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Land Law > Mortgages > Flashcards

Mortgages Flashcards

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1
Q

A mortgage is defined as: ‘a conveyance of land … as a security for a payment of a debt or the discharge of some other obligation

A

Stanley v White

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2
Q

A mortgage is an interest that is capable of being legal

A

s. 1 LPA 1925

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3
Q

In order to be a legal mortgage it must be created by a deed

A

s. 23 LRA 2002

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4
Q

An equitable mortgage would arise

A
  • if there is a valid contract to create a mortgage

- if the land-owner only had an equitable interest in the land

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5
Q

A mortgage is a triggering event

A

It must be registered on the land registry (s. 4 LRA)
As well as the charges register
- Legal (s. 27 LRA)
- equitable (s. 32 LRA)

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6
Q

The date of redemption

A

The first date that the mortgage can be paid in full.

  • It cannot be prevented altogether (Toomes v Consent)
  • It can be postponed
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7
Q

Date of redemption postponed until 6 weeks before the end of a 17 yr lease

A

Fairclough v Swan Brewery

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8
Q

Options to purchase:

A

Will generally be held void if included in a mortgage Samuel v Jarrah Timber

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9
Q

Options to purchase can only be valid if

A

granted afterwards in a separate agreement

Reeve v Lisle

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10
Q

Collateral ties

A

Will be struck out if unconscionable, a penalty, a restraint or a clog on the equity of redemption

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11
Q

A beer tie (could only by their beer) was truck out because it could last the duration of the lease, even after the mortgage had ended

A

Noakes v Rice

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12
Q

The defendant entered into a agreement where it would distribute the company’s petrol at two of it’s garages

A

A tying agreement must not amount to a restriction of free trade
- Esso Petroleum v Harper’s Garage

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13
Q

A collateral advantage will be allowed if wholly independent of the mortgage arrangement

A

Kreglinger v New Patagonia

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14
Q

Even were a collateral tie was made before the mortgage it was still struck out as it was part of a refinancing arrangement and thus integral to the mortgage

A

Jones v Morgan

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15
Q

The court can strike down a penal rate of interest

A

Holles v Wyse

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16
Q

A penal rate of interest is one that is

A
  • Exorbitant, extravagant or unconscionable

Cavendish Makdessi

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17
Q

A penal rate may also contradict the statutes of

A

Consumer Rights Act 2015
Unfair Terms in Consumer Contract Regulations 1999
Consumer Credit Act 2006

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18
Q

An interest rate that doubled on default was held to be unfair under UTCCR

A

Falco Finance v Gough

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19
Q

Rates of 2-4% above the high street lender was deemed fair

A

Paragon Finance v Nash

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20
Q

Even though this was above the high street lender, a 21% interest rate was allowed because the mortgagor had a bad credit history

A

Davies v DirectLoans

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21
Q

An interest rate must not arise from an unfair relationship

A

Consumer Credit Act 2006

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22
Q

If the wife/partner has not expressly or impliedly consented to a mortgage being taken out over a joint company

A

She will continue to have an overriding equitable interest in occupation
Williams and Glyn Bank v Boland

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23
Q

Lenders must take care to ensure that consent is not obtained as a result of undue influence

A

If it is, the contract will be invalid and the mortgage set aside
Avon Finance v Bridger

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24
Q

Son misled elderly parents into thinking that they were singing documentation connected with the original mortgage, not a new one

A

Avon Finance v Bridger

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25
Q

Husband lied to his wife about the size and term of the loan

A

Barcleys Bank v O’Brian

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26
Q

Wife only spoke Urdu so the bank had to use her husband, who deliberately mistranslated

A

Natwest Bank v Amin

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27
Q

Where the loan is not for the wife’s benefit, or where the wife guarantees the debts of a husband or his company

A

The lender will be put on enquiry

RBS v Etridge (No. 2)

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28
Q

The lender will not be put on enquiry were money is advanced for an apparent joint benefit,

A

CIBC Mortgages v Pitt

  • a loan given for a holiday cottage, but which was actually gambled away by the husband.
  • the bank took no knowledge or reason to suspect that the husband had pressured the wife into consenting.
29
Q

The lender that takes possession is under struct requirements to account for any profit made out of the property

A

Swan Brewery

- they must give the credit back to the borrower

30
Q

Powers of the lender

A
  • Debt Action
  • Right to Possession
  • Power of Sale
  • Personal Recall Remedy
  • Appointing a Receiver
  • Foreclosure
31
Q

Debt Action

A

The lender’s first option: tho reclaim the loan + interest

- usually the borrower will not be able to pay so consider the other options

32
Q

Right to possession

A

Lenders can take possession as soon as the mortgage is signed (Four Maids v Dudley)

33
Q

Self-help is possible under the right to possession

A

But entry must not be forced so this is risky (Ropaigealach v Barcleys)

34
Q

The Lender can apply for a court order for the right to possession

A

This gives the mortgagor extra protection under s. 36 AJA 1970

35
Q

Possession can be postponed at a court’s discretion

A

IF the borrower can repay within a reasonable period

Cheltenham and Gloucester BS v Norgan

36
Q

The court will postpone an order for possession if the mortgagor has a sound financial plan to repay the instalments

