MORTGAGES Flashcards

1
Q

Mortgage definition

A

A mortgage is a charge over an estate or interest in land, with the purpose of securing an obligation to pay money

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2
Q

What/who is a mortgagee?

A

A mortgagee is a person LENDING the money

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3
Q

Who/What is a mortgagor?

A

The person who is charged with a mortgage - The BORROWER

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4
Q

What are the three types of mortgages?

A

Fixed Sum Mortgage, All obligations mortgage, subsequent mortgage.

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5
Q

What is a fixed-sum mortgage?

A

A mortgage specifies the amount secured and all of the terms and conditions of the loan.

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6
Q

What is an all-obligations mortgage?

A

Secures loan repayment obligations that are separated in a SEPARATE loan agreement.

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7
Q

What is a subsequent mortgage?

A

the mortgagor can sign mortgage agreements with multiple mortgagees.

Legal (Registered) mortgages have priority over equitable (unregistered mortgages). Earlier in time have priority.

Each may stipulate a priority limit to recover up to on the case of a default.

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8
Q

What are the three essential elements of a mortgage?

A

Descriptive Contractual and Operative
DCO.

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9
Q

What are the three necessary descriptive elements in a mortgage?

A

Specify the land/interest to be mortgaged, the name of the mortgagee and mortgagor, and the nature of the debt secured by the mortgage (interest rates and principal).

The last two are optional but need to be expressly stated in the agreement if you want them to apply.

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10
Q

What does the contractual element set out in a mortgage?

A

Set out what is to be paid and the terms governing the parties. The most important is the covenant to pay.

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11
Q

Does registering the mortgage create an obligation to pay?

A

NO, registering the mortgage agreement only creates a charge. The mortgage agreement MUST include the operative charging clause.

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12
Q

What if there is no operative charging clause in a registered mortgage?

A

The charge is created by the act of registration, but if the mortgage is missing an operative clause, the registration of the mortgage will cause it to only become a charge upon the land.

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13
Q

What if there is no operative charging clause in an unregistered mortgage?

A

there will be no charge, and the mortgage will not secure the mortgaged property if the mortgagor defaults.

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14
Q

Registered or Unregistered?
_____ is created on registration, and are indefeasible even if the mortgage instrument is void (except in the case of LT Fraud or manifest injustice).

A

Registered Mortgage

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15
Q

True or false?
The mortgagor is not obliged to pay the mortgagee anything unless the mortgage agreement incorporates a covenant to pay.

A

true

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16
Q

What does indefeasibility protect?

A

The registered mortgage agreement and any registered documents

17
Q

Are unregistered covenants (Such as the covenant to pay) protected by indefeasibility?

A

Not necessarily. depends on whether the covenant to pay was properly incorporated into the registered documents.

if the loan agreement is incorporated, the indefeasible charge on the mortgage secures in the land an obligation to pay.

18
Q

Was the loan incorporated in Westpac v Clark?

A

Yes, however it is a NON existent loan agreement as the REAL ms Fenech does not have a loan with westpac. The covenant to pay is therefore indefeasible, but SECURES NOTHING.

19
Q

If the loan agreement had been incorporated, how many possible outcomes were established of its effect?

A

Three outcomes

20
Q

Which was the favoured of the three outcomes in Westpac v Clark?

A

Registration has the effect of validating an otherwise invalid mortgage, but only to the extent necessary to enable the exercise of security.

21
Q

Registration has the effect of validating an otherwise invalid mortgage, but only to the extent necessary to enable the exercise of security – Allows what?

A

This view would have allowed Westpac to sell Fenech’s property, but not sue the real ms fenech personally if the sale did not cover the full amount outstanding.

22
Q

What is “Redemption”?

A

When the mortgagor repays the loan in full and the mortgagee no longer has a claim to the property.

23
Q

Who governs oppressive interest rates and can it be contracted out of?

A

CCFA, No.

24
Q

What is Early redemption and what is the requirement?

A

When repayment is made before the final due date and the mortgagor must pay interest that would have been due across the remaining period.

25
Q

What is late redemption and what are the two requirements?

A

Late redemption is repayment after the due date.
The mortgagor must give the mortgagee written notice not less than 60 Days AND pay the mortgagee all amounts owing.

26
Q

What are the two notices/procedural requirements for mortgagee remedies?

A

s118 and s119 notice

27
Q

what are the four requirements under s120 that a s119 notice must comply with?

A
  1. The nature and extent of the default
  2. the action required to remedy the default
  3. the timeframe within which the mortgagor must remedy the default
  4. The consequences of the failure to remedy the default
28
Q

What happens if a s119 notice does not comply with all of the elements under s120?

A

The notice will be invalid and the mortgagee will not be able to exercise its remedies without issuing a new notice and waiting out the new elapsed time period.

29
Q

What are the 2 mortgagees remedies?

A

Accelaration clause, power of sale

30
Q

What are the three methods of power of sale?

A

High Court registrar sale, court assisted sale, private sale.

31
Q

What of the three methods of power of sale is the mortgagee not permitted to purchase the property?

A

Private sale.