Mortgages

Question 1

S.1(2) LPA

Answer 1

Mortgages can be a legal interest.

Question 2

S.52 LPA

Answer 2

Mortgages must be created by deed.

Question 3

S.27(1) LRA

Answer 3

Registered- It is a deposition and must be created by registration.

Question 4

ss 4/7 LRA

Answer 4

Can trigger registration.

Question 5

Equitable mortgages

Answer 5

Of an equitable interest by signed writing (s.53(1)(c) LPA

Must be a specifically enforceable contract for a mortgage.

Question 6

Misrep

Answer 6

Barclays’s Bank v O’Brien (HL)

Question 7

Barclays’s Bank v O’Brien (HL)

Answer 7

H and W took out 2nd mortgage on matrimonial home to secure overdraft for husband’s company. She did not read documents but was told inaccurately that the overdraft was limited to £60,000. In reliance on this she signed.

Bank sought to enforce when debt reached £150,000.

Held that due to the misrepresentation she was only bound to the amount of £60,000

Question 8

Undue Influence

Answer 8

Royal Bank of Scotland v Etridge (No. 2) (HL)- Lord Nicholls

Question 9

Royal Bank of Scotland v Etridge (No. 2) (HL)- Lord Nicholls

Answer 9

Up to person alleging undue influence to prove
it- specific evidence such as a witness or a document.

Can make out a presumed case of undue influence- burden shifts to other party. Must show that there is a relationship of trust and confidence (assumed for a parent and child (only when parent gets child to sign)/solicitor and client) as well as transaction calling for an explanation e.g. an elderly mother guaranteeing her son’s business debts.

Question 10

Undue Influence- Circumstances in which mortgagee will be adversely affected

Answer 10

Barclays Bank v O’Brien

Where that other was acting as the mortgagee’s agent (quite rare)

Where the mortgagee has actual or constructive notice of that other’s conduct

Constructive notice- where they have been “put on inquiry”-when the provision of security is for a deal which principally benefits another (will take documents at face value) and the relationship between the mortgagor and debtor is non-commercial.

Question 11

Undue Influence- What can mortgagee do to avoid transaction being set aside

Answer 11

Royal Bank of Scotland v Etridge

The furthest a bank can be expected to go is to take
reasonable steps to satisfy itself that the wife has had brought home to her, in a meaningful way, the practical implications of the proposed transaction.

Question 12

Royal Bank of Scotland v Etridge- Minimum Obligations

Answer 12

Mortgagee should advise her to seek solicitor, send
financial information on husband’s affairs to
solicitor (with husband’s consent).

Solicitor should meet with the wife without the
husband being present and explain why he is involved, explain nature of the documents, practical consequences of mortgaging a home, seriousness of risks, emphasise that wife has a choice. Solicitor should also not act for the husband or at least not in this particular transaction.

If solicitor messes up the principle of agency comes into play with the solicitor being personally liable to W.

Question 13

Rights of the Mortgagor

Answer 13

Main principle- Mortgagor has the right to get his property back on repayment of the loan unencumbered by any rights of the mortgagee.

Legal/Contractual right to redeem-Paying off mortgage on date specified in the terms. General rule that mortgage cannot be redeemed before the specified date unless provided for otherwise and you cannot repay late either.

Equitable right to redeem- This is available after the date specified for repayment and is available until the moment the court grants an order of foreclosure. However, some mortgages will set the redemption date as 6 months after the mortgage has been created which maintains the fiction of early repayment.

Question 14

Define a mortgage

Answer 14

Santley v Wilde

A conveyance of land… in security for the payment of a debt or the discharge of some other obligation for which it is given.

Question 15

Equitable right to redeem

Answer 15

This arises where the loan has not been repaid on the legal date of redemption.

Question 16

Cesser on redemption (mortgage by demise)

Answer 16

A provision that on the debt being repaid on a named date the lease should automatically terminate.

Question 17

Knightsbridge Estates Trust Ltd v Bryne

Answer 17

Equity of redemption

To explain that a lease can some cases prevent early redemption.

Question 18

Fairclough v Swan Brewery

Answer 18

Mortgage of a lease

Where the redemption date of a mortgage on a lease is at the point when the lease is about to expire, then redemption is of no value to the mortgagor.

Question 19

Krelinger v New Patagonia Meat and Cold Storage Co.

Answer 19

Clog on the equity of redemption

To show that there are circumstances where a collateral advantage in a mortgage can continue after the mortgage has been redeemed.

Question 20

Nature of a mortgage

Answer 20

A contract between the mortgagee and /or

and

A proprietary interest in the land of the mortgagor granted to the mortgagee.

Question 21

Types of Mortgage

Answer 21

Mortgage of land is normally a charge by way of legal mortgage.

An equitable mortgage can be created through an agreement which complies with s 2 LPA (Misc provisions) 1989

Question 22

History

Answer 22

Originally used as a method of obtaining loans, now used to buy a title or lease a home. However, equity still insists on the equity of redemption, and it claims to set a mortgage aside. (Oldham (2002)).

Question 23

Equity of redemption

Answer 23

Fundamentally, a mortgagor can pay off early. As this is equity, it is not absolute.