Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Land Law > Mortgages > Flashcards

Mortgages Flashcards

You may prefer our related Brainscape-certified flashcards:
MBE flashcards MPRE flashcards Civil Procedure 1L flashcards
1
Q

City Land Property (Holdings) Ltd v Dabrah (Facts)

A
  • Base lending rate at the time was 7%
  • Annual rate of interest under the mortgage was 19%
  • If defaulted, interest rate would have risen to 57%
  • Held:
  • Considered a penal rate of interest
  • Unconscionable
  • Rate of 7% was substituted
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

City Land Property (Holdings) Ltd v Dabrah (Principle)

A

Clauses contained in mortgages that are unconscionable will be struck out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Multiservice Bookbinding v Marden (Facts)

A

-Small company borrowed by was of a mortgage
-Under the mortgage, interest was index-linked to the Swiss Franc
-If the GBP fell against the Swiss Franc, amount of interest would rise dramatically
Held:
-Clause was upheld, not unconscionable
-Strength of bargaining position was equal (sophisticated)
-Mortgagor could not establish that the clause was imposed in a morally reprehensible way
-Mortgagor received independent advice

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Multiservice Bookbinding v Marden (Principle)

A
  • A clause will not be struck out of a mortgage agreement for being unreasonable
  • It must have been imposed in a morally reprehensible way
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Paragon Finance plc v Staunton (Facts)

A
  • P was claiming possession from S for late payments
    -Bank of England lowered interest rates while P did not
    -S argued that his rate should have been lowered that that P was extortionate under under the Consumer Credit Act 1974
    held:
  • Bank was not acting unconscionable
  • It was protecting its own assets
  • There is an implied term that the rate of interest will not be set dishonestly, arbitrarily, or for improper use
  • Although it may be unreasonable for the mortgagor, it may be commercially necessary for the mortgagee
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Paragon Finance plc v Staunton (Principles)

A
  • Determined the issue of whether clauses allowing the mortgagee to vary interest rates was challengeable
  • Only if it is unconscionable
  • Although it may be unreasonable for the mortgagor, it may be commercially necessary for the mortgagee
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Cuckmere Brick v Mutual Finance Ltd (Issue Topic)

A

Conduct of Sale by Mortgagee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Cuckmere Brick v Mutual Finance Ltd (Facts)

A

-Property was sold
- Mortgagor sued Mortgagee
- Mortgagor alleged that the Mortgagee sold the property for too low of a price
-Land was not properly advertised
Held:
-Mortgagee did not obtain the fair and true market value for the property
-Mortgagee will have to pay the difference or set the sale aside

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Cuckmere Brick v Mutual Finance Ltd (Principle)

A

The Mortgagee has a duty to take reasonable care to obtain the true market price for the property when selling it.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Tse Kwong Lam v Wong Chit Sen (Issue Topic)

A

Associated Persons and Duty on sale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Tse Kwong Lam v Wong Chit Sen (Facts)

A
  • Mortgagee sold property in an auction
  • Only bidder was Mortgagee’s wife, at exactly the reserve price
  • Mortgagor sought to have the sale set aside
    Held:
  • Close relationship does not entitle the mortgagor to automatically set aside the sale
  • Onus of proof is moved onto the purchaser to show that the sale was in good faith
  • Onus was not discharged on the facts, transaction should have been set aside
  • Was allowed in the case because of the Mortgagor’s excessive delay in seeking to dispute the sale
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Tse Kwong Lam v Wong Chit Sen (Principle)

A

Mortgagee can sell to:

  • An associated person, or
  • A company in which he holds a substantial shareholding

-But, he burden of proving the transaction was made in good faith and without fraud would fall on him.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

A Mortgagee can sell to?

A
  • An associated person, or
  • A company in which he holds a substantial shareholding
  • But, the burden of proving the transaction was made in good faith and without fraud would fall on him.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

China and South Sea Bank Ltd v Tan Soon Gin (Issue Topic)

A

Conduct of the Sale & Timing of the Sale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

China and South Sea Bank Ltd v Tan Soon Gin (Facts)

A

???

