Introduction to mortgages

Question 1

What is a mortgage

Answer 1

A bundle of proprietary rights granted to the lender (the mortgagee) as security for a loan

Question 2

What is a legal mortgage?

Answer 2

A mortgage is capable of being a legal interest in land

To be recognised as a legal interest it must be created with the correct formalities

Question 3

What are the formalities for a legal mortgage

Answer 3

Deed

Registration

Question 4

What are the requirements of the deed formality?

Answer 4

All legal interests must be created by a deed

The deed must be clear on the face of the document that it is intended to be a deed

The deed must be validly executed

The deed must be delivered

Question 5

How do you know if a purpoted grant of a mortgage is legal or equitable?

Answer 5

If granted over a legal estate by the legal owner = capable of being legal interest plus all the formalities complied with

If the borrower only holds an equitable interest in the land or the mortgage is a defective legal mortgage (did not comply with formalities) then there could be an equitable mortgage on facts

Question 6

When can an equitable mortgage arise?

Answer 6

Where a borrower holds an equitable interest in the land eg they are the beneficiary in trust of land any mortgage of that interest will be equitable
- It can be created informally
- mortgage only has to be in writing and signed by the grantor

Mortgage with defective title deed may be registered as an equitable mortgage as a contract to grant a legal mortgage
- has to be in writing, contain all the agreed terms and is signed by both the mortgagor and mortgagee

Question 7

How is a mortgage discharged?

Answer 7

Mortgage entries at the land registry must be cancelled

Mortgage is only considered to be discharged when all references have been removed from the charges register

Question 8

USE FLOW CHART TO REVISE

Answer 8

USE FLOW CHART TO REVISE