STANDARD SECURITIES

mary1503
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Mind Map on STANDARD SECURITIES, created by mary1503 on 04/14/2013.

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mary1503
Created by mary1503 over 6 years ago
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STANDARD SECURITIES
1 statutory form of charge
1.1 introduced by Conveyancing Fuedal Reform (Scotland) Act 1970
1.1.1 abolished the bond & disposition in security
1.1.2 & ex facie absolute disposition
1.1.3 replaced with one very simple and very flexible basic form of standard security
2 normally most valuable asset you can own
2.1 land and buildings
2.1.1 without a mortgage beyond means of the individual
3 Lord Diplock - English case Pettit v Pettit
3.1 "that we are a real property mortgaged to a building society owning democracy"
3.1.1 reasonably accurate statement of position in Scotland, three decades on
4 flexibility of 1970 Act
4.1 statute provides for social and economic changes
4.1.1 take place over the life of secured loan
4.1.1.1 without need of discharging loan and creating new one
4.2 allows debtor transfer - more economically viable agreement
4.2.1 s14 assignation of transfer of standard security
5 all heritable loans since 1970 Act, constituted by standard security
5.1 s3 CFR(S) A 1970
5.1.1 part 11 s9-32 contains law of standard security 1970 Act
5.1.1.1 standard security either in terms of schedule 2 form A or form B 1970 Act
5.1.1.1.1 Form A - personal obligation and details of loan are connected in standard security
5.1.1.1.1.1 widely used by building societies
5.1.1.1.1.2 whether form A or B Albatown Ltd v Credential Group Ltd
5.1.1.1.2 Form B - where personal obligations and details of loan are in a separate unrecorded document
5.1.1.1.2.1 widely used by banks in housing loans or commercial lenders
5.1.1.1.2.1.1 loans in connection with trade (garahes/breweries)
5.1.1.1.2.1.1.1 & large loans over factory/office buildings
5.1.1.1.2.1.1.1.1 where parties don't wish to make details public
5.1.1.1.2.2 Form B security- express assignation of secured debt required
5.1.1.1.2.2.1 Watson v Bogue No 1
6 Personal bond
6.1 Bird v HBOS
6.1.1 PB properly regarded as a bond of caution my/not give defenders secuirty for the loan
6.1.1.1 bond of caution was irrelevant as absence of valid standard security
7 Deed of Variation s16
7.1 allows for a number of variations to be made
7.1.1 without creditors consent
7.1.2 used to release one of a number of original debtors from further liability
7.1.2.1 or introduce a new debtor
7.2 utilized where a single person, owns property subject to standard security
7.2.1 makes over one half share of property to their partner
7.2.2 partner in turn agrees - undertake joint and several liability for the secured loan
7.2.2.1 creditor will want to ensure the partner is a co-debtor to the change
7.2.2.1.1 before consenting to the change to the original obligation
7.3 where couple break up
7.3.1 one of them can take over the whole of the property
7.3.1.1 assume sole respnsibilty for the loan
7.3.1.1.1 partner can make over their share to the first and be released from any further liability
7.4 in either situation - a suitably worded deed of variation - easily give effect to these changes in debtor
8 deed of restriction
8.1 s15 form c&d - allows debtor to have portion of security subjects released from secuirty
8.1.1 usually on payment of a substantial amount of the original loan
8.1.1.1 useful when building company, purchase land for residential developement
8.1.1.1.1 gives standard security to bank in security of loan, covering development costs
8.1.1.1.2 developed plots subsequently sold to purchasers
8.1.1.1.2.1 buidling company obtains deed of restriction for each plot when sold
8.1.1.1.2.1.1 purchaser takes plot free of any debts of building company
8.1.2 area of original security subjects will be reduced
8.1.2.1 normal for company to repay its creditor - portioned amount of proceeds of sale of plot
8.1.2.1.1 provides flexible way of securing the financing of the development
9 Discharge s17 purpose is 2 fold
9.1 1) releases debtor from continuing personal obligation to the creditor
9.2 2) releases security subjects from the burden of the standard security as a real secuirty thereon
9.3 short statutory form provided for is CFR(S) A 1970
9.3.1 achieves both objectives by granting of discharge, following form F of the schedule 1970 Act
9.3.1.1 recording of discharge in statutory form, the subjects are disburdened thereof
10 Assignation s14 (1) - duly recorded standard security may be transferred
10.1 whole or in part, by a creditor by assignation in conformity
10.1.1 with Form A or B schedule 4 1970 Act.
10.1.1.1 upon the tranfer being duly recorded, the security or part thereof
10.1.1.1.1 shall be vested in the asignee as effectually as has been granted in his favour
10.2 (2) assignation of standard security shall except where otherwise stated
10.2.1 deemed to convey to the grantee
10.2.1.1 all rights competent to the grantor to the writs
10.2.1.1.1 effect inter alia of vesting in the assignee
10.2.1.1.1.1 a) full benefit of corroborative or subtantial debt obligation or part thereof
10.2.1.1.1.1.1 irrespective of whether obligations are contained in any deed or arise from operation of law or other wise
10.2.1.1.1.2 b) right to recover payment from debtor of all properly incurred expenses incurred by the creditor in connection with the security
10.2.1.1.1.3 c) entitlement to the benefit of any notices served and all procedure instituted by the creditor in respect of the security
