Mortgages

Question 1

Demise

Answer 1

conveyance or transfer of property or a title by will or lease.

Question 2

Mortgage

Answer 2

A loan of money secured against property, interest in land under s1(2)LPA25, created by legal charge s85LPA, effected by execution of mortgage deed s52LPA

Question 3

Contractual right to redeem

Answer 3

right of borrower under mortgage to pay off (redeem) it, usually set out in mortgage deed as being 6m from the start of mortgage, though repayment schedule usually for 25y, if not repaid in the date of redemption = breach f contract, house can be taken

Question 4

Equitable right to redeem

Answer 4

Strikes out any clause in deed that prevents Mor from redeeming property if he repays it; BUT repayment of commercial mortgage can be postponed or limited, if mortgage is not unconscionable & the right to redeem is not illusory

Question 5

Acquisition mortgage

Answer 5

When one borrows money to buy home

Question 6

sub-prime mortgages

Answer 6

loans to people with poor credit history

Question 7

Mortgage by demise or by conveyance

Answer 7

Nowadays possible if Mor has only E title; E title could be where co-ownership of failure of formalities (deed); not really used

Question 8

Charge by deed expressed to be by way of legal mortgage

Answer 8

Mor of a legal estate remains the owner, but by deed burdens it with a legal interest in favour of the Mee, giving him the same protection, powers and remedies – in particular the right to possession – as if he had granted him a mortgage term of 3000 years (or in the case of mortgage of a lease, a term less by one day than the term of that lease)

Mee has the power to sell the whole estate subject to E

Question 9

Four-Maids Ltd v Dudley Marshall (Properties) Ltd

Answer 9

HARMAN J at 320: […] the right of the mortgagee to possession in the absence of some contract has nothing to do with default on the part of the mortgagor. The mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the contract, express or by implication, whereby he has contracted himself out of that right. He has the right because he has a legal term of years in the property or its statutory equivalent. If there is an attornment clause, he must give notice. If there is a provision that, so long as certain payments are made, he will not go into possession, then he has contracted himself out of his rights. Apart from that, possession is a matter of course.

Question 10

Ropaigealach v Barclays Bank Plc

Answer 10

The mortgagees, who did not reside at the mortgaged property, found out from a neighbour that the mortgagee bank had sold it by exercising its common-law power of sale. They argued that, as the property was a dwelling, the mortgagor should have first obtained an order for sale from the court under s 36 AJA 1970;

Question 11

Ropaigealach v Barclays Bank Plc

Answer 11

The court can exercise its discretion [under section 36 of the Act of 1970] only if the mortgagee applies to it for a possession order: technically, therefore, the mortgagee can deprive the mortgagor of protection by electing to seek some other means of enforcement; thus if Mor does not apply to court, there is no protection for Mee from Mor taking possession and i.e. selling property

Question 12

Western Bank v Schindler

Answer 12

The mortgagee sought possession in circumstances in which the mortgagor had allowed a life policy, taken as collateral security, to lapse, but where there had been no default under the mortgage itself. The question arose whether the court could exercise the powers conferred by section 36(2) of the Act in a case where no sums being due under the mortgage and there being no default, debatable

Question 13

Quennell v Maltby

Answer 13

A landlord owned a mortgaged house, which he let out to a tenant; He wished to take possession of the house, but couldn’t as his tenant was a statutory tenant; As there was only £1,000 outstanding on the mortgage, the landlord’s wife bought out the mortgage and sought possession herself

Although on the face of the claim for possession, the wife could take possession irrespective of protective tenant legislation, a court is entitled to look behind a formal legal relationship; As the wife was not enforcing her security against her husband, but rather acting on behalf of her husband against the tenant, possession would be denied

Question 14

Downsview Nominees Ltd v First City Corp Ltd

Answer 14

A mortgagee owes a general duty to subsequent encumbrances and to the mortgagor to use his powers for the sole purpose of securing repayments of the moneys owing under his mortgage and a duty to act in good faith.

Question 15

First National Securities v Hegerty

Answer 15

A husband and wife owned their home jointly. The husband caused the wife’s signature to be forged on a mortgage agreement. Husband defaulted, wife sought H’s beneficial interest
If the husband and wife were up to then equitable as well as legal joint owners of the house I think that this disposition by the husband was a sufficient act of alienation to sever the beneficial joint tenancy and convert the husband and wife into tenants in common. In any case the disposition was in my view effective to create a valid equitable charge in favour of the lenders of the husband’s beneficial interest in the house.

Question 16

Thames Guaranty v Campbell

Answer 16

A husband and wife owned their home jointly. Unbeknownst to the wife, the husband charged the property to the claimant to secure an overdraft facility; no longer possible after 1989: s 2 LP(MP)A 1989.

Equity: in the course of concluding a contract, a person has represented that he can grant a certain interest/property, and it later appears that there is a deficiency in his title or interest, the other party can obtain an order compelling him to grant what he has got

Question 17

Collateral advantage

Answer 17

The situation in which a contracting party uses his stronger bargaining position to obtain terms that are advantageous to him, often disproportionately so, over and above the benefits conferred upon him by the core contract itself;
In commercial transactions allowed provided that it:
1) stops when mortgage is redeemed,
2) is not unconscionable

Striking down collateral - discretionary equitable remedy

Question 18

Unconscionable terms

Answer 18

Equity has power to strike down any unconscionable or oppressive term in mortgage agreement; one must take clear advantage of another

Question 19

Barclays Bank v O’Brien

Answer 19

Step 1: claim of undue influence:
– Class 1 actual UI; – Class 2 presumed UI:
• 2A: certain relationships that raise presumption: e.g., doctor/patient, solicitor/client
• 2B: any other relationship, e.g., H & W, where the complainant has reposed trust and confidence in the wrongdoer.

Question 20

Swiss Bank Corp v Lloyds Bank Ltd

Answer 20

Charge – most used form of security
“An equitable charge which is not an equitable mortgage is said to be created when property is expressly or constructively made liable, or specially appropriated, to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is to say, by the appointment of a receiver or an order for sale.”

Question 21

Re Cosslett

Answer 21

The essence of a floating charge is that it is a charge, not on any particular asset, but on a fluctuating body of assets which remain under the management and control of the chargor, and which the chargor has the right to withdraw from the security despite the existence of the charge. The essence of a fixed charge is that the charge is on a particular asset or class of assets which the chargor cannot deal with free from the charge without the consent of the chargee.