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

China and South Sea Bank Ltd v Tan Soon Gin (Principle)

A
  • Timing of a sale is a matter entirely up to the mortgagee

- Mortgagee should not be liable for failing to exercise their power of sale when market conditions were more favourable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Parker-Tweedale v Dunbar Bank plc (Issue Topic)

A

Conduct of Sale & Associated People

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Parker-Tweedale v Dunbar Bank plc (Facts)

A

-P’s wife was the sole owner of the property mortgaged by D
- D sold the property, with the wife’s consent, with the power of sale
- P argued that they sold the property for less than it was with worth
- P brought proceedings against D for not taking reasonable steps
Held:
- Mortgagee’s Duty to take reasonable steps does not extend to a person with beneficial interest of which the mortgagee had notice

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Parker-Tweedale v Dunbar Bank plc (Principle)

A
  • No statutory duties are imposed on the mortgagee when exercising power of sale
  • Duties have arisen in case law
  • Duties exists solely between the mortgagee and the mortgagor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Palk v Mortgage Services Funding plc (Issue Topic)

A

Who sells the property? (selling v renting)

Negative equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Palk v Mortgage Services Funding plc (Facts)

A

-M brought a possession action
-There was a negative equity
- M intended to rent the property until the price of the property was higher
-P argued that M should sell immediately because P’s debt increased because the rent was less than the money owed
Held:
-Argument accepted
-Ordered direct sale of the property under s.91(2) LPA 1925

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Palk v Mortgage Services Funding plc (Principle)

A

-Under s.91 LPA 1925, the court has jurisdiction to sell mortgaged property independent of the mortgagee’s right to do so

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Cheltenham & Gloucester B.S. v Krausz (Issue Topic)

A
  • Negative Equity

- Sale of the property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Cheltenham & Gloucester B.S. v Krausz (Facts)

A
  • C sought an order for the sale of the mortgaged property
    -K (mortgagor) obtained a warrant for possession (ability to sell the house himself)
    -Proposed sale by C would not have been enough to pay off what C owed
    Held:
  • Refused sale order
  • K’s warrant of possession was enforced
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Cheltenham & Gloucester B.S. v Krausz (Principle)

A
  • Courts can refuse a party from having possession of the property
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Cheltenham & Gloucester B.S. v Norgan (Issue Topic)

A

Reasonable Period of Time to meet Mortgage Payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Cheltenham & Gloucester B.S. v Norgan (Facts)

A

-N repeatedly experienced difficulties in meeting mortgage payments
-several possession orders were brought forward, but postponed under s.36 AJA each time
-Finally, another action was brought forward and this time was granted
Held:
- N was given until the end of the mortgage term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Cheltenham & Gloucester B.S. v Norgan (Principle)

A
  • Creates rules around reasonable period to meet mortgage payments
  • A reasonable period to postpone possession to pay arrears is the remaining term of the mortgage
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is a mortgage?

A
  • A security interest over land

- Using land to secure a debt (repayment of a loan)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Who is the mortgagor?

A

The borrower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Who is the mortgagee?

A

The lender

- Receives property interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

If mortgagor defaults?

A

Property rights will be sold to pay back the loan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Mortgages are legal or equitable?

A

Both

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Creation of a Legal Mortgage (LPA 1925)

A

2 methods: s. 85(1) & s. 87
1- Long Lease (Lease by demise): Lease for long period of time (i.e. 3000 years) that ends once debt is paid
2- Charge by Deed: A deed that is a mortgage interest (charge) (most common since 1925)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Creation of legal mortgage (LRA 2002)

A

s. 23(1)- Mortgage of registered land can only be by charge,
and,
s. 27(2)(f) & s. 93(1)(2)- Registration is essential

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Mortgage is equitable when?

