Mortgages

Question 1

How does a mortgage behave, where is this found

Answer 1

For freehold, like a 3000 year lease. For leasehold like alease of 1 day less. S87(1) LPA 1925

Question 2

Formalities for creation of a legal mortgage

Answer 2

S85 for freehold, S86 for leasehold. Charge by deed expressed by way of legal mortgage PLUS registration S27(2)(f) LRA 2002

Question 3

Creation of an equitable mortgage

Answer 3

Specifically enforceable contract to create a mortgage OR mortgage of an equitable interest S53 LPA 1925

Question 4

Rights of the borrower

Answer 4

Redemption (normally 6 months). Enforceable under S91 LPA 1925

Question 5

Case that says an option to purchase is a fetter

Answer 5

Samuel v Jarrah - effect of the option was to deprive the mortgagor of the right to redeem

Question 6

Where an option to purchase is a seperate transaction to the mortgage, not a glog

Answer 6

Reeve v Lisle

Question 7

A case where redemption was not allowed until only 6 weeks prior to trhe end of the term: Clog

Answer 7

Fairclough v Swan Brewery

Question 8

A case where mere postponement (by 40 years!) of redemption was acceptable

Answer 8

Knightsbridge Estates v Byrne - was at a good rate on interest - they knew what they were doing - no oppressive bargain

Question 9

Case where court struck out a mortgage term for unconscionability (NOT a bad bargain)

Answer 9

Cirtland Property v Dabrah (57% interest rate - inexperienced buyer)

Question 10

Case that shows collateral advantage must be truly seperate to the mortgage

Answer 10

Biggs v Hoddinot - Lender was a brewery. Borrower had to buy all booze for 5 years even if they redeemed early.

Question 11

Case where it truly was a collateral advantage

Answer 11

New Patagonia Meat Co - First refusal on animal skins unrelated

Question 12

Rights of the mortgagelender

Answer 12

Proprietary: All rights of a 3000 year lasehold. Contractual: Right to sue for recovery of debt

Question 13

Lender can go into possession “as soon as the ink is dry”

Answer 13

Four maids

Question 14

Mortgagee’s right to possession can be limited in the contract

Answer 14

Ashley Guarantee v Zaccaria

Question 15

Court has discretion only to briefly postpone possession

Answer 15

Birmingham Midshires v Grant

Question 16

Where does it says that if the land contains a dwelling house, the court can postpone, stay, suspend the judgement or postpone possession

Answer 16

S36 Administration of Justice Act 1970

Question 17

A case where possession was postponed

Answer 17

Cheltenham & Gloucester v Norgan (equity in the house was massaive, no way that they would lose their money. Arrears repayable over remaining life of the mortgage)

Question 18

Self help (repossession) is available to tghe lender

Answer 18

Ropaigealach v Barclays (peacable possession taken)

Question 19

Lender can sell the property without possession

Answer 19

Horsham Properties v Clarke - rendered the occupiers trespassers

Question 20

Common law requirements for lender to be able to sell

Answer 20

Mortgage by deed and legal date of redemption passed (S101 LPA - power to sell)

Question 21

Statutory requirements to sell

Answer 21

Common law req’s met PLUS: Three months notice requiring repayment of full sum OR an installment overdue for 2 months OR breach of terms (S103 LPA)

Question 22

Lender can give good title in the land

Answer 22

S104 LPA 1925

Question 23

Duties of the lender when selling

Answer 23

Not to sell to self, act in good faith

Question 24

Mortgatgee’s duty to act in good faith is “not a duty of care but a sui generis equitable duty arising from the relationship”

Answer 24

Parker-Tweedale v Dunbar Bank

Question 25

The mortgagee must obtain the best price REASONABLY obtainable, not best price - no need to go out of its way

Answer 25

Cuckmere Brick Co

Question 26

Case where mortgagee sold in bad faith

Answer 26

Tse Kwong Lam

Question 27

Once a case is befoire them for ANY reason, the court can order sale on terms it sees fit

Answer 27

S91(2) LPA 1925

Question 28

Case where court ordered sale so borrower coudl manage his debt (against wishes of lender)

Answer 28

Palk v Mortgage Services Funding

Question 29

Case that says when a lender is put on notice of undue influence

Answer 29

Barclays Bank v O’Brien - Where bank knows of a cohabitee and the transaction is not to their advantage

Question 30

Case which shows how a bank can discharge their duty of care to a potential victim of undue influence

Answer 30

RBS v Etridge - basically make sure they know what they’re committing to

Question 31

Case which says acquisition mortgages have special status

Answer 31

Abbey National v Cann

Question 32

No need to hold off for the market to recover

Answer 32

China & South Sea Bank