Mortgages Flashcards
Creation of a legal/equitable mortgage
Legal
- deed s.85(1) LPA
- registration s.4(1)(g)
Equitable
- Writing
Terminology
Mortgagee : lender
Mortgagors : borrower
Rights of the mortgagee (overview)
1) Sue for the debt in contract law
2) Control over the property during the mortgage term
- Brittania BS v Earl : mortgagor couldn’t let the property out
3) Possession
4) Sale
5) Appointment if a receiver
- s.101 LPA
6) Foreclosure
Rights of the mortgagee - sale
(1) has the power of sale arisen? S.101
- legal date of redemption, 6 months passed
- OR any breach of the mortgage contract
(2) is the power of sale exercisable? s.103
- 3 months notice from mortgagee
- 2 months arrears
- OR breach if other mortgage terms
Mortgagees duty on sale
- No sale by tender
- Reasonable care in relation to mortgagor
Parker Tweedale v Dunbar : obtain reasonable price
- Good faith : sale to related body plus low price not allowed, Tse Kwong Lam v Won Chit Sen
- Use of proceeds, s.105
Rights of the mortgagee - possession
Ropaigealach v Barclays Bank : right of possession, even equitable mortgages
Right can be restricted by
- express terms in contract
- common law : e.g. Birmingham Citizens BS v Caunt
- statute : s.36 AJA court can limit if the house is a dwelling house and has payment instalments
cheltenham and Gloucester BS v Norgan : repeated postponement
Mortgagees duty on possession
- lease out the land, s.99
- manage the property, account for the profits
Protection of the mortgagor - overview
1) equitable right of redemption
2) no collateral advantages for mortgagee
3) sale of property
4) protection against unconscionable terms
5) undue influence
Protection of the mortgagor - equitable right of redemption
The mortgagor retains the right to pay off the mortgage
No clogs of right of redemption allowed
- Samuel v Jarrah : option to purchase stocks after the borrower had paid off the loan was void
- Warnborough v garmite : option to purchase not always necessarily a clog
- Fairnclough v Swan Brewery : postponement of redemption till 6 months before end of term was too long
- Knightsbridge Estates v Byrne : postponement for 40 years valid
Protection of the mortgagor - no collateral advantages for mortgagee
The mortgage should not give the lender any additional rights that last longer than the mortgage
- Biggs v Hoddinott : pub buying brew from lender brewery was ok because it was only for the life of the mortgage
- Noakes v rice : similar provision, but this would last even after paid off the loan, not allowed
Protection of the mortgagor - sale of property
S.91 LPA
Palk v Mortgage Services
Protection of the mortgagor - protection against unconcscionable terms
Cityland and Property Hoodings v dabrah : 57% interest rate was unconscionable
Multiservice Bookbinding v Marden : 16% was unreasonable but not unconscionable
Protection of the mortgagor - undue influence
Where A exerts influence on B to enter an agreement with C
Barclays Bank O’Brien : such agreements cannot be enforced
RBS v Etridge (No 2) : C should be required to take certain steps to minimise the prospect of undue influence
