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Land Law > Mortgages > Flashcards

Mortgages Flashcards

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1
Q

Who is the mortgagor?

A

The mortgagor is the borrower.

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2
Q

Who is the mortgagee?

A

The mortgagee is the lender.

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3
Q

What is a legal mortgage?

A

A legal mortgage is a mortgage that is capable of being a legal interest in land, created in compliance with formalities.

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4
Q

What are the formalities for a legal mortgage?

A

The formalities are: Deed + Registration.

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5
Q

What does LPA 1925, s 52 state about conveyances?

A

All conveyances of land or any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed.

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6
Q

What are the requirements for a valid deed under LP(MP)A 1989, s 1?

A

A deed must be clear on its face, validly executed, and delivered.

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7
Q

What happens if a mortgage deed is not registered?

A

If not registered, the mortgage will not take effect as a legal mortgage but could still be an equitable interest.

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8
Q

How can you determine if a mortgage is legal or equitable?

A

If the mortgagor only holds an equitable interest or the mortgage is defective, consider it an equitable mortgage.

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9
Q

What is an equitable mortgage?

A

An equitable mortgage arises when the borrower holds an equitable interest or when a legal mortgage is defective.

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10
Q

What is required for a mortgage of equitable interests?

A

It must be in writing and signed by the grantor.

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11
Q

What must happen after a mortgage is repaid in full?

A

The mortgage entries at the Land Registry must be cancelled.

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12
Q

What is the legal date for redemption?

A

It is the specified date on which the borrower must repay the loan in full.

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13
Q

What is the equitable right to redeem?

A

It allows the borrower to repay the loan at any time after the legal date for redemption has passed.

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14
Q

What are the rights that make up the equity of redemption?

A

The rights include the equitable right to redeem, protection from postponement, collateral advantages, and unconscionable terms.

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15
Q

What does the court say about postponement of the right to redeem?

A

Courts closely examine clauses that postpone the legal date for redemption and will not allow clauses that prevent redemption altogether.

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16
Q

What are collateral advantages in a mortgage?

A

They are additional benefits a lender might try to extract from the borrower beyond the repayment of capital and interest.

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17
Q

What is the standard for unconscionable terms?

A

A term must be imposed in a morally reprehensible manner to be considered unconscionable.

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18
Q

What is the test for determining if a term is unconscionable?

A

The test is whether the term has been imposed in a ‘morally reprehensible’ manner.

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19
Q

What is the equity of redemption?

A

It is the bundle of rights the borrower has, including the right to redeem and protection from unfair terms.

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20
Q

What must banks do to ensure priority in case of default?

A

They must write to the party granting the mortgage and obtain confirmation from an independent solicitor.

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21
Q

What is required from the independent solicitor?

A

They must explain the transaction in a non-complicated way and keep an attendance note confirming everything in writing.

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22
Q

What must all mortgages over registered land do to attain legal status?

A

They must be registered substantively under the LRA 2002, s27(2)(f).

23
Q

What happens to a mortgage over registered land that is not completed by substantive registration?

A

It will not take effect as a legal mortgage (s.27(1) LRA 2002).

24
Q

How is priority determined between registered charges?

A

Priority depends upon the order in which they are entered on the register, regardless of the order of creation.

25
Q

What is the basic rule of priority for equitable mortgages?

A

Equitable mortgages rank in order of creation (LRA 2002, s 28).

26
Q

How can an equitable mortgage over registered land be protected?

A

By entering a notice on the charges register (LRA 2002, s 32).

27
Q

What happens if an equitable mortgage is protected by a notice?

A

It will take priority over a subsequent legal mortgage (LRA 2002, s 29(1)).

28
Q

What occurs if an equitable mortgage is not protected by a notice?

A

It will not take priority over a subsequent registrable disposition of a registered estate or charge (LRA 2002, s 29(1)).

29
Q

What can modify the priority rules for mortgages?

A

A postponement of a pre-existing interest can modify the priority rules.

30
Q

What is the lender’s right to possess mortgaged property?

