Mortgages

Creation of mortgages:Registered land must created through a charge by way of legal mortgage created using a deed expressly stating that it is such. Must be registered as a charge at the land registry s27(2) LRA 2002

Unregistered land 2 ways: charge by way of legal mortgage & mortgage by demise grants mortgagee long lease of 3000 years subject that it will terminate after debt is paid.

Equity of redemption - grants the mortgagor the right to property when the mortgage is discharged. Mortgagee will try to prevent this from happening through a number of ways:

Attempting to postpone ability to redeem - Fairclough v Swan Brewery - property held on a 20 year lease, mortgage agreement provided that the mortgage could not be redeemed until 6 week before lease ended = void right to redeem cannot be illusory ( this would be worthless. Knightbridge v Bryne -40 year postponement = upheld, courts considered the property being a freehold right to redeem = not illusory upon redemption the mortgagor receives a valuable property. Bargaining power of parties. 

Option to purchase- Samuel v Jarrah timbers -  an option to purchase the mortgaged property included in the agreement = void because it goes against the nature of a mortgage (equitable right to redeem - once a mortgage always a mortgage) option to purchase means that the mortgagor will not be able to redeem the property.Reeve v Lisle - an option to purchase can stand if it is an independent transaction. Jones v Morgan a mere delay between the mortgage agreement & option to purchase does not constitute a truly independent separate agreement ( must not be reconstruction of the mortgage.

Removing the right to redeem - clauses void goes against the equity of redemption.

Unconscionable clauses/high interest - courts have authority to strike out any interests rates too hight that render the equity of redemption useless.

Collateral advantages - Kreglinger v new Patagonia meat - valid, recognized freedom of contract - must not be oppressive + unconscionable. Valid even if they endure after redemption date ( must not be a clog on equity of redemption.) Multiservice Bookbinding v Mardon - interest payable was linked to the swiss franc = higher held to be reasonable. Courts will take into account bargaining power, legal advice whether the clause is oppressive. 

Consumer credit act 1974 - courts granted the power to intervene in unfair relationships between debtor + creditor, they can vary, set aside terms ( only covers 2nd + buy to let mortgages. Financial services + market act 2000 - first legal mortgage over residential property. Charge is compared to charges of similar products/services on the market at the time.

Priorities - unregistered land: mortgagee has title deed he will take priority over all tenders. No title deeds but legal - no registration at the time subsequent mortgage will take priority.No registration = void against subsequent mortgagees s4 land charges.Registered land - priority governed by the order in which  mortgages were entered not registered.Equitable priority = chronological.

Mortgagee's remedies - 1. Mortgagee has the right to sue mortgagor 4 sum owed personally ( might not be used if the mortgagor does not have money.2. Possession - this comes as soon as the contract is signed, but mortgagee might not exercise this firstly in fear of breaching s.6 criminal law act 1977 (using violence 2 gain entry) instead might apply for a possession order 2 the court. If the property is a home s.8 AJA 1973 is applied giving the court discretion to postpone possession if the lender is likely to pay the arrears within a reasonable time(the duration of the mortgage) only applies when no possession has taken place. Must be able 2 meet future payments. Terms that state all sums will be due after default AJA = only has 2 pay sums that are due.Where mortgagor wants 2 sell it must be fanciful.3. Sale - arises at the contractual date of redemption has passed, s101 (1) LPA 1925, power of sale arises= date of redemption has passed + 1 installment is in arrears, exercisable if notice is served requiring payment of the whole mortgage, 3 months arrears since notice was served & 2 months interest unpaid. Sale b4 power arises=invalid=transfer of interest. Sale b4 power is exercisable = good title passes/ mortgagee must pay 2 any1 who has suffered loss, but if purchased knows they not get good title sale could be set aside. Duty- obtain a fair+true market value but not obliged 2 incur cost 2 get better price. Appointing a receiver - duty=manage property with diligence.

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