A
  • Absence of correct formality to make it legal (Deed/Registration)
  • Beneficial Interest or Equitable Lease
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Is the deposit of title deeds enough to create a valid equitable mortgage?

A
  • No
  • There must be a valid contract (s. 2 LP Act 1989)
  • United Bank of Kuwait v Sahib (1996)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

s.2 Law of Property Act 1989?

A

Rules surrounding the creation of a valid contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

s.27 LRA 2002

A

Registration is required

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Equity of Redemption

A
  • Mortgagor’s property rights over the mortgaged land (can be transferred)
  • Protects the Mortgagors rights
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Financial Value of the Equity of Redemption?

A

Equity (Value)= value of Land - total mortgage debt outstanding

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Negative Equity?

A

When the value of land is less than the total mortgage debt outstanding

Value of land < Mortgage debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Equitable Right to Redeem?

A
  • Eliminates Land rights under common law (harsh)
  • Allows the mortgagor some lee-way to pay at a later date
  • Mortgagor does not lose property immediately after the loan due date
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

“clogs” or “fetters”?

A
  • Terms inserted into the mortgage which deny or prevent the mortgagor’s right to redeem (equity of redemption)
  • Void by Equity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Examples of Clogs/Fetters? (3)

A

1) Terms restricting/postponing mortgagor’s right to redemption
2) Terms giving mortgagee right to buy mortgaged land
3) Terms giving mortgagee some additional advantage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Restricting/Postponing Redemption (Clog) inserted to do what? (2)

A

1) Prolong the ‘investment’

2) prolong a tie to the mortgagee to prolong the supply of agreed materials

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Restricting/Postponing Redemption (Clog) Case

A
  • Fairclough v Swan Brewery Ltd (1912)

- Knightsbridge v Byrne (1939)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Fairclough v Swan Brewery Ltd (1912)?

A
  • Concerns a clog on the equity of redemption
    -17 years left on a lease
  • Redemption was postpone until 6 weeks before the due date of the lease
    Held:
  • postponement is invalid because it rendered mortgagor’s right to redeem valueless
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

Knightsbridge v Byrne (1939)

A
  • Concerns a clog on the equity of redemption
  • Parties were both businesses
  • Term postponing redemption of freehold land for 40 years.
    -Mortgagor seemed to have obtained a preferable interest rate
    Held:
  • Term was valid
  • Court is reluctant to interfere in proper business transactions between 2 parties of close standing
    -Unless term was unfair/unconscionable or oppressive
50
Q

Knightsbridge v Byrne (1939) (Principle)

A
  • Court is reluctant to interfere in proper business transactions between 2 parties of close standing
  • Unless term was unfair/unconscionable or oppressive
51
Q

Fairclough v Swan Brewery Ltd (1912) (Principle)

A
  • postponement of the right to redemption is invalid because it renders mortgagor’s right to redeem valueless
52
Q

Term Permitting the Purchase of Land by the Mortgagee (Clog) is?

A
  • Option to purchase when the mortgagee might exercise in first year is void as a clog
  • Samuel v Jarrah Timber (1904)
53
Q

Lord Macnaghten obiter in Samuel v Jarrah Timber (1904)?

A

-He question whether the rule (option to purchase) should apply where the bargain is a fair one in a commercial context between parties of equal standing (freedom of contract)

54
Q

Term Permitting the Purchase of Land by the Mortgagee (Clog):
- Valid when separate transaction from mortgage?

A
  • Yes, when the second document is created 10 days after the mortgage (Reeve v Lisle (1902))
  • No, when they are made on the same day (c.f. Lewis v Frank Love (1961))
55
Q

Term Permitting the Purchase of Land by the Mortgagee (Clog):
- Warnborough Ltd v Garmite Ltd (2003)?

A

-Interlinking transactions
- S sold land to P
- P borrowed purchase money from S in return for charge on land
-Parties created an option for S to re-purchase the land
Held:
- Option was held to be valid because it was not part of the mortgage, it was part of the sale.

