Mortgages Flashcards
What is a mortgage?
A mortgage is a transaction under which land or chattels are given as security for the payment of a debt or the discharge of some other obligation
Mortgage remedies
Sue for debt - client has no money Receiver - business probably closed Foreclosure - transfer whole beneficial interest to lender - draconian Possession - precursor to sale Sale - s101 LPA 1925
Requirements for remedy of sale
In accordance with terms of deed
Must be in good faith and sell for the best possible price
Cannot be in worse position than unsecured debt
Follow s101, s103 and s105 LPA 1925
Provisions of s101, s103 and s105 LPA 1925
s101 - Power of sale - Order
s103 - When power exercisable
s105 - Mortgagee becomes trustee of sale proceeds
Name a case where bank exercised the remedy of sale
Mutual Finance Ltd v Cuckmere Brick Co [1971]
Mortgagor sued Mortgagee claiming sale price was too low
Mortgagee duty to act in good faith broken
Name a case where bank exercised the remedy of possession
Ropaigelach v Barclays [1999]
No requirement for court order if taking possession of property can be carried out peacefully
Explain doctrine of undue influence
The equitable doctrine under which the court may set aside or decline to enforce any bargain reached by means of undue influence
Subtle form of pressure where other feels obliged
Can be actual or presumed
Explain presumption in undue influence
Presumption arises when there is
A relationship of trust and confidence
Circumstances justifying the presumption
Relationship abused in order to achieve bargain
What does someone need to prove to claim undue influence and outcome if established
Transaction was one which was advantageous to the alleged influencer
Burden of proof is on the defendant to prove no undue influence
Claimant can have mortgage set aside against other party if successful
Name 2 cases of undue influence
Royal Bank of Scotland Plc v Etridge [2001]
Ensure independent advice - make it clear what will happen if enter into transaction
Clean the taint!
Barclays Bank Plc v O’Brien [1994]
Undue influence can be either actual or presumed
Rights of wife prevail over lender if undue influence proven
Which case happened on the same day as Barclays v O’Brien but had different result
CIBC Mortgages v Pitt [1994]
Husband wife relationship not enough
Who is the mortgagee and who is the mortgagor?
Mortgagee - Bank
Mortgagor - Owner
When can power of sale be exercised under s103 LPA 1925
Three months default of payment after notice issued
Two months default payment of interest
Breach of some other covenant
