Rights Over Land - Mortgages

Question 1

What is ‘the equitable right to redeem a mortgage’?

Answer 1

Where a court would step in to allow a mortgagor to repay their mortgage if they could afford to, if a mortgage had made themselves absent with a view to recovering the freehold as if the mortgagors had defaulted on the day of redemption

Question 2

What is meant when it is said that ‘the right to redeem cannot be excluded, rendered illusory or postponed’?

Answer 2

The terms of a loan are not valid if they prevent the mortgagor from eventually recovering the property on repayment

Question 3

Historically, what are the four principles known as ‘equity of redemption’?

Answer 3

1. The equitable right to redeem the mortgage
2. The right to redeem the mortgage cannot be excluded, rendered illusory or postponed
3. The mortgage cannot include collateral advantages for the mortgage
4. Oppressive interest rates

Question 4

What is meant when it is said that ‘the mortgage cannot include collateral advantages for the mortgagee’?

Answer 4

A collateral bargain freely entered into by the parties is enforceable BUT a collateral advantage is void

(Eg a collateral agreement typical is that of a loan to a landlord from a brewery where they are required to buy all their drink from that company - although this is now not allowed under EU law)

Question 5

What power has a court against oppressive interest rates?

Answer 5

The court has a general equitable power to strike down any term in the mortgage agreement that is unconscionable

If therefore it is deemed that the interest rate of the agreement could constitute impossible means to repay a charge, the court can take action

Question 6

What are the three kinds of undue influence?

Answer 6

1. Where someone is actively pressurised into entering into an agreement (eg CIBC Mortgages PLC v Pitt)
2. The second is where there is an irrebuttable presumption of undue influence (ie that where there is s relationship between a doctor and patient, trustee and beneficiary, patent and child etc) in these cases the vulnerable party is automatically entitled to have and gift set aside (see Allcard v Skinner 1887)
3. Undue influence in a husband and wife or equivalent relationship. The presumption of influence is not irrebuttable