A

A legal mortgagee has the right to take possession of the property as soon as the mortgage is granted.

31
Q

What is the significance of the Pre-Action Protocol in possession cases?

A

It requires lenders to explore alternative arrangements with borrowers before seeking possession.

32
Q

What does the Criminal Law Act 1977, s 6 state regarding repossession?

A

It makes it a criminal offence to use or threaten violence to gain entry to property.

33
Q

What does AJA 1970, s 36 allow the court to do?

A

It allows the court to postpone possession if the borrower is likely to be able to pay any sums due within a reasonable period.

34
Q

What must be true for AJA 1970, s 36 to apply?

A

Possession proceedings must have started, and the property must be fully or partly residential.

35
Q

What does ‘any sums due’ mean in the context of AJA 1970, s 36?

A

‘Any sums due’ means the arrears and accrued interest, not the whole mortgage debt.

36
Q

What is the lender’s right to possess mortgaged property from the outset?

A

The legal lender has a right to possess mortgaged property as soon as the mortgage is granted.

37
Q

What does ‘any sums due’ mean in this context?

A

‘any sums due’ means the arrears and accrued interest, and not the whole of the mortgage debt.

38
Q

What does ‘within a reasonable period’ mean in this context?

A

The starting point for pinpointing a ‘reasonable period’ was the remainder of the mortgage term.

Cheltenham & Gloucester Building Society v Norgan [1996]

39
Q

What is the legal lender’s right to possess?

A

The legal lender has a right to possess mortgaged property from the outset, but this is not usually exercised unless there is a breach of mortgage terms.

40
Q

Can the lender exercise the right to possess without a court order?

A

Yes, the right can be exercised without a court order, but lenders almost always apply for one.

41
Q

What jurisdiction do courts have regarding possession of residential property?

A

Courts have a statutory jurisdiction to postpone possession for a long period if the property is residential or partly residential.

42
Q

What does AJA s 36 provide regarding possession?

A

AJA s 36 gives the court the power to postpone possession of residential property if all sums due can be paid within a reasonable period.

43
Q

How are ‘sums due’ and ‘reasonable period’ interpreted?

A

‘sums due’ and ‘reasonable period’ have been interpreted generously to assist the borrower.

44
Q

What is the implied power of sale under LPA 1925?

A

In the absence of an express power, a right to sell can be implied under LPA 1925, s 101(1)(i) unless it is excluded or modified in the mortgage deed.

45
Q

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

A

The lender’s statutory power of sale arises ‘when the mortgage money has become due’, LPA 1925, s 101(1)(i).

46
Q

When does the power of sale arise for a capital and interest repayment mortgage?

A

The power of sale arises as soon as one portion of capital is due, meaning that it arises as soon as one payment is due.

Payne v Cardiff [1932] 1 KB 241

47
Q

When does the capital become due in an interest-only mortgage?

A

In an interest-only mortgage, the capital is not due until the end of the loan term, usually about six months from the start of the mortgage.

48
Q

What happens if a lender sells after the power has arisen but before it is exercisable?

A

A sale to an innocent purchaser will be valid, but the lender will be liable in damages to the borrower, LPA 1925, s 104.

49
Q

When is the lender’s right to sell exercisable?

A

The power will become exercisable only when at least one of the criteria in s 103 applies.

50
Q

What are the criteria for the lender’s right to sell under LPA 1925, s 103?

A

1) Notice requiring payment of the whole loan has been served and the borrower has defaulted. 2) Interest is unpaid and arrears for at least two months. 3) There has been some breach of another mortgage provision.

51
Q

What duties does the lender have when exercising the right to sell?

A

The lender owes duties to the borrower to act fairly and balance its interests against those of the borrower.

52
Q

What is the lender’s obligation regarding surplus proceeds of sale?

A

After the sale, the lender is trustee of the surplus proceeds of sale and must hand them to the person next entitled.

53
Q

What is the summary of the right to sell?

A

The legal lender has a right to sell the property without a court order, arising when the money has become due, and must act fairly to the borrower.

Land Law (10 decks)

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