A

National and Provincial v Lloyd

37
Q

Postponement is less likely to be awarded by the court if the lender is prejudiced by falling property prices

A

Bristol and West BS v Ellis

38
Q

The lender is liable to account to the mortgagor for any rent they could have made whilst in possession

A

White v City of London Brewery

39
Q

Power of Sale

A

under s. 101 LPA 1925

  • a power of sale is implied into every mortgage by deed
  • only becomes exercisable upon default
40
Q

The power of sale arises as soon as the first capital instalment is due

A

Payne v Cardiff RDC

41
Q

The power of sale can only be exercised if notice is served, and if the rent is in arrears or there is some other breach

A

s. 103 LPA 1925

42
Q

Personal Recall Remedy

A

the lender can sue the borrower for the debt

- Alliance and Leicester v Slayford

43
Q

There is a limitation period of 12 years in regards to the personal recall remedy

A

Cannot sue after this (West Bromwich BS v Wilkinson)

44
Q

Appointing a receiver

A

someone who oversees the sale and prevents the lender being liable for a negligent sale
Northern Properties v Clarke

45
Q

Foreclosure

A

An equitable remedy (very rarely) awarded at the court’s discretion.

46
Q

The borrower could challenge on a ground of a human right to a home

A

The lender’s rights in law will most likely override this claim (FJM v UK)

47
Q

The lender cannot take possession if there is an overriding interest on the property

A

Williams and Glyn’s Bank

48
Q

If the borrower can immediately redeem the entire mortgage they can apply for a ‘stay of possession’

A

BPBS v Caunt

49
Q

S. 91 LPA 1925 allows a court to order a sale of the property to anyone interested in the land

A

A way of keeping the lender out of the property and for the occupier to manage the sale of the property.
Palk v Mortgage Services

50
Q

A suspension of possession order may be given by the court if the borrower can pay any sums due under the mortgage

A

S. 36 AJA 1970

51
Q

The suspension of possession only applies when the mortgagee (lender) applies

A

Horsham Properties v Beech

52
Q

The application for a suspension of possession must be for a dwelling

A

Definition of a dwelling

URATEMP v Collins

53
Q

A suspension only applies when the borrower is able to pay any sums due within a reasonable time

A

Norgan

54
Q

The lender must take care to obtain a proper price for the property

A

i.e. the true market value of the land

Bishop v Blake

55
Q

Lenders are not allowed to sell the house themselves

A

Halifax v Thomas

56
Q

The lenders cannot sell the property to a connecting company

A

Lipman v Jones

57
Q

Lenders can sell whenever they choose, even if they could have obtained a higher price by waiting

A

Cuckmere

- but they must do so in good faith

58
Q

Lenders can choose how to sell the property

A

Auctions help to show that a proper price was obtained in good faity
Cuckmere

59
Q

A property was sold at auction, without it having been advertised that it had extensive planning permission, meaning the sale was much lower.

A

Cuckmere Brick v Mutual Finance
Salmon LJ
- mortgagee had not taken reasonable precautions and so had breached it’s duty to the mortgagor

60
Q

The mortgagee sold the claimant’s property by auction where price fixing sold the house at a loss to the mortgagee.

A

Tse Kwong Lam v Wong Chit Sen

  • Court held there was a conflict of interest and that the mortgagee had failed in his duties
  • an example of a mortgagee failing to obtain a proper price of sell in good faith.
61
Q

The mortgagee had sold the property directly to a company, without putting it on the market, leading to a lower sale price

A

Bishop v Blake

- an example of a mortgagee failing to obtain a proper price.

62
Q

The receiver appointed by RBS sold properties as they were.

A

Silven Properties v RBS

  • The court held that the receiver and the bank were not under any obligation to incur expenses that would delay a sale.
  • the bank is entitled to improve a property but is under no duty to do so.
63
Q

The duty to obtain a proper price is not necessarily breached if the court merely has misgivings about the price - the market value is not an exact figure

A

Meah v Home Money Finance

64
Q

Priorities of Mortgages

- who gets maid first

A

Legal Mortgages
Equitable Mortgages
Mortgages of unregistered land

65
Q

The money received from a sale needs to be used in this order

A

s. 105 LPA 1925
- To pay the costs fo the sale
- Any accrued costs
- The principle debt
- The debt of any other mortgages
- The surplus back to the borrower

66
Q

If a lender is put on inquiry, it is reasonable to suggest to the wife (usually) that she takes independent legal advice in the husband’s absence.

A

RBS v Etridge (No. 2)
- the lender is entitled to assume that the solicitor has done his job properly in advising his client and so can still enforce the mortgage even the solicitor hasn’t.

67
Q

Restitutionary Subrogation

A

Equity and Home Loans v Prestidge

- when you re-mortgage then the 2nd mortgage takes the shoes of the first mortgage.

68
Q

Where a property is bought with a mortgage, the mortgage will be considered to have come ‘first in time’

A

Abbey National v Cann

69
Q

Restitutionary Subrogation

A

Equity Home Loads v Prestidge

Land Law (5 decks)

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