortgage will have priority over any later dealings of the legal estate (even later legal mortgages)

33
Q

In the unregistered system, which legal mortgage will have priority?

A

Whichever one is protected by deposit of the title deeds with the lender

34
Q

For all legal mortgages in the unregistered system other than the first protected by the title deeds, what is the main factor in determining priority?

A

The date of registration as a legal charge

35
Q

In the unregistered system, how should (1) a legal mortgage not protected by deposit of title deeds and (2) an equitable mortgage be protected?

A

Legal mortgage: Class C(i) puisne mortgage land charge

Equitable mortgage: Class C(iii) general equitable interest land charge

36
Q

What is postponement?

A

Process whereby lenders agree between themselves to vary the priority of their respective charges

37
Q

If a borrower defaults on their mortgage and the mortgage does not contain an express mention of the lender’s right to take possession of the property, is repossession possible?

A

Yes, a lender is entitled to possession of the property from the date that the mortgage is executed even if the mortgage agreement does not expressly mention this right

Land Law - (9 decks)

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