Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
8 Cards in this Set
- Front
- Back
|
First paragraph
|
A mortgage is a pledge of land as security for the repayment of a loan (Lindley MR in Santley v Wilde). It is the relationship between the borrower (mortgagor) and the lender (mortgagee) that is both a personal covenant and an interest granted over land (s.58 (a) Transfer of Property Act). In situations where a mortgagor is in breach of the terms of the mortgage, the law has in place remedies for the mortgagee.
|
|
|
Second paragraph
|
Dickens is in breach of his contract as he has failed to make repayments as they have fallen due. The legal date for redemption is the date agreed in the mortgage deed as the earliest date on which the mortgage can be redeemed. If it is deemed fair, the equity of redemption may be allowed, which would ignore the legal date of redemption and force Fagin Building Society to accept money even though the date has passed (however, at present it doesn’t seem like he has the funds for this). The nature of the agreement between Dickens and Fagin Building Society will need to be looked at to assess the fairness of it as there is statutory protection in place for unfair agreements (Financial Services and Markets Act 2000).
|
|
|
Third paragraph
|
It seems likely that Dickens has a legal mortgage of registered land. The ruling for legal mortgages of registered land is set out in s.23 (1) (a) of the Land Registration Act (LRA) 2002. A legal mortgage of registered land can only be created by a charge of expressed to be by way of legal mortgage. This mean that the mortgage only becomes legal once it is registered as a charge at the land registry. There is no mention of the mortgage being registered, however for the purposes of this advice, it shall be assumed it has. If it hasn’t, it’s more likely to be an equitable mortgage. Equitable mortgagees have no right of possession because they hold no legal estate (Ashley Guarantee Plc v Zacaria). If a sale is ordered, vacant possession will also be ordered.
|
|
|
Fourth pragraph
|
The Financial Services and Markets Act 2000 imposes a number of sanctions on lenders levying exorbitant charges on borrowers. It applies to first mortgages of premises intended for residential occupation, but it is not clear what substantive relief it might offer Dickens. The Consumer Credit Act 1974, as amended, applies to mortgage agreements falling outside the Financial Services and Markets Act 2000, but is limited so as to effectively only apply to second mortgages so therefore is unlikely to assist Dickens. Further information will be needed with regards to the expenses as these Acts also deal with unfair interest rates.
|
|
|
Fifth paragraph
|
Fagin House has a number of rights against Dickens. Foreclosure would eliminate Dickens’s right to redeem the mortgage and arises as soon as the legal date of redemption has passed. However, the court may deem it would be simpler to exercise their discretion to make an order for sale under s.91 of the LPA 1925. Fagin House would also have the power of sale. S.103 of the Law of Property Act would be exercisable as Dickens has breached a covenant.
|
|
|
Sixth paragraph
|
In relation to the loan outstanding amounting to a substantially greater sum than the current market value of Cruel House, Fagin Building Society, when exercising its power of sale, owes a duty to Dickens to take reasonable care to obtain a proper price (Cuckmere Brick Ltd v Mutual Finance Ltd).
|
|
|
Seventh paragraph
|
If Fagin Building Society should choose to exercise this power, they will need to take possession of the property. It is not mentioned within the facts, however is someone is willing to buy the house with Dickens in occupation then it is not essential (Horsham). A court order is usually sought in situations where the mortgagor is still in possession to avoid a criminal offence under s.6 Criminal Law Act 1977, however in theory, it is not necessary to have an order (Four Maids). Dickens should not voluntarily vacate the property. This is particularly important as his right to relief under s.36 of the Administration of Justice Act 1970 is dependent upon the lender having sought a court order for possession. It is not mentioned if Cruel House is a residential home, however s.36 gives the court discretion to postpone any order for sale if Dickens feels he is likely to be able to pay his arrears within a reasonable period. According to Norgan, a reasonable period is thirteen years.
|
|
|
Eighth paragraph
|
If Fagin Building Society gains legal right to possession, then it will automatically have the power to grant leases subject to the equity of redemption as mentioned previously. S.99 of the Law of Property Act sets out the rules on the power to lease, and what the terms and conditions of the lease have to be in order to fall within the statutory powers.
|
