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;
3 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
Rights and remedies of a mortgagee (in outline) |
What are the remedies available to a mortgagee? |
1) suing for the debt (personal covenant) 2) possession - see flashcard 2 3) sale - see flashcard 3 4) appointment of a receiver (s109 LPA 1925) 5) foreclosure - a draconian remedy which is rarely used nowadays. Vests fee simple in mortgagee and no excess is payable back to borrower, meaning the lender could have a windfall. Under s91(2) LPA 1925 any person interested can apply for an order for sale instead. |
|
|
Describe how a mortgagee may take possession |
A mortgagee has a common law right to possession at any time after the mortgage deed is signed (Four Maids Ltd v Dudley Marshall Properties Ltd (1957). However, a mortgagee should obtain a court order for possession to avoid a criminal offence under the Criminal Law Act 1977.
Possession must be exercised peaceably and without force (Ropaigaelach v Barclays Bank plc (1999)).
Under s36 Administration of Justice Act 1970 where the mortgaged property consists of a dwelling-house the court may postpone an order for possession if there is a reasonable prospect of the mortgagor paying the arrears. In Cheltenham & Gloucester Building Society v Norgan (1996) this was exercised with wide discretion to postpone the repayment until the end of the mortgage term. However, this should be contrasted with Bristol & West Building Society v Ellis (1996) where postponement for a short period was not granted on the basis that the sale value will not have covered the debt.
s36 was enacted due to social changes occurring in the latter part of the twentieth century. More and more people were owning their own homes but they were finding that they had less protection from eviction by a mortgagee than a tenant would have from their landlord. |
|
|
|
Describe the mortgagees power of sale under LPA 1925 |
The statutory power of sale arises provided all the conditions under s101 LPA 1925.
These are:
(i) the mortgage was made by deed; and (ii) the legal date for redemption has passed; and (iii) there is nothing to the contrary in the deed
The power of sale becomes exercisable under s103 LPA 1925 if one of the following conditions are satisfied:
(i) a notice requiring repayment has been served and the debt is more than three months in arrears; or (ii) interest under the mortgage has remained unpaid for at least two months (iii) there has been some other breach of the mortgage terms
The mortgagee when exercising its power of sale is not a trustee for the mortgagor (Cuckmere Brick Co Ltd v Mutual Finance (1971)). Furthermore, so long as the mortgagee has acted reasonably it will not have breached any duty of care (Michael v Miller (2004)). However, a mortgagee may have to account for any loss in sale value if it had not acted diligently (Bishop v Blake (2006) and Potomek Construction Ltd v Zurich Securities (2004)). |
|