56
Q

Term Permitting the Purchase of Land by the Mortgagee (Clog):
-Relevance today? (case)

A

Jones v Morgan (2002)

57
Q

Jones v Morgan (2002)

A

-1994, M agreed to mortgage with J over farm land
-M used money to turn farmhouse into a nursing home
-1997, M had financial difficulties.
-Led to mortgage agreement which had a term that allowed J to purchase half-share in M’s mortgaged farmland
Held:
-2:1 - Term is void (clog on equity of redemption)
-Prevented mortgaged land from being restored in original state
- 1997 mortgage not independent from 1994 mortgage

58
Q

Collateral Advantages (clog) are?

A
  • Mortgage terms that agrees on additional benefits, other than interest, in return for loan
  • ex: Exclusive supply agreement
59
Q

Collateral Advantages are clogs when?

A
  • When they stop the mortgagor from getting back the property in original condition
  • If the tie goes beyond the term of the mortgage
60
Q

Noakes v Rice (1902)

A
  • Concerns mortgage terms of collateral advantages
  • The mortgage clause created a slous tie (collateral advantage) between the brewery and the pub landlord
    -This meant the mortgagor would get a ‘tied’ pub rather than the ‘free house’ pub that he mortgaged
    -Not in original condition
    Held:
    -Term was a clog on the equity of redemption
61
Q

Bradley v Carritt (1903)

A

-Concerns when the collateral advantage must end
-Mortgagor had controlling shareholding in team company, Mortgagee was a tea broker
-mortgaged shares to mortgagee
-mortgage included term that the mortgagee would remain employed as the company’s tea broker or otherwise get a commission
Held:
-Term is unenforceable, MUST end at the end of the the mortgage

62
Q

Collateral Advantages are valid of redemption when?

A
  • When it is independent and separate from the mortgage (even if contained in mortgage agreement)
  • Kreglinger v New Patagonia Meat Co. (1914)
63
Q

Kreglinger v New Patagonia Meat Co. (1914)

A
  • Concerns Collateral Advantages
  • 2 businesses
  • Mortgagee had right of pre-emption to purchase sheepskins from mortgagor for 5 years at best market price
    -Mortgagor repaid loan after 2 years
    Held:
  • Pre-emption was not a clog
  • No oppression (commercial trade- freedom of contract)
    -Separate transaction
64
Q

Alternative legal basis to challenge a ‘solus agreement’?

A

Restraint of Trade Doctrine

- Is the term an unreasonable restriction on freedom of trade?

65
Q

Restraint of Trade Doctrine test?

A
  • Test is one of reasonableness and duration
  • Longer tie requires stronger justification
  • Esso v Harper’s Garage (1968)
66
Q

Esso v Harper’s Garage (1968)

A
  • Regarding Restraint of Trade
  • solus agreement for petrol
  • 2 mortgages
  • 4 year + tie = reasonable
  • 21 year + tie= unreasonable
  • Duration- longer tie requires stronger justification
67
Q

Who sets the base rate of interest for the banks?

A

Bank of England

68
Q

When can the mortgagor challenge the interest rates being charged by the mortgagee?

A
  • Only if the mortgagor can show that the rate is:
    1) unconscionable, and
    2) unreasonable
69
Q

Cases where interest rates were challenged for being unconscionable? (2)

A
  • City Land Property (Holdings) Ltd v Dabrah (1968)

- Multiservice Bookbinding v Marden (1979)

70
Q

When can a mortgagor challenge a clause that allows mortgagee’s to vary the interest rate?

A
  • only if unconscionable
  • Although it may be unreasonable for the mortgagor, it may be commercially necessary for the mortgagee
  • There is an implied term that interest rates will not be set dishonestly, arbitrarily, or for improper use.
    Paragon Finance v Nash (2002)
71
Q

What did Lord Dyson say about clauses that allow mortgagee’s to vary interest rates?

What case was this in?

