Mortgages

Question	Answer
What is a mortgage?	A bank lends money to an individual with security of the loan being placed on the individuals property.
What is real security?	When mortgaged land is used as "real security" for the mortgage instead of it being a personal promise.
Who is the mortgagee and who is the mortgagor?	Mortgagee - bank Mortgagor - people recieving money
What does s 85 (1) LPA 1925 state?	Mortgage needs to be created by a deed.
What does the Law of Property (Miscellaneous provisions) Act 1989 s 2 state?	the deed must be in writing, have expressly agreed terms and must be signed.
What act and section states what needs to be on a deed for a mortgage to be created?	Law of Property (Miscellaneous Provisions) Act 1989 section 2.
What is s 23 1 (a) Land Registration Act 2002?	Mortgage needs to be registered to be legal!
What is undue influence?	Equity steps in to protect the mortgagee (the bank) from the third party (normally the husband) from using inappropriate pressure or misrepresentation on the mortgagor.(wife)
What was established in Pitt?	Joint owners are presumed to be benefiting financially from the mortgage.
What happens if there is undue influence?	The mortgage must be set aside.
What are the steps the bank must take in order to protect themselves?	Established in the case of Etridge - - If there are 2 non commercial people, the bank is put on notice of potentional undue influence a) plain English instructions b) allow mortgagors to go into contract with their eyes open.
What needs to be shown that the bank has done enough regarding undue influence?	- consult a solicitor - provide information to solicitor so they can advise -written confirmation from the solicitor that the agreement has been explained = bank protected from undue influence.
What are the 3 rights a mortgagor has? (borrow)	Legal right to redeem Equitable right to redeem Equity of redemption
what is a legal right to redeem?	right to repay loan on legal date of redemption
what is equitable right to redeem?	after legal date of redemption, equity allows them to repay whenever in order to end the mortgage
what is equity of redemption?	lenders have a charge on the house, once mortgage is repaid it is removed.
What is a clog?	Santley v Wilde - Clog is against the idea of security
What does a clog do?	Stops the mortgagors from redeeming
What else does a clog do?	makes the mortgage void.
What was established in Fairclough?	172 yr mortgage was too long
what was established in knightrsbridge?	40 yr old mortgage allowed
what was established in Noakes with regard to a collateral advantage?	buying all beer from mortgagee even after mortgage is finished is a collateral advantage
What was established in Kreglinger?	Collateral bargains allowed if goods are at the market value.
What are the five remedies of the mortgagee?	right to posession right to sell right to sue appointment of a reciever foreclosure
what is right to posession regarding a property that is not subject to a lease?	they have the right to take physical possession of the land.
what is right to posession with regard to property that is subject to a lease?	lenders take posession of the land by directing tenants to pay their rent to the lenders instead of the borrowers
what do lenders do to get a right of possession?	go to court for an order - cant use violence as this is a criminal offence.
what are they techinically allowed to take possession?	before the "ink is dry on the mortgage"
What was established in Ropagealach v Barclays?	most would be surprised that the bank can take possession the next day
what does postponing depend on?	the terms of mortgage deed
in law, what side are the courts on with rregard to right of possession?	the lenders
What does postponing in equity do, whos side are they on?	more in favour of the borrowers, it restricts the lenders rights to possession.
What did Lord Denning establish in Quennell v Malby?	a very wide discretion that could prevent lenders taking possession
when will the courts allow the lenders to take possession (with regard to equity)?	where lenders are "bona fide" and are acting reasonanably in seeking posession
what does equity do when the borrower hasnt deafulted on the mortgage?	Steps in and stoops them taking possession
What does s 38 Administration of justice Act 1970 do?	court with regard t dwelling house can adjourn, suspend the execuition of an order or postpone the date for delivery of possession for such period the courts see fit.
what does s8 of the Administartion of justice act 1970 do?	only allows postponement once it is sure that the borrower can pay off ALL the mortgage!
what conditions must be fulfilled with regard to s8?	1. mortgage must be ovver land that contains a dwelling house 2. borrowers are entitled under mortgage deed or by some agreement either to - pay the principle sum by installments - defer payment of it in whole or party 3. provision is also made for earlier payment in the event of any default by the borrowers or of a demand by the lender or otherwise.
What was established in Western Bank ltd v Schlinder with regard to s36 and borrowers not being in default?	s36 could not be used where the mortgagor has not defaulted. Bucklet LJ - it would be maifestly unfiar.
what are the two reasons why a court might postpone possession?	1. to set a repayment schedule giving borrowers time to pay their arrears. 2. give borrows time to sell te land and use proceeds to pay back to the lender
what was established in Horsham properties group ltd v clark?	court rejected an argument that s36 infringes someones right to peaceful enjoyment of land under art 1 first protocol ECHR
What is power to sell?	when lenders exercise power to sell they sell the property and use proceeds to pay back the sum they are owed.
what is s101 (1) LPA 1925?	power to sell when mortgage becomes due - this is the contractual or legal date for redemption
what does s 103 LPA 1925 set out?	Mortgage shall not sell unless - notice requiring payment has been served and default has been made for 3 months after such service -no letter but havent paid mortgage for 2 months after becoming due - there has been a breach of some provision in the mortgage deed.
what must the lender do before he sells the property?	ensure power of sale has arisen
what protection does the buyer of a lenders property have?	protection under s 104 LPA 1925 if the lender didn't follow the correct procedure
what is the buyer knew the power of sale wasn't exercisable but still bought the property?	they wont get good title.
what 2 duties did Salmon LJ in Cuckmere Brick & co v Mututal finance sat lenders owe to borrowers?	1. lenders must act in good faith to the borrowers 2. must take reasonable case to obtain the marktet value of property at date of sale.
what happens when the power to sale has arisen but there is more than one mortgagee?	work out the order of priority
how does the priority work?	registered then unregsiter (if unregistered look if they have a notice)
what section regards dealing with the proceeds of the sale?	s 105 - must first discharge any prior incumbrances that are not to bind the purchaser.
what is appointment of a recivor?	s 109 LPA 1925 - lender has statutory right to appoint a recievor.
what does a recievor do?	they have a statutory right to take management over the property, recieve rent and other income from the property and pays the property expenses. whatever money is left is paying back the money owed under the mortgage.
what are the 7 legal principles established in Medlock v Blake regarding the legal position of recievors?	1. owe duty to borrowers and anyone else interested in the property. 2. duty of good faith 3. duty of good faith depends on facts of the case 4. priary duty is to bring about a situation in which interest on the secured debt can be paid and the debt itself is repaid. 5. manage property with due dilligence. 6. due dilligence does not oblige recivors to carry on a business on the mortgaged property previously carried out by the borrowers. 7. if do above - must be done proftably.
what is foreclosure?	vest ownership of the borrowers property in the lenders
what does equity give the court discretion to do regarding foreclosure of property?	gives the court discretion to allow th borrower to redeem even after an order for disclosure has been made.
what is interim ordeR?	fixes a date the borrowers should pay the moeny
what is the final stage of foreclosure?	foreclosure absolute - borrowers cannot redeem unless court authorised so
what is right to sure for debt?	s 20 (1) Limitation acy 1980 - right of mortgagee to sue on the mortgages convenant continues for 12 years from date the right to recieve money occurder

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