Loss of property rights in the home - Mortgaged Registration

Question 1

What must registration take form in?

Answer 1

Legal charge granted by the mortgagor in favour of the mortgagee

Question 2

What legislation required a form of legal charge granted?

Answer 2

s.23(1) LRA 2002

Question 3

What must a registered mortgage be created by?

Answer 3

As a conveyance in land, it must be created by deed

Question 4

What legislation requires a conveyance in land to be created by deed

Answer 4

ss.205(1)(ii), s.52 LPA 1925

Question 5

What happens when the mortgage is registered?

Answer 5

If registered, the charge takes effect as a charge by way of deed by legal mortgage

Question 6

What 2 provisions highlights the validity of a charge if registered?

Answer 6

s.51 LRA 2002, s.87 LPA 1925

Question 7

What happens if the mortgage is not registered?

Answer 7

If not registered, the charge can only ever take effect in equity

Question 8

What is a charge?

Answer 8

A legal interest in property that secures a debt, typically a mortgage. It’s a form of security granted by the property owner (chargor or mortgagor) to a lender (chargee or mortgagee). This allows the lender to claim against the property if the debt is not repaid

Question 9

Under what legislation makes the only method of creation of a legal mortgage in registered land is the registered charge?

Answer 9

s.23(1) LRA 2002

Question 10

What does s.27(2)(f) 2002 mean?

Answer 10

The grant of a legal charge is a registrable disposition which cannot operate at law until it has been completed by registration in compliance with the relevant registration requirements

Question 11

What will happen on registration?

Answer 11

A notice will be entered in the charges register

Question 12

What does the notice do?

Answer 12

Protects the owner of that interest by ensuring the mortgage enjoys priorty

Question 13

What does s.51 LRA 2002 do?

Answer 13

Confirms that once the registration requirements are met, the charge has effect as ‘a charge by way of legal mortgage’

Question 14

What do most modern mortgages do?

Answer 14

They involve regular payments made in instalments (often monthly) over lengthy periods, sometimes 25 years

Question 15

What other legislation requires registration?

Answer 15

S.1 LP(MP)A 1989

Question 16

What is an interest only mortgage?

Answer 16

The mortgagor pays the interest on the mortgage loan only. Must find a way to repay the capital sum at the end of the mortgage term

Question 17

What is a repayment mortgage?

Answer 17

Mortgagor pays the capital and interest on the loan in monthly instalments usually over a 25 year period. Once repaid, the mortgagee is discharged

Question 18

What is an endowment mortgage?

Answer 18

Type of interest-only mortgage where the capital is intended to be repaid by an endowment policy which matures when the mortgage ends

Question 19

A legal mortgage can only operate…

Answer 19

at law if it has been completed by registration against the registered title

Question 20

What is the effect of a mortgage operating at law?

Answer 20

It constitutes a ‘registered disposition’ and will gain priorty under s.29 LRA 2002, subject to those interests protected by entry of a notice and overriding interests

Question 21

Who will be registered as proprietor of the legal charge?

Answer 21

The mortgagee

Question 22

What happens when a mortgage is not properly registered?

Answer 22

It cannot operate at law and takes effect only in equity, and must be protected by entry of a notice if it is to bind third party purchasers of the mortgaged land

Question 23

What are the circumstances that give rise to equitable interests?

Answer 23

• Where the borrower holds an equitable interest in land only, any mortgage of that interest will be an equitable mortgage. Doesn’t require a deed
• Informal or defective legal mortgages
• Where there is forgery
• Mortgages by deposit of title deeds
• Mortgages arising under the doctrine of proprietary estoppel

Question 24

What sets an equitable charge apart from equitable mortgage?

Answer 24

Its informality

Question 25

What does an equitable charge require?

Answer 25

- No specific formalities - Evidence of an intention that a parcel of land is to be charged as security for the loan

Question 26

What does an equitable mortgage have?

Answer 26

A broader range of remedies

Question 27

What are equitable mortgages exposed to?

Answer 27

The same risk of losing priority upon a conveyance of land in either registered or unregistered land

Question 28

When can the mortgagor claim possession of the mortgaged property? What legislation allows this?

Answer 28

When no claim of possession has been made by the mortgagee, s.98 LPA 1925

Question 29

When can a mortgagor have the power to grant a lease over the mortgaged property? What legislation allows this?

Answer 29

Provided that it is not inconsistent with the terms of the mortgage, s.99 LPA 1925

Question 30

What other power does the mortgagor have? What legislation allows this?

Answer 30

The power to seek an order of sale of the mortgaged property, s.91 LPA 1925

Question 31

What rights does the legal mortgagee have?

Answer 31

- The right to payment under contract - The right to possession - The power of sale - The remedy of foreclosure - The power to appoint a receiver - However, equity is prepared to oversee that in seeking a remedy, the mortgagee acts fairly and reasonably in the recovery of debt

Question 32

What does the mortgagor undertake?

Answer 32

A personal contractual obligation to repay the loan advanced subject to the particular terms of the loan agreement

Question 33

What can the mortgagee do if the mortgagor defaults?

Answer 33

Bring an action seeking repayment of the debt

Question 34

What does the contractual liability of the mortgage do? What is the result?

Answer 34

- Arises independently of the security. - The mortgagee may rely on the contractual liability of the mortgagor to 'top up' any deficit that may remain after other remedies have been pursued

Question 35

What does 'charge by way of legal mortgage' mean?

Answer 35

specific way a lender secures a loan on a property. It's a legally binding agreement, usually a deed, where the borrower (mortgagor) grants the lender (mortgagee) the right to sell the property if the loan is not repaid

Question 36

What is proprietary estoppel?

Answer 36

Creating a proprietary interest in land in the absence of following the correct formalities. Proprietary estoppel operates on the unconscionable behaviour and can be used to award an interest in land as a remedy where it would be unconscionable for the holder of the legal title to deny the claimant's entitlement