Mortgages

Question 1

What are the formalities required for the creation of a legal mortgage?

Answer 1

1. Deed
2. Registration

Question 2

Formalities required for an equitable mortgage?

Answer 2

1. In writing
2. Contains agreed terms
3. Signed by mortgagor and mortgagee

^ if met, equity will recognise a contract to grant a legal mortgage.

Question 3

What is the relevant form used to discharge a mortgage over the whole of the land in a title?

Answer 3

DS1.

Question 4

What is the form used to discharge part of the land in a title?

Answer 4

DS3.

Question 5

Which relationships give rise to an irrebuttable presumption of undue influence?

Answer 5

Doctor/patient
Trustee/beneficiary
Solicitor/client
Parent/child

NOT husband/wife - must be proved

Question 6

What is the order of priority between registered mortgages?

Answer 6

Once registered, mortgages take effect as registered charges. Priority between registered charges depends upon the order in which they are entered on the register.

Question 7

What is the order of priority between equitable mortgages??

Answer 7

Equitable mortgages are ranked in order of creation.

An equitable mortgage over registered land can be protected by entering a notice in the charges register.

Question 8

How do you protect an equitable mortgage?

Answer 8

An equitable mortgage over registered land can be protected by a notice in the charges register.

If protected by entry of notice, an equitable mortgage takes priority over a subsequent legal mortgage.

Between competing equitable mortgages - entry of notice has no effect.

Question 9

When does the lender’s statutory right to sell become exercisable?

Answer 9

Notice served by the lender and borrower has defaulted;
Interest unpaid and arrears for at least 2 months;
Some breach of another mortgage provision e.g. a covenant.

Question 10

When does the lender’s statutory right to sell arise?

Answer 10

‘When the mortgage money has become due’:
Capital and interest repayment mortgage - right arises as soon as one portion of capital is due.
Interest-only mortgage - capital is not due until the end of the loan term, mortgage money becomes due at the LRD - usually 6 months into term

Question 11

What is the order for the application of sale proceeds following a sale by a mortgagee? (Governed by s105 LPA 1925)

Answer 11

1. Requires the redemption of any prior mortgage to which the sale is not made subject to- any mortgage which has priority over the selling mortgagee’s mortgage.
2. Selling mortgagee’s mortgagee expenses.
3. The selling mortgagee’s mortgage will be redeemed.
4. Any surplus will be paid to the owner.