10.2.1.1.1.3.1 effect that the grantee may proceed as if he had originally served or instituted such notices or procedures
11 Notice of default
11.1 1970 Act gives creditor range of remedies
11.1.1 personal action, summary diligence, poinding of the ground, adjudication
11.1.1.1 removing the debtor and letting the property
11.1.2 Scotland generally held to be 3 roads to sale
11.1.2.1 1) calling up notice s19 1970 Act, debtor once served required to pay whole of the debt within 2 months
11.1.2.1.1 failure creditor has automatic power of sale
11.1.2.1.1.1 1970 Act does not state circumstances justifying the service of the notice
11.1.2.1.1.1.1 No problem if loan is on demand or term loan
11.1.2.1.1.1.1.1 where there is an acceleration clause which has been activated
11.1.2.1.1.1.1.1.1 loan agreement defines circumstances which amount to default
11.1.2.1.1.1.1.1.1.1 procedure does not need to involve any court involvement
11.1.2.1.1.1.1.1.1.1.1 In practice common for Creditors to obtain Action of Declarator
11.1.2.1.1.1.1.1.1.1.1.1 the right to sell has crystallised
11.1.2.2 2)Notice of default s20 and 21 1970 Act, on default creditor serves Notice of Default, stating the default
11.1.2.2.1 calls upon debtor to cease to be in default within one month
11.1.2.2.1.1 failing which enforcement powers emerge. Act is not clear meaning of default
11.1.2.2.1.1.1 default usually failure to make periodic payment s9(1)(b)
11.1.2.2.2 merely requires the arrears are brought up to date
11.1.2.3 3) last - road to enforced sale by s24 warrant
11.1.2.3.1 application by creditors to the court, stating debtor is in default, requesting permission to sell
11.1.2.3.1.1 involves the court, rather rare to use this road
11.1.2.3.1.2 procedure may be used where creditor wishes to sell, not as a result of failure to pay but because debtor is insolvent
11.1.2.3.1.2.1 not as expensive as it might be, since creditors can prove statutory requirements have been met
11.1.2.3.1.2.1.1 court has no discretion to refuse the warrant
11.1.2.3.1.2.1.2 missives concluded in normal way, no moveables included, disposition granted by creditors
11.1.2.3.1.2.1.2.1 s26 1970 Act provides on sale by creditor, property automatically disburdened of security or pari passu security
12 joint and several obligations and rights of relief
12.1 often taken out by joint borrowers husband/wife
12.1.1 jointly and severally liable
12.1.1.1 each has one half pro indivisio share burdened by the whole loan
12.1.1.1.1 often standard security contains " all sums due and to become due"
12.1.1.1.1.1 in such a case all future loans from the same lender will be on the same footing as the original security of the house
12.2 problems when future loans made to only one of the parties
12.2.1 husband/wife as co-owners grant a standard security for joint loan
12.2.1.1 thereafter the husband (only) borrows money from the same lender
12.2.1.1.1 loan is made out to him in name only
12.2.1.1.1.1 wife may not know of the transaction
12.2.1.2 if the new loan is covered by the standard security, it will affect both the husband and wife
12.2.1.2.1 usually banks/building societies expressly provide that any debt incurred at any time
12.2.1.2.1.1 by either party will be burdened by the whole property
12.2.1.2.1.2 such a style will solve any problems that may occur
12.2.1.2.1.2.1 but should be noticed that it still allows one of the parties to create a loan without the knowledg of the other
12.2.1.2.1.2.1.1 may be unethical to construe the ignorant party as liable for the addtional debt
12.2.1.2.1.2.1.1.1 position may be challenged under Unfair Terms in Consumer Contracts Regulations 1999
12.3 odd situation occurred in Christie v Armstrong
12.3.1 bought house in common with survivorship destination
12.3.1.1 joint loan secured on the house
12.3.1.1.1 also assigned life policy in Mr Christies name
12.3.1.1.2 Mr Christie died shortly after buying house and was intestate
12.3.1.1.2.1 Mr C's daugher confirmed as executor dative
12.3.1.1.2.2 Life assurance paid the proceeds of life policy to the lender
12.3.1.1.2.2.1 discharged the debt
12.3.1.1.2.2.2 Ms C argued whole loan repaid from fathers estate, since life policy formed part of the estate
12.3.1.1.2.2.2.1 but only half of policy proceeds should have used to repay the debt as father was only liable for half the debt
12.3.1.1.2.2.2.2 father jointly and severally liable, Ms C entitled to claim relief from Ms Armstrong
12.3.1.1.2.2.2.2.1 Ms C claimed repayment of one half of policy proceeds from Ms A
12.3.1.1.2.2.2.2.1.1 stained by court in principle
12.3.1.1.2.2.2.2.1.1.1
12.3.1.1.2.2.2.2.1.1.2 court held proof was necessary to establish
12.3.1.1.2.2.2.2.1.1.2.1 intentions of the deceased
12.3.1.1.2.2.2.2.1.1.2.1.1 could have been deceased intention to repay all
12.3.1.1.2.2.2.2.1.1.2.1.1.1 therefore, no right of relief in circumstances
12.4 Royal Bank v Wilson
12.4.1 acknowledge bank failed on number of issues
12.4.1.1 1) where joint and several obligations, defaults/calling up notices must be served on all debtors
12.4.1.1.1 individually in addition to a letter addressed to the occupier
12.5 where borrowers have separated only one remains living in security subjects
12.5.1 party may continue to pay the mortgage payements
12.5.1.1 may wish to claim relief from non-paying party
12.5.1.1.1 non-paying party claims implied understanding
12.5.1.1.1.1 relief would not be claimed in this situation
12.5.1.1.1.1.1 as an implied term of the agreement to move out

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