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Land Law > Mortgages > Flashcards

Mortgages Flashcards

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1
Q

What are the formalities of a legal mortgage?

A
  • created by deed
  • clear on face intended to be deed
  • validly executed
  • delivered
  • registered at land registry
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2
Q

What is the effect if a legal mortgage is not registered at the land registry?

A

Not legal mortgage but may be equitable mortgage

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3
Q

How may an equitable mortgage arise?

A
  • Mortgage of equitable interest
  • Defective legal mortgage
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4
Q

What formalities need to be met for there to be an equitable mortgage where the borrower only holds an equitable interst in the land?

A
  • in writing
  • signed by guarantor
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5
Q

What formalities need to be met for there to be an equitable mortgage where there is a defective legal mortgage?

A
  • in writing
  • contain all agreed terms
  • signed by mortgagor and mortgagee
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6
Q

When is a mortgage considered fully discharged?

A

Removed from charges register at land registry

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7
Q

What are the discharge of mortgage forms and their use?

A
  • DS1: mortgage over whole of land
  • DS3: mortgage over part of land
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8
Q

What is the equity of redemption?

A
  • Equitable right to redeem
  • No postponement or prevention of redemption
  • No collateral advantages
  • No unconscionable terms
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9
Q

What is the equitable right to redeem?

A

allows borrower to repay loan any time after legal date for redemption has passed

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10
Q

What is the legal date for redemption?

A

The first day that the loan can be repaid

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11
Q

When will the courts allow postponement of the legal date for redemption?

A

No clog or fetter on equity of redemption

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12
Q

When are the courts more likely to consider postponement of the legal date for redemption as being a clog/fetter on the equity of redemption?

A

Leasehold property

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13
Q

When may the courts not declare a lender’s option to purchase as void?

A
  • Granted in subsequent transaction independent to mortgage
  • Granted same day but completely separate
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14
Q

What is a solus tie?

A

condition that borrower buys all its supplies from lender

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15
Q

When will a solus tie be upheld?

A

Commercial transaction where it ends during the mortgage term

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16
Q

What is likely to be an important factor when considering whether a term of a mortgage is unconscionable?

A

imbalance of bargaining power

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17
Q

What are the principles to consider where it is argued that a high interest rate is an unconscionable term?

A
  • penalty interest rate for default exceeds lender’s losses = void
  • Can have higher interest where poor credit history
  • can have higher interest where lender in financial difficulties
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18
Q

What is the typical form of undue influence regarding mortgages?

A

One party has influence/ascendancy over the other and takes advantage

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19
Q

For undue influence, which relationships have an irrebuttable presumption that one party has influence over the other?

A
  • parent
  • trustee
  • solicitor
  • doctor
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20
Q

When will the court determine that a transaction is the product of undue influence?

A
  • relationship of trust and confidence
  • transaction requires explanation
21
Q

What is the equitable remedy for undue influence?

A

Contract set aside (discretionary)

22
Q

When may the court not allow setting aside the contract for undue influence?

A
  • delayed in making claim
  • unclean hands
23
Q

When will a bank be regarded as put on inquiry with regards to mortgages?

A

One party in non-commercial setting is standing as surety for the other party

24
Q

What is the consequence if a bank is put on inquiry with regards to mortgages?

A

Must follow etridge guidelines

25
Q

What are the Etridge guidelines?

A
  • write to spouse re need for confirmation from independent solicitor
  • ask them to nominate
  • not proceed until confirmation
26
Q

What is the order of priority for legal mortgages?

A

Order in which entered on the register

27
Q

What is the order of priority for equitable mortgages?

A

Order of creation

28
Q

How does protecting an equitable mortgage by notice on the charges register affect the order of priority?

A
  • take priority over subsequent legal mortgages
  • do not take priority over former equitable mortgages
29
Q

How can lenders alter the order of priority?

A

Deed of priority or intercreditor deed registered at land registry

30
Q

What duty are lenders under when pursuing remedies if a mortgagor fails to make payments?

A

Act fairly and reasonably

31
Q

Which remedies are open to equitable mortgagees?

A

Debt action
Foreclosure
Receiver

32
Q

Which remedies are open to legal mortgagees?

A

Debt action
Foreclosure
Receiver
Possession
Sale

33
Q

How is debt action usually taken as a remedy for non payment of the mortgage?

A

In addition to other remedies eg where there is negative equity

34
Q

What is the limitation period for an action in debt for non payment of a mortgage?

A

12 years for debt, 6 years for interest

35
Q

What rule is important for possession as a mortgage remedy?

A

For residential cases, must be a last resort

36
Q

What is the function of a receiver as a remedy for non payment of the mortgage?

A

get income from land before sale and apply to outstanding debt

37
Q

Why is appoiting a receiver a safe option for a lender?

A

Deemed borrower’s agent

38
Q

What is the advantage of foreclosure for a borrower?

A

Extinguishes all other mortgages and the debt

39
Q

When does the right to repossess arise?

A

As soon as the mortgage is granted

40
Q

Is a court order required for repossession?

A

No but criminal offence to use/threaten violence so prudent to obtain one

41
Q

What is the statutory limitation on repossession?

A

Where land includes dwelling, court has power to postpone date for delivery of possession for such period as it thinks reasonable

42
Q

Can the statutory limitation on repossession be used where there has been no application for an order for possession?

A

No

43
Q

How may the power to sell a mortgaged property exist?

A
  • express power in deed
  • implied by statute
44
Q

When does the statutory power to sell a mortgaged property arise?

A

Capital and interest: as soon as one payment due
Interest only: legal redemption date

45
Q

What happens where a mortgagee sells a property after the power to sell has arisen but before they are able to exercise the power?

A

innocent purchaser is valid but lender liable in damages

46
Q

When does the statutory power to sell a mortgaged property become exercisable?

A

Where one applies:
* Notice requiring payment of whole loan served and borrower has defaulted
* Interest unpaid and in arrears for two months
* Some other breach of mortgage provision

47
Q

What duties are lenders under when exercising the power to sell?

A
  • balance own interests and borrowers
  • hand surplus funds to person next entitled
48
Q

What are the case law principles regarding a lender’s right to sell and the associated duties?

A
  • duty to obtain true market value
  • perfection as to price not required
  • duty to take expert advice on sale method, marketing strategy and price
  • lender has unfettered discretion on when to sell

Land Law (9 decks)

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