Mortgages

Question 1

Is a mortgage a proprietary right?

Answer 1

Yes

Question 2

How is a mortgage created?

Answer 2

Has to be executed validly by deed and registered

Question 3

What happens if a mortgage fails the formalities of creation (eg by deed and registered?)

Answer 3

Equity will recognise that there is an equitable mortgage, if it is in writing, signed by both parties and contains all the terms

Question 4

What is undue influence?

Answer 4

This is an issue where a mortgage is granted by someone who is not the direct beneficiary, but there is a relationship of trust and confidence. If this situation arises, the parties must seek independent legal advice.

Question 5

What are the rights and dutes of the lender?

Answer 5

1) Right to Possess- this is the power for the lender to possess the property. If there is someone in the property, a court order is needed.

2) power of sale- no court order is required, implied by statute. Has to be sure this right has arisen. If statutory, notice of payment to pay the whole has been served, or interest on arrears then it is exercisable. The sale has to be at market value

Question 6

Which lender gets paid first? (priority)

Answer 6

A legal mortgage (registered as part of creation) will rank ahead of:

1) any subsequently granted mortgages AND

2) any unprotected equitable interests BUT not pre-existing overriding interests

Question 7

What is the position of an equitable mortgage in priority

Answer 7

If an equitable mortgage is protected by a notice on the register, then it will rank ahead of subsequent legal mortgages