Mortgages Flashcards
2 remedies where lender wishes to end mortgage?
- Power of sale.
2. Foreclosure.
By virtue of what does lender have power of sale? Authority.
Implied into deed by s101(1)(i) LPA.
What 2 conditions must be met to exercise power of sale?
- Power must have arisen, i.e. date of redemption has passed - s101(1)(i) LPA.
- Power is exercisable - see s103 LPA.
When exercising power of sale, under what duty is the lender? Case.
To act in good faith & obtain true market value - Cuckmere Brick v Mutual Finance.
How must the selling mortgagee apply the proceeds of sale? Authority.
As per s105 LPA.
What is the effect of foreclosure? Is it likely to succeed?
Lender takes absolute ownership (subject to prior interests). Unlikely as either party can request court order for sale in lieu of foreclosure under s91(2) LPA.
3 remedies where lender wishes to continue the mortgage?
- Debt action (unlikely if borrower is broke).
- Possession.
- Receiver.
When will the right to take possession arise? Case.
“As soon as the ink is dry” - Four Maids v Dudley Marshall.
What must the lender not do when taking possession? Authority. How can this be avoided? Authority.
- Use or threaten force - s6(2) CLA 1977.
2. By applying to court for order for possession - s36(2) AJA 1970.
Once lender has taken possession, under what duty is he? Case.
To manage the property with due diligence and account for any surplus profit - White v City of London Brewery.
By virtue of what does lender have power to appoint receiver? Authority.
Implied into deed by s101(1)(iii) LPA.
What 2 conditions must be met to exercise power to appoint receiver?
- Power must have arisen, i.e. date of redemption has passed - s101(1)(i) LPA.
- Power is exercisable - see s103 LPA.
How must the receiver apply the proceeds of sale? Authority.
As per s109(8) LPA.
How can a lender protect his mortgage in the registered system? Authority.
Registrable disposition - s27 LRA, so register against title by date of registration of owner/next mortgagee - s29 LRA.
How can a lender protect his mortgage in the unregistered system? Authorities.
- 1st lender can take deeds - s85(1) LPA.
2. Subsequent lenders must register mortgage as puisne mortgage, as Class C(i) land charge - s2 LCA 1972.
