Mortgages

Question 1

Is a mortgage capable of being a legal interest?

Answer 1

Yes

Question 2

What does a mortgage need in order to be legal?

Answer 2

A mortgage needs to be created by deed in order to be legal

Question 3

Does a lender have an automatic right to possession?

Answer 3

Yes, but if the property is occupied as a dwelling a court order will be required and the borrower can seek the protection of the AJA 1970

Question 4

When is the power of sale exercisable?

Answer 4

Only when certain criteria have been met and the lender is bound by certain duties when exercising it. Exercising the power of sale will end the mortgage

Question 5

Can a lender pursue the borrower via a debt action?

Answer 5

Yes

Question 6

Under what circumstances can a lender appoint a receiver?

Answer 6

The lender can appoint a receiver in the same circumstances as exercising the power of sale and subject to the same duties but the receiver is deemed to be the agent of the borrower

Question 7

What is foreclosure?

Answer 7

A lender can foreclose a mortgage which brings the mortgage to an end and vests the title in the lender. There are protections for the borrower to avoid foreclosure.

Question 8

What formalities are required to create a legal mortgage in relation to a legal estate

Answer 8

Adidas is required to create a legal mortgage and it must meet the requirements set out in section 1LPM,PA 1989

Question 9

If the document used to create legal mortgage lacks the requirements of a deed, can equity intervene and recognise an equitable mortgage

Answer 9

Yes

Question 10

Can a mortgage be created over and equitable interest and what formality requirements are needed

Answer 10

Yes, and mortgage can be created over and equitable interest. This would need to comply with the law of property act which means it must be in writing and signed.

For example, when I co-owner of land creates a mortgage in relation to their equitable interest under a trust

Question 11

What does s6 of the Criminal Justice Act 1977 do to impact the law on possession?

Answer 11

It makes it a criminal offence for the lender to use or threaten force towards anyone known to be present on the property in order to obtain possession

Question 12

Is a court order for possession required if the lender can take possession singling breaching S6 CJA?

Answer 12

No - this will usually be when a property is empty (or when the property is let and the lender directs the tenants to pay rent to the lender)

Question 13

When must the lender comply with the pre action protocol?

Answer 13

When the proceedings concern the possession of residential property

Question 14

What way is the pre-action protocol weighed?

Answer 14

The pre-action protocol is weighed in favour of the borrower paying off the debt and still being able to stay in his property

Question 15

What does section 36 of the Administration of Justice Act 1970 allow the borrower to ask the court to exercise its discretion to do?

Answer 15

It allows the borrower to ask the court to exercise its discretion to :

Adjourn proceedings or,
ON make an order for possession, suspend execution or postpone the date for possession

Question 16

When does S36 AJA 1970 apply?

Answer 16

When

1) the lender has started possession proceedings
2) the property includes a dwelling-house
3) the borrower is likely within a reasonable period to pay any sums due under the mortgage (arrears)

• the court won’t exercise it’s discretion unless the borrower can provide a detailed financial plan showing that they can pay both the mortgage instalments as they fall due and any arrears

A reasonable period has been defined to include the full remaining period of the mortgage

Question 17

In what case would the lender need to obtain a court order in order to engage in possession?

Answer 17

If the property is a dwelling house, you will need to obtain a court order for possession

Question 18

What makes the appointment of a receiver and the power of sale available?

Answer 18

If the mortgage is made by a deed ( a legal mortgage) - that makes it existing