Mortgages Flashcards
Santley v Wilde
a conveyance of land as security for the payment of a debt or the discharge of some other obligation
s1(2)(C) LPA 1925
a mortgage is capable of being a legal interest
s52(1) LPA 1925
to be legal, it must be created by deed
s1 LP(MP)(A) 1989
the requirements for a valid deed - it must be headed ‘deed’, it must be signed by the grantor, attested by a capable witness, and delivered (dated)
s27(2)(f) LRA 2002
Registered -the mortgage must be substantively registered as it is on the list of registrable dispositions
s4(1)(g) LRA 2002
Unregistered - mortgage triggers compulsory first registration if not protected by holding title deeds
s2(4)(i) LCA 1972
Unregistered land - where protected by title deeds can be registered as Class C(i) charge
s2(4)(iii) LCA 1972
or C(iii) land charge
Legal mortgage
binds the world once it has been registered
Equitable mortgage
s32 LRA 2002 Notice must be entered on the charges register of the freehold, which will make it binding on any purchaser - s29(2) LRA. If no Notice, void against a purchaser for value - s29(1) LRA 2002
Options to purchase
will prevent the M’OR’s equitable right to redeem. If the MEE exercises the option, the M’OR cannot repay the loan and get their land back unencumbered by the mortgage
Samuel v Jarrah
options to purchase within the mortgage deed are void. Option granted on the same day as mortgage was void
Reeve v Lisle
option in a transaction independent of the mortgage may be valid. Option was granted 12d after mortgage, formed a separate bargain in the eyes of the court
Jones v Morgan
if option linked to mortgage, option will be void. Would prevent equitable right to redeem by M’OR
Warmborough v Garmite
the court will look at the ‘substance’ of the transaction to ascertain its true nature/determine
Brighton CC v Audus
applied Warmborough. Its overall character was not a mortgage
Postponement of legal redemption date
the date from which the MO is able to repay the loan and interest in full to discharge the mortgage (equitable right to redeem begins immediately after the legal date expires
Toomes v Consent
equity won’t allow a mortgage term that prevents redemptions all together
Knightsbridge Estates v Byrne
legal date of redemption pushed back to 40year after start of mortgage term, but upheld: arm’s length business transaction, freely and willingly entered into + MO received a very low interest
Fairclough v Swan Brewery
lease had 17.6 years to run and legal redemption was pushed back to 6 weeks before the lease was due to expire - struck down - the MO would not get back substantially the same property - a lease with 17years to run
Collateral advantage
residential = unlikely to uphold, commercial = uphold the collateral tie
Biggs v Hoddinott
collateral tie which isn’t unscoscnionable or repugnant to right to redeem and doesn’t last longer than the duration of the mortgage. The court said no = the business entered with eyes open
Noakes v Rice
collateral tie not usually allowed to go beyond duration of mortgage.
Kreglinger v New Patagonia
If the collateral tie goes beyond the duration of mortgage, must be genuinely independent of the mortgage transaction
Esso Petroluem v Harper’s
must also not be in restraint of trade
Holles v Wyse
court has the power to strike down an unconscionable or penal interest rate
Cityland v Dabrah
No legal advice, vulnerable, trusting naive. Lender - bargaining position, rate was 19% pa + 57% total amount of the loan. Effective 38% when the borrower went into default. Was changed = the court changed the 19% rate with 7%
Multiservice Bookbinding v Marden
Rate 2% above the bank rate, loan couldn’t be deemed for 10years BUT it was beneficial - it was okay
Falco Finance v Gough
late payment by 1 day increased rate by 5% to 14% for the entire term - STROKE OUT
Davies v Directloans
rate of 21.6% when market rate was 17% was justified as MO had poor credit history and ME was taking risk. 4.6% above market rate was not improper
Paragon Finance v Nash
rate of 2-4% above market area was justified as ME itself was suffering financial difficulties + had a higher cost of borrowing on the international money markets
s62 Consumers Act 2015
unfair = causing significant imbalance between parties’ rights to consumer’s detriment
s67 CRA 2015
unfair terms not binding on borrowers, but remainder of agreement still in force
William v Boland
express consent - of all adult occupiers - must be fully informed and freely given
Bristol v Henning
can get implied consent too - wife’s knowledge
Barclays v O’brien
wife signed without reading, not advised to get ind. legal advice, didn’t have doc. explained to her
RBS v Entridge No2
Nature of docs -and practical consequences explained. Seriousness of risks, terms of loans, that they have a choice.
Avon Finance v Bridger
mortgage set aside bc. misled parents into believing they were signing docs for original mortgage not a new one
Kingsnorth Trust v Bell
second mortgage set aside - husband falsely told wife that it was for a short-term
Hewett v First Plus
husband’s failure to disclose affair to wife could be undue influence. Has breached the duty of fairness and honesty to her while persuading her to agree to re-mortgage, wife had agreed to mortgage to save home and maintain relationship
Bank of Scotland v Bennet
lender only put on inquiry if, there was a substantial risk that consent was obtained improperly
Barclays v Boulter
C could easily discharge burden by showing that the lender knew she was a wife and the transaction wasn’t on its face for her financial benefit. Burden shifts to lender to show reasonable steps.
