Mortgages Flashcards
mortgage
a secured loan, both a contract and an interest in the land
redemption of a mortgage
paying it off so that the land is free from the mortgage
undue influence
the use of improper pressure or influence, which effectively deprives a party of their independent will
actual undue influence (Class 1)
arises where overt acts exert improper pressure in a similar manner to duress
undue influence from a relationship (Class 2)
arises from a relationship between two parties, where one has used their dominant position to exploit the weaker party (certain types accepted without any further evidence)
possession
taking back the house, usually sought before sale
overreaching
if you take from two trustees, you overreach the beneficiaries’ interests
Williams & Glyns’s Bank v Boland 1980
a woman recognised as a person with rights
City of London Building Society v Flegg 1987
f: Mr and Mrs Flegg had an equitable property held for them on trust by their daughter and her husband, the latter remortgaged, building society sought possession
j: building soc’s charge took priority
p: overreaching precedent
Cheltenham & Gloucester Building Society v Norgan 1996
f: a mortgagor felt into arrears, C&G sought possession
j: possession allowed but postponed until the end of the mortgage term, factors to give consideration to given
p: encourages negotiations
Horsham Properties Group v Clark 2008
f: Ds dell into mortgage arrears, mortgagee claimed possession because they wanted to sale, Ds claimed that under HRA the mortgagees should seek a court order for possession or sale
j: since the receivers’ power to sell the property was derived wholly from the mortgage contract, there was no corresponding power under the Act, the defendant’s issue technically never arose, the mortgagors can be trespassers in their own home if it was owned by somebody else
p: s101 to implement rather to override the private bargain between the mortgagor and the mortgagee
Edwards v Lloyds TSB 2004
f: a husband’s fraudulent obtaining of a mortgage led to a mortgagee seeking his jointly held family home to be sold
j: under TOLATA s14 the house could be sold, but it was delayed for 5 years (until the youngest child completed education), the debt owed relatively small and the wife’s share would not let her buy
p: a very successful use of TOLATA
First National Bank v Achampong 2003
f: a wife and joint tenant guaranteed her husband’s business debts, the bank failed to separately advise the wife who had 50%
j: presumed undue influence found in preserving trusting relationship, but even though infant grandchildren and mentally handicapped son, order for sale made under s14
p: undue influence and TOLATA precedent
Bank of Ireland Home Mortgages v Bell 2001
f: ex-wife and her nearly 18yo son living in the house mortgaged by the husband, bank sought s14 order
j: yes, the debt was huge, on balance more significant than a consideration of a nearly 18yo minor, approved Shaire
p: TOLAT precedent, unfairness on the banks mentioned
Mortgage Corp v Shaire 2001
f: after his death it turned out that H forged W’s signature and mortgage accepted against his share, payments not met, bank applied for possession order, W argued that under s15 her interest should prevail
j: Neuberger came up with the idea that mortgage should pay 25% belonging to the bank as a loan, he said that the law changed by TOLATA so it’s better for the beneficiaries
j: old law irrelevant anymore, TOLATA precedent
Re Citro 1991
f: Mr and Mrs Citro went bankrupt, Mr was living in their house with three children, youngest 12yo, Mrs - somewhere else with 3 children, youngest 10yo, the debts owed exceeded the value of the interest in their homes, truestees applied for declarations and orders under LPA 1925
j: financial hardship not an exceptional circumstance, exceptional means beyond the normal ‘melancholy consequences’
p: normal awfulness of bankruptcy not enough
Barca v Mears 2004
confirmed Re Citro in definition of exceptional circumstances
Barclays Bank v O’Brien 1993
f: Mr and Mrs executed a 2nd mortgage on their home as security for an overdraft run up by a company in which H had an interest, they ignored documents that they should consult solicitors, Mr made false representation
j: classes of undue influence identified, burden shifts onto the bank
p: mortgage precedent
RBS v Etridge 2002
8 cases with wives, mortgage precedent
Palk v Mortgage Services 1993
f: Mr and Mrs were unable to pair their mortgage, they negotiated a sale of the house for less than redemption of mortgage, the company refused consent tot he sale and postponed it which would increase the interest payable
j: in the circumstances it was just and equitable to order a sale, notwithstanding the deficiency in price
j: as above
Cheltenham BS v Norgan 1996
Factors to take into account when constituting a reasonable period for the purposes of s36:
- how much can the borrower reasonably afford to pay, both now and in the future?
- if the borrower has a temporary difficulty in meeting his obligations, how long is the difficulty likely to last?
- what was the reason for the arrears which have accumulated?
- how much remains of the original term?
- what are the relevant contractual terms e.g. when is the principal due to be repaid?
- is it a case where the court should exercise its power under AJA 1973 s8 to disregard accelerated payment provisions?
- what are reasonable expectations of the lender? What term is reasonable? Should the lender capitalise the interest?
are there any reasons affecting the security which should influence the length of the period for payment?