A
  • There is an implied term that interest rates will not be set dishonestly, arbitrarily, or for improper use.
  • Paragon Finance v Nash (2002)
72
Q

Statutory control for interest rates?

A

Consumer Credit Act 1974

73
Q

Consumer Credit Act 1974 applies to what?

A

Second mortgages

74
Q

Consumer Credit Act 1974 does what?

A
  • Protects people of creditors

- Strikes down/adjusts unfair terms or use of powers by lenders

75
Q

Consumer Credit Act 1974 sections?

A

140A: unfair relationship between creditors and debtors
140B: Powers of court in relation to unfair relationships

76
Q

Remedies for the Mortgagee? (3)

A

Recovery
Possession*
Sale*

77
Q

Remedy limitation period?

Where do I find this?

A
  • 12 years from date the sum is due

- Limitation Act 1980 s.20

78
Q

To sue for “Recovery” is available when?

A

-When the land was sold and there is still an outstanding liability

79
Q

Right of Possession belongs to who?

A
  • Mortgagee
  • inherent part of property right
  • Exists without Mortgagor default
80
Q

Can the right to Possession be restricted?

A

Yes, as a term in the mortgage

81
Q

Why would the mortgagee allow the right to possession be restricted?

A
  • Mortgagor will have to consistently pay back the interest owed
  • Less responsibility if not in possession
82
Q

Risk of taking possession?

A

-Strict Accountability

White v City London Brewery (1889)

83
Q

White v City London Brewery (1889)

A
  • Mortgagee took possession
  • rented the ‘free’ house as a ‘tied’ house which made rent lower
  • Mortgagee had to pay the difference to the mortgagor because of using the land in a less valuable manner
84
Q

Why would a Mortgagee want possession if the mortgagor is in default?

A
  • Prelude to sale

- Easier to sell property if it is vacant

85
Q

Can the Mortgagee gain possession by re-entering peaceably without a court order?

A

Yes, if it is unoccupied

86
Q

Mortgagor can stop or delay a court order by the use of? (3)

A
  • Common Law
  • Equity
  • Statutory*
87
Q

Use of Common law to delay court order for possession?

A
  • Very limited
  • Allows mortgagor a short time to repay what is owed
  • Allows for 28 days to repay the amount due
  • Dependent on the reasonable prospect that the mortgagor can repay the entire amount in the time allowed
88
Q

Use of Equity to delay court order for possession?

A

-Prevents mortgagee from taking possession unless it is fair and for proper purposes
Quennell v Maltby

89
Q

Quennell v Maltby

A

-Q got a mortgage and sub-letted the property
-Need permission of mortgagee to do this
-Q was in breach of mortgage agreement
-Q created a protection tenancy, giving the tenant protection from being evicted
-Could not kick tenant out
-Q asked mortgagee to use its powers to say there was a breach of tenancy
-Mortgagee refused
-Q then persuaded his wife to buy the mortgage from mortgagee, making her the mortgagee
- Wife sought to evict the tenant
-Q sought to use his wife’s powers as a mortgagee for improper purposes (not to protect the value of the land)
Held:
- Mortgagee did not use her powers in good faith
-Wife was acting as an agent of Q, not as a independent mortgagee
-Equity intervened and prevented Q from evicting the tenant

90
Q

A mortgagee may evict a tenant only in situations where?

A

-it is necessary to protect the property interest

91
Q

Use of Statute to delay court order for possession?

A
  • s. 36 Administration of Justice Act 1970
  • Allows for extensive range of orders to help mortgagor
  • Power to adjourn possession proceedings, or suspend/postpone operation of possession order
  • Only applies to property that contains a dwelling-house
92
Q

Administration of Justice Act s.36

A
  • Gives court the power to adjourn possession proceedings, or suspend/postpone operation of possession order
  • Only applies to property that contains a dwelling-house
93
Q

S. 36 A.J.A. is not available when?

A

-unless there are court proceeding for possession
(obtained possession lawfully without going to court)
-If mortgagee sells the land without first taking possession, and the purchaser is the one who seeks possession
Horsham Properties v Clark (2008)

94
Q

Horsham Properties v Clark (2008)

A
  • s. 36 AJA could not be used
  • mortgagee sold the property in an auction to H
  • H successfully evicted the tenants as trespassers
95
Q

What is ‘reasonable time’ under s. 36 AJA 1970?

