MORTGAGES Flashcards
Definition of a Mortgage
A mortgage is a transaction whereby property either land or personal property is given as security for the repayment of money borrowed.
What is a Charge?
A charge attached to the land of the mortgagor and gives right over the land but does not convey a legal or equitable interest in the mortgages land to the chargee.
Who is the Mortgagor?
The borrower
Who is the Mortgagee?
The lender
Introduction to Mortgages
A mortgage is a form of security interest in land which will guarantee the amount of a loan made so the mortgagee has confidence that he/she will recover their money.
What is a Mortgage?
The borrower (mortgagor) grants the leader (mortgagee), a Mortgage over his property. The effect of this is that the mortgagee has rights in the property which can be realised if the mortgagor defaults in repayment. If the borrower runs into debt and cannot repay the sum borrowed, the mortgagee can claim possession of the property and force a sale and so recover the sum borrowed from the proceeds of the sale.
What is ‘Equity of Redemption’?
Describes the rights that a mortgagor retains in the property used for the security of the loan. rights recognised by equity but not common law.
It is a separate proprietary right in property and has a value of its own and can be transferred to others or sold. the equity of redemption arises as soon as the mortgage is created.
What is the case Barclays Bank plc v Zaroovabli [1997] 2 All ER 19?
A bank failed to register a charge as required under law. Under the age there was a prohibition on leases by the mortgagor. In spite of the prohibition the mortgagor granted a lease to a tenant for six months. The tenant then acquired a statutory tenancy under the Rent Act 1977. The Court of Appeal held that the lease was binding on the bank and took priority. The bank had failed to register the charge when it had been created.
What rights arise under the equity of redemption?
The equity of redemption arose as soon as the mortgage was created.it was in itself a right in property and it could be dealt with in several ways:
- It could be conveyed to another.
- It could be leased.
- It could be devised/ left to someone by will.
- It could even be mortgaged itself.
What is the position under Common Law in relation to Mortgages?
The mortgage of capital would become the owner of the mortgagor’s property subject to the mortgage.
It gave the mortgagee rights including the right to sell the property and the mortgagee was also able to claim any income which arose from the property while the mortgage was in existence. These rights would last until the mortgagor repaid the mortgage.
What is ‘legal date of redemption’?
Repayment had to be on the day laid down in the mortgage deed. If there was a delay, the right to redeem was lost.
What is the definition of the equitable right to redeem?
Allows the mortgagor to redeem after the legal date for repayment has passed. It means that any mortgagor who fails to pay on the legal date for redemption retains the right to redeem. The mortgagor could ignore the date set out in the mortgage deed and repay whenever it was convenient, so long as the legal date for redemption under the contract had passed. Equity would uphold the rights of the mortgagor to have the right to redeem his property at any time on any day.
What are the special circumstances allowed under the equitable right to redeem?
- The mortgagor was unable to repay because he had had an accident and physically was unable to repay the money.
- The mortgagor was unable to repay because he had made a mistake about the date of repayment or who was owed the money.
- The mortgagor could prove special hardship.
Redemption is allowed in all cases so long as the debt was repaid by the mortgagor. The right to redeem was a right in the property so it could be enforced against a third-party purchaser.
Explain the creation of mortgages Before 1925?
A legal mortgage of freehold was created by conveying the fee simple estate to the mortgagee. This included a convent for re-conveyance on redemption of the mortgage. The mortgagee then became the legal owner of the mortgaged property. Equity accepted that the mortgagor retained the right to redeem after the date for repayment had passed.
What does demise mean?
The transfer of property to another by lease or under a will.