Abbey National v Stringer
M’OR was an elderly lady who didn’t read and spoke little English, trusted her son, signed a mortgage for her son’s business, as loan wasn’t for her benefit, transaction was not explained to her - mortgage was set rise and unenforceable
CIBC v Pitt
Husband borrowed to speculate on stocks, had wife’s knowledge but not approval, but loan was stated to be for joint holiday home, was for joint benefit
Thompson v Foy
lender not put on enquiry, mum gifted house to daughter which D mortgage, but used to fund mum’s new lief in Spain
Coldunell v Gallon
mortgage not set aside, lender wrote directly to borrower’s elderly parent , son intercepted letter and got signature away
RBS v Etridge
solicitor is not lender’s agent, solicitor is responsible for own advice, lender entitled to assume solicitor has done job properly, solicitor can act for both owners - confirmed in Bank of Baroda v Rayerel
Equity and Law Homes v Prestidge
if wife consents to first mortgage but not to subsequent ones for larger sums, wife only bound to extent of sum in first mortgage
Castle Phillips v Piddington
Prestidge rule confined to where both mortgages for the same purpose
s95(4) LPA 1925
ME has right to possess immediately ‘before the ink is dry on the mortgage deed’ - Four Maids v Dudley Marshall
s6 of the Criminal Law Act 1977
makes a criminal offence to use or threaten violence to gain entry to premises, making self-help risky for the lender
s36 AJA 1970
court can postpone possession if borrower applies for postponement of possession, applicable to residential or part-residential property ONLY (‘which consits of or includes a dwelling house’). If it seems likely that the borrower will be able to pay all sums due with a ‘reasonable period’
s8 AJA 1973
defines ‘sums due’ = the arrears
C&G v Norgan
‘reasonable period’ = outstanding term of the mortgage
White v City of London
M’EE in possession must manage property to full potential and pay profit to M’OR (doctrine of waste)
N&P Lloyds
borrower wanting postponement should present a detailed financial plan to show that the loan and any arrears will be paid off before the mortgage term expires
Target Home v Clothier
borrower might be given chance to sell house himself
Mortgage Service v Steele
for borrower to be allowed to sell himself and postpone possession, need proof that a particular sale is about to be completed (i.e. evidence of actual/imminent exchange of contracts)
B&W v Ellis
postponement less likely if falling property values, negative equity, or borrower trying to delay a sale deliberately
Birmingham Citizens v Caunt
court can postpone possession for all types of property (not just residential) where reasonable prospect of payment is shown, but normally only up to 28 days
s101 LPA
power to sell arises impliedly under when the mortgage is made by deed and when the mortgage money has become due (one month after date of mortgage OR when one instalment is due)
Payne v Cardiff
if mortgage is repayable in instalments, the power arises as soon as one instalment is due
Horsham v Clark
s101LPA is not incompatible with Art 1 ECHR
s103 LPA
power becomes exercisable in any one of 3 situations: 1) MEE has served notice to M’OR to repay the capital, and 3 months have passed since then notice without the borrower paying 2) interest is in arrear and unpaid for at least 2 months 3) breach of another mortgage term
s104 LPA
sale to innocent purchaser after s101 but before s103 is still valid, borrower’s remedy is to claim damages from lender for selling too early
Cuckmere v Mutual Finance
to obtain a proper price or true market value. Lender failed to mention 1/2 planning permissions - reduced price paid, lender liable for difference
Newport Farm v Damesh
duty to sell at best price depends on circ. which have to be looked at in the round, perfection not required, sale price can be broadly within the right bracket
Michael v Miller
lender was reasonable to accept £1.625M for land valued between £1.6-1.9M
Tse Kwong Lam v Wong Chit Sen
lender should get expert advice on method of sale, marketing, reserve price, onus on lender to show this has been done
Bishop v Blake
breach of duty to obtain proper price, put in minimum effort, colluded with buyer, placed a simple ad with no contact number, sale price was 115k less than potential
Silven v RBS
lender can sell property as it stands - it has no duty to improve it or increase its value (no duty obtain PP or leases)
s105 LPA 1925
lender is a trustee of the surplus proceeds of sale, Must give them to the person next in line then to borrower
Silven v RBS
‘unfettered discretion’ to decide when to sell
Cuckmere
lender can sell whenever he likes, even if higher price could be obtained later
Bell v Long
lender could sell 4 properties at a discount together even if they’d have got more individually
Palk v Mortgage Services
court can order earlier sale against lender’s wishes (negative equity, lender wanted to rent and wait - but would have been gambling with borrower’s debt)
Barrett v Halifax
borrower in negative equity allowed to sell as he was more likely to get a better price than the lender
Parker-Tweedale v Dunbar
no duty to beneficiaries under a trust of the property where not a legal owner too. Wife was sole legal owner, husband tried to sue for failing to obtain a property price but no duty to him regardless of notice of his interest