A

-Used to be only a couple of years, until…
Cheltenham & Gloucester v Norgan (1996)
-Now it can be the full remaining period of the mortgage
-Can also be approximately half the remaining mortgage term (Bank of Scotland v Zinda (2012))

96
Q

What does the mortgagor have to pay in a reasonable time under s.36 AJA 1970?

A
  • Arrears + Resuming Monthly Payments
97
Q

To use s.36 AJA 1970, the mortgagor must show what?

A
  • Has the means of paying the loan
    -Likely future income
    (show that he can repay)
98
Q

Balancing Act of s.36 AJA 1970?

A
  • Court must balance the needs and interests of both parties:
  • Mortgagor’s ability to repay
  • Mortgagee’s right to protect the value of the land
99
Q

Can the Mortgagor postpone possession in order to sell?

A
  • Court may allow short period (Up to a year)

- Will want evidence that the mortgagor is actively trying to sell the land.

100
Q

s.91(2) Law of Property Act 1925

A

-allows the court to ‘direct a sale’ of the property on terms as it thinks fit
Palk v Mortgage Services Funding plc (1993)

101
Q

What are the 2 pre-conditions for the mortgagee to sell the mortgaged property?

A

-s. 101 LPA 1925: Power of sale
Mortgage must be by deed
Money must be due
There cannot be any express provisions precluding sale

-s. 103 LPA 1925: Power is exercisable 
Notice of repayment + 3 moths of arrear
or
2 months of arrears
or
other breach of terms
102
Q

Effect of sale by mortgagee when Power has not arisen?

A
  • Sale transfers mortgage only
103
Q

Effect of sale where Power has arisen but not exercisable?

A
  • Title transfer free of mortgage
  • Purchaser is unaffected unless he has knowledge
  • Purchaser has no duty to find out if power is exercisable (Bailey v Barnes (1894))
  • Mortgagor may claim damages under s.104(2)
104
Q

What is the effect of a proper sale by the mortgagee?

A
  • Destroys mortgagor’s equity of redemption
105
Q

How are the proceeds of the sale dealt with?

A
  • Mortgagee holds the money on trust
  • s. 105 applies (in this order)
    1) Defray legitimate costs and expenses of the sale
    2) Discharge of outstanding mortgage debt
    3) Pay any surplus to any other mortgage and/or the mortgagor
106
Q

s. 105 LPA 1925?

A

-Determines how the proceeds of a sale is distributed.

107
Q

What are the Mortgagee’s duties when it sells?

A
  • Can act in its own interests (Good Faith)
  • Must take reasonable care in determining the true market price (conduct of Sale)
  • If fails, liable to make up the deficit
108
Q

Mortgagee’s duty to take reasonable steps to obtain fair market price case?

A

Cuckmere Brick Co Ltd v Mutual Finance (1971)

109
Q

Duty to achieve market price at the time of the sale by the mortgagee case?

A

-Do not need to wait for prices to rise

Silven Properties v RBS (2004)

110
Q

Determining timing and method of sale case?

A
  • Up to Mortgagee

- China & South Sea Bank (1990)

111
Q

Can Mortgagee sell the property to himself?

A

No, Difficult to be legitimate

112
Q

Can the mortgagee sell to an associate or company in which he is interested in?

A

-Yes
-Onus is on mortgagor to establish that he acted in good fairly and got the best price he could
Tse Kwong Lam v Wong Chit Sen (1983)

113
Q

United Bank of Kuwait v Sahib (1996) Principle?

A
  • Deposit of title deeds is no longer enough to create an equitable lease
  • s. 2 LPA 1989 must be complied with
114
Q

Reeve v Lisle (1902) Facts & Principle?

A 
Facts:
Ship had been mortgaged
12 days later, mortgagee was granted the option to purchase it 
Not Part of initial mortgage 
Held:
- Not a clog 
Separate from mortgage

Principle:
- Second Document created after the original contract is not a Clog

115
Q

Fairclough v Swan Brewery Ltd Issue

A

o Rather than a clog on redemption might including a term long postponing mortgagor’s right to redeem be seen an agreed commercial trade-off for favourable terms – such as lower interest rate?

116
Q

Jones v Morgan & Reeve v Lisle?

A

Jones v Morgan Contradicted the rule in Reeve v Lisle

  • Rules was that the option was not a clog if created after the initial contract
  • Jones v Morgan found that the option was a clog because it was not independent from the initial contract
117
Q

Mortgagee Powers Cases/ Statutes ?

A 
Possession Action
Equity
- Quennell v Maltby 
Statute 
- Horsham v Clark 
- Norgan
- Bank of Scotland v Zinda 
- National Privincial Bank v Lloyd
- Palk 
- White v City London Brewery 
Power of Sale
2 Precondition
- Bailey v Barnes
Duties
- China v South Sea Bank v Tan Soon Gin 
- Cuckmire v Brick 
- Halifax v Corbett
- Tse Kwong Lamb 
- 
After Sale
- s. 105
Mortgagor sells property
- Krausz
118
Q

Mortgagor’s Rights/Protection?

A

Statutory Protection

  • Consumer Credit Act 1974
  • s. 36 AJA 1970 & 1973
  • Horsham v Clark
  • Norgan

Challenging Interest Rates

  • Paragon finance v Nash (Lord Dyson)
  • Dabrah
  • Multiservice Bookbinding v Marden

Equity of Redemption

  • Right to Sell/ Second mortgage
  • Right to Redeem (Clogs)
  • Right to get property back in original State
  • Noakes v Rice
Clogs
Term permitting purchase
- Warborough v Garmite
- Jones v Morgan
- Samuel v Jarrah 
- Reeve v Lisle

term restricting redemption

  • Fairclough v Swan Brewery
  • Knightsbridge v Byrne

Collateral Advantage

  • Noakes v Rice
  • Bradley v Carritt
  • New Patagonia Meat
  • Biggs v Hoddinott
  • Esso v Marden (Restraint of Trade Doctrine)
119
Q

Equity of Redemption cases?

A

Equity of Redemption

  • Right to Sell/ Second mortgage
  • Right to Redeem (Clogs)
  • Right to get property back in original State
  • Noakes v Rice
Clogs
Term permitting purchase
- Warborough v Garmite
- Jones v Morgan
- Samuel v Jarrah 
- Reeve v Lisle

term restricting redemption

  • Fairclough v Swan Brewery
  • Knightsbridge v Byrne

Collateral Advantage

  • Noakes v Rice
  • Bradley v Carritt
  • New Patagonia Meat
  • Biggs v Hoddinott
  • Esso v Marden (Restraint of Trade Doctrine)
120
Q

Statutory Protection of Mortgagor’s rights?

Challenging interest rates?

A

Statutory Protection

  • Consumer Credit Act 1974
  • s. 36 AJA 1970 & 1973
  • Horsham v Clark
  • Norgan

Challenging Interest Rates

  • Paragon finance v Nash (Lord Dyson)
  • Dabrah
  • Multiservice Bookbinding v Marden
121
Q

Power of Sale cases?

A 
Power of Sale
2 Precondition
- Bailey v Barnes
Duties
- China v South Sea Bank v Tan Soon Gin 
- Cuckmire v Brick 
- Halifax v Corbett
- Tse Kwong Lamb 
- 
After Sale
- s. 105
Mortgagor sells property
- Krausz

Land Law (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions