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Mortgages
A mortgage signifies the method by which they may raise enough capital to purchase a house or other property
...

The essential nature of a mortgage
Mortgage is a legal concept that partakes both of the law of contract and the law of real property – which provides
the basis for the versatility of the mortgage
...

A contract between the borrower and the lender
A mortgage is a contract between the borrower and lender
...

In the typical mortgage of land, the borrower of money (the mortgagor) will enter into a binding contract
with the mortgagee (the lender, often a bank or building society), whereby a capital sum will be lent on the
security of property owned by the mortgagor
...
therefore, one remedy available to the mortgagee upon none repayment
of the loan is to sue the mortgager personally on the contract for repayment of the sum borrowed plus interest and
cost
...
)
Vedalease Ltd v Cascabel Investments Ltd - wherein the court determined that the respondent could incorporate legal
coststo security as costs reasonably and properly incurred in obtaining redemption of charge
...

Alliance & Leicester v Slayford - The Court of Appeal held that it is not an abuse of process for a mortgage lender,
whocannot get a possession order because the borrower's wife has an equitable defence, to sue on the borrower's
personalcovenants and bankrupt the borrower, even though this may result in the trustee in bankruptcy selling the
property in whichthe wife has an equitable interest
...
In ​Alliance & Leicester v Slayford​, the
mortgager pursued its contractual remedies against the mortgage after its proprietary remedies proved ineffective
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An interest in land in its own right
A Mortgage is a contract, it also it also constitutes a proprietary interest in the land over which it (the mortgage)
takes effect
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Borrower retains an equity of redemption (residual rights of the property)
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The proprietary nature of a mortgage brings with it the intervention and attention of equity
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- Lender’s contractual right supported by proprietary interest
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o The lenders remedies endure only so long as the borrower owes money or the mortgage still
exists
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This is the idea of a mortgage: and that
security is redeemable on the payment or discharge of such debt or obligation, any provision to the contrary
notwithstanding
...
"
JONES v MORGAN (2001​) - A clause in a document executed in 1997 whereby the lender became entitled to a 50 per
cent share of the borrower's land after the borrower had redeemed the mortgage was held void and this was so even
though the document was executed some three years later than the mortgage
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The mortgage as a device for the purchase of property
Mortgage is still security for a loan, but now the purpose of the loan is to purchase the property over which the
security is to take effect
...

- This problem is dealt with by transfer (the completed sale) of the estate in land to new owner, followed
immediately by the execution of a mortgage over the property and a transfer of the purchase price to
vendor
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- There is a ‘time gap’ between the purchaser acquiring the property and the execution of the mortgage over
it
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This may be only a matter of minutes but has the potential to create problems
...
g
...
See cases ​Stack v Dowden and Jones v
Kenott
- This problem has been solved:
The HOL in ​Abbey National Building Society v Cann​, and accepted in ​Scott v Southern Pacific as a matter of
law,​ there is no ​scintilla temporis ​between a purchaser’s acquisition of title to a property and the
subsequent creation of a mortgage over that property that has enabled the purchase to take place
...

There is one remaining uncertainty
...
What is not clear is whether there is a ​scintilla temporis between the earlier contract for
purchase, then completion of that purchase and then the mortgage
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Any potential equitable interest rank second in time to mortgage and cannot take priority
...

However, if property is already held on trust for claimant before any thought of mortgage, so that the
mortgage is not the reason, then mortgagee cannot rely on the Cann principle; priority is determined by
the application of normal rules of registered or unregistered conveyancing
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No declaration as to whether the house was to
be held as joint tenants or on trust as tenants in common was made
...
The claimant left his partner and children living in the house applied for an order for
sale with equal division of the proceeds
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The House of Lords held that Ms Dowden owned a greater share than half the equity, and so although she and Mr Stack
were joint tenants of the legal estate, Ms Dowden was entitled to a 65 per cent interest
...
Lord Hope, gave a short judgment also concurring with Baroness Hale
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Lord Walker, agreeing with the reasons given by Baroness Hale and
having examined the precedent in detail, was also of the opinion that the appeal should be dismissed
...
The key question is “did the parties intend their beneficial interests to be different from their legal interests?
Lord Neuberger, dissenting in his reasoning advised against easy and frequent changes to law (especially by the judiciary
rather than Parliament) that might give rise to new and unforeseen uncertainties and unfairnesses
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Lord Neuberger held that there were no grounds for varying the 65/35 split which he believed
originated on the acquisition of the property and the establishment of a resulting trust
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Kernott and Ms
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The couple co-habited the home and contributed to its expenses for eight years, after which Mr
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The Supreme Court upheld that, if a property is purchased in
joint names for a couple, there is a presumption that their beneficial interests in the property coincide with their legal
estate
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Repayment Mortgage – purchase of residential property
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It is paid in installments, early instalments pure interest, and later instalments - capital element
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2
...
Mortgagor borrows capital sum for fixed period
(25 years)
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Mortgagor
enters an endowment policy (saving plan) – pays a regular sum towards the plan which will mature at the
same time as the mortgage
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However, if, when the endowment policy matures, it does not realise enough to pay off the capital debt,
the mortgagor must provide the balance from other funds or remortgage and continue to pay instalments
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Current account mortgage - advantageous to borrowers whose only or principal debt is a mortgage
...
Lender provide
these monies for the purchase of property in the normal way and interest will be charged at the prevailing
rate
...
g
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Any surplus
funds will go towards paying off the debt
...
Secured overdraft - common where funds are required for commercial purposes e
...
where a businessman
uses the family home to raise finance for his company
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No lump sum is paid,
interest is charged on the amount of the actual debt and the total amount owed varies according to the
level of current indebtedness
...

State Bank of India v Sood​ [1997] Ch 276
The first and second defendants were the registered proprietors of the family home and held the property on trust for
themselves and the third to seventh defendants
...
They failed to keep up the repayments and the
State Bank of India bank brought proceedings seeking possession
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Held: The beneficial interests had been overreached
...
27(2) only applies where the conveyance gives rise to capital
moneys
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Peter Gibson LJ:
h though I value the principle of overreaching as having aided the simplification of conveyancing, I cannot pretend that
I regard the resulting position in the present case as entirely satisfactory
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But that is no safeguard at all, as this case has shown, when no capital money is received on and
contemporaneously with the conveyance
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Charge - does not refer to a specific type of mortgage, but rather to the manner in which ​any t​ ype of
mortgage may be created
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The Creation of Mortgages before 1925
It would be unusual if a mortgage created before the LPA 1925 is still to be in existence
...
Once payment of
principal, interests and costs were repaid, the mortgagee would re-transfer property
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The equity of
redemption was held to exist under equitable principles, and the borrower was entitled to a reconveyance of the
property if fulfills sums due under mortgage were paid, even though the legal date for redemption had passed
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Creation of Legal Mortgage on or after 1 January 1926
The LPA 1925 made significant changes to the ways in which mortgages could be created
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Further, a mortgage of a legal estate does not occur through the transfer of the mortgagor’s entire interest in land
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Note that since 13 October 2003 (date of entry unto
force of LRA 2002), legal mortgages of registered titles may be created only by use of a ‘charge’ and thus the
long leasehold method is now only applicable to unregistered land
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The long lease method
The first method is where the mortgagor grants the mortgagee a long lease over the land with a provision for the
termination of the lease on repayment of all sums due under the loan
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- Typical case – mortgage lease 3000 years, however the contract will fix an earlier contractual date for
repayment and redemption
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- As was the case before 1925, the mortgagor has an equitable right to redeem the mortgage, and thereby to
terminate the long lease, on the payment of all sums due at any time after this legal date has passed
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The mortgagor retains the legal fee simple throughout the term of the mortgage
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The mortgagee acquires some proprietary interest in the land, being the leasehold granted to them
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3
...
The term
granted to the second mortgagee will necessarily always be longer than that granted to the first, as this
gives the second mortgagee a notional legal interest in the property distinct from that of the first
mortgagee The actual sum lent on the second mortgage will be calculated by reference to the value of the
land, taking account of the debt owed under the first mortgage, but again the mortgagor retains the
ultimate fee simple and the second mortgagee also receives a proprietary interest in the land
...
This is a much simpler method
of creating a mortgage than executing a long lease
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Legal Mortgages of Leasehold Estates: Unregistered leases and Registered Leasehold titles Mortgages
before 13 October 2003
For unregistered leasehold land and pre-LRA 2002 registered leasehold titles, there are also two methods of
creating legal mortgages, and these are substantially similar to those used for the freehold
...
The sublease must of course be shorter
than the lease that the leaseholder has, because the mortgagor cannot grant a greater term than they have – ​seen in
Grange side Properties v
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The Charge
The second method is to use the ‘legal charge by deed’ under section 87 of the LPA 1925 and referred to above
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Legal Mortgages of Registered Titles under the Land Registration Act 2002
Under section 23(1) of the LRA, the legal charge is the only permissible method of creating a legal mortgage of a
registered freehold or leasehold estate
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The tenant paid £600 in cash and
took out a mortgage from the plaintiffs for the remaining £2,900 over six years
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Instead the mortgage contained a premium of £1,653 that represented 19% interest per year,
or 57% of the whole loan
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Issues: The defendant sought equitable relief against the premium charged on the grounds that it was an
unreasonable collateral advantage
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This was a commercial transaction and the defendant was not poor or ignorant
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This meant the advantage could not be unfair or unreasonable
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The agreement imposed an extremely high
premium rate rather than interest, amounting to 57% of the loan
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Also, in case of default the entire amount became due
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Consequently, the court used its inherent jurisdiction to rewrite the agreement, and the borrower was allowed to
repay the loan together with 7% interest, which was reasonable
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The charge does not confer any proprietary interest on the mortgagee (the ‘chargee’) but section
87 of the LPA 1925 also makes it clear that a chargee obtains ‘the same protection, powers and remedies’ as if the
mortgage had been created by a long lease of 3,000 years in the old way
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Registration will show the mortgagee as the proprietor of the charge and will ensure both that it takes effect as a
legal interest and that it amounts to a ‘registered disposition’ for the purpose of obtaining priority for the
mortgagee over prior rights (except registered interest and overriding interests); section 29 of the LRA 2002
...
Unbeknownst to her in April 2006n an unknown party executed a charge
over the property in favour of GE Money Lending Limited (GE) for a supposed loan of £32k to Mrs rani
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In May 2006 a further fraudulent charge was registered in favour of Swift for £64k who
paid GE £34k and the balance to Mrs Rani who never received the money
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Interest instalments on the loan were not paid and in May 2007 proceedings were commenced against Mrs Rani
for possession
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Swift accepted this and a consent order was made in January 2009 directing the land registry to delete the entry of
the charges on the register
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The High Court decided Swift was entitled to an indemnity
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What were the issues involved?
The issues on appeal were:
●

●

whether the proprietor of a registered charge which turns out to have been a forged disposition is entitled
to payment by way of indemnity under LRA 2002, Sch 8 in circumstances where the registered proprietor
and rightful owner of the property was in actual occupation at the date of the disposition;
whether the much-debated decision of the Court of Appeal in ​Malory (Malory) was decided ​per incuriam
(through want of care) insofar as the court held that the innocent victim of a forged disposition acquired
only the legal estate and not the beneficial ownership of the property Malory Enterprises v Cheshire
Homes (UK) [2002] EWCA Civ 151, [2002] All ER (D) 319 (Feb)

Decision:
The Court of Appeal found that Swift was entitled to an indemnity from the land registry dismissed the
Registrar’s appeal
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Mrs Rani’s overriding interest could not defeat
the claim
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This seemed to be driven by
questions of policy and practicality as much as black letter law, with the Court citing concerns about the effect of
Malory on the integrity of the title register and the facilitation of e-conveyancing
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Barclays Bank v Zaroovabli (1997): failure to register the mortgage meant that it lost its priority to a
subsequently created legal lease of the land
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In Popeck​, failure to register Halifax’s mortgage over the primary land was due either to the incompetence of a
solicitor’s conveyancing clerk or to his willing participation in the borrower’s fraud
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Equitable Mortgages
A mortgage may be equitable because the borrower originally has only an equitable interest in the land or because
the borrower has a legal interest and the mortgage is not executed with the formality required by statute for the
creation of a legal interest
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An equitable mortgage is effected by the transfer of the whole of the mortgagor’s interest to
the mortgagee (since the LPA 1925 and LRA 2002 did not affect this with respect to equitable mortgages)
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​William
Brandt v Dunlop Rubber (1905)
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This means it must be signed in writing or it will
be void
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Guinness (1998) the court appears to have held that the creation of an equitable charge (as distinct
from an equitable mortgage proper) did not have to be in writing under section 53(1)(c) of the LPA 1925, because
technically no interest in land is actually transferred to the chargee under a charge
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‘Informal’ mortgages of legal interests
Where the parties purported to effect a legal mortgage, but it was not done by deed or it was done by deed, but
was not registered (by error, negligence or fraud), the result may be to effect an equitable mortgage
...
In ​Cheltenham & Gloucester plc v
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Where informality arises because no deed was used, the mortgage will be equitable only if it complies with the
requirements for creation of an equitable interest, that is, there must be a written instrument within section 2 of the
LP(MP) A 1989
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Lonsdale (1882)
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Mortgages by deposit of title deeds
Before the LP (MP)A 1989, it was possible to create an equitable mortgage by depositing the title deeds of the
property with the mortgagee
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The borrower was
protected because it held the documents of title, so preventing the borrower from further dealing with the land
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After 1989, however, contracts for the
disposition of any interest in land (i
...
to create a mortgage) must be in writing and this cannot be presumed to
exist from the deposit of title deeds
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Sahib (1996) has
confirmed that deposit of title deeds is an attempt to create a mortgage by unwritten contract and is therefore void
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However, mortgages created by the deposit of title deeds after 27 September 1989 are void
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Jennings v
...
There is no reason why this remedy should not be such so as to give the claimant an
equitable mortgage over the defendant’s land, even despite the absence of formality
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Liverpool Victoria Trustees (1982) - if one person promises an interest in land to another,
and that is relied upon to their detriment, equity will enforce the promise and can give effect to the claim of the
promisee
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Estoppel can be used in these circumstances because it would be
unconscionable to deny the mortgage
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Equitable charges
Equitable charge - informal way of securing a loan over property
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Charnley (1924))​
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Murray v
...
However, whether this means that no
written formalities are required at all has been questioned – without any conclusive answer – ​in Kinane v
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Problem with equitable mortgages and equitable charges over land

The main issue is that an equitable mortgagee could lose his priority over the land because of a subsequent sale of
the mortgaged estate, either by a deed in unregistered conveyancing or by a properly registered disposition for
value of a legal estate within section 29 of the LRA 2002
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1
...
If then so registered against the name of the estate owner who granted it, it is binding on
all subsequent, transferees of the land over which the mortgage exists
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Of course, it will remain valid against someone who does not
‘purchase’ the land, such as the recipient of a gift, devisee under a will or a squatter
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In registered land under the LRA 2002, the equitable mortgagee should protect his interest by means of a
Notice against the mortgaged registered title
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Failure to
enter a Notice will cause the equitable mortgagee to lose priority in favour of a properly registered
purchaser of the land (including a later legal mortgagee) unless the equitable mortgagee happens to be
able to claim an overriding interest under paragraph 2 Schedule 3 of the Act as being in actual occupation
of the land
...
Note that in registered land, even an unregistered equitable mortgage will retain priority over a transferee
who does not give valuable consideration, such as the recipient of a gift or person who inherits under a
will or on intestacy, or against later equitable mortgages (section 28 of the LRA 2002)
...

4
...
If the equitable mortgage is made by deed, the mortgage benefits from all the powers implied
into a mortgage by deed under section 101 LPA 1925, even though it be equitable
...
A few days
or even hours late entitled the mortgagee to keep the property even if its value was far greater than the loan
secured on it
...
Consequently, equity stepped in and under the
maxim ‘once a mortgage, always a mortgage’, redemption of the mortgage after this date is permitted
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The equity of redemption
The equity of redemption is the sum total of the mortgagor’s rights of ownership that the mortgagor has, both in
virtue of their paramount legal estate in the land and in the protection that equity offers
...
The equity of redemption is itself a proprietary right which may be sold or transferred
and this is why second and third mortgages may be obtained on the same property
...
This protection is present in a
number of ways
...
The right to redeem cannot be limited
to certain people or certain periods of time
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​3
The mortgagee and attempts to purchase the mortgaged property
A provision that the property shall become the mortgagee’s or which gives the mortgagee an option to purchase
the property is void
...
4​

1

2​

Thornborough v Baker (1675)
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Jones v Morgan (2001)
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3​

 However, an option to purchase the property given to the mortgagee in a separate and independent

transaction can be valid, provided that it does not de facto form part of the mortgage itself
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Note that this principle does not affect the mortgagee exercising its normal rights over the land in the event of
the mortgagor’s default on the loan, for example, its power of sale
...
There should be no other conditions
attached to right of redemption, known as collateral advantages
...

However, a collateral advantage that does not continue after equity of redemption may be valid
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​
Unconscionable terms, unconscionable use of remedies and unreasonable interest rates
Court will also strike down any term or an entire mortgage which is as a result of an unconscionable bargain
...
In
effect, there term as well as conduct of mortgagee taken together must ‘shock the conscience of the court’
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​However, in exercising this jurisdiction, the court is not concerned with
excusing a mortgagor from the consequences of a bad bargain, especially where it had legal advice
...

For example, a requirement that borrower takes supplies from lender
...
E
...
oil companies using the mortgagee to tie the
owner of a petrol station (​Esso Petroleum v Harpers Garage (1968)
...
Most mortgages of
land were ‘exempt agreements’ with the effect that the consumer credit regime provisions did not apply
...

With effect from 21 March, 2016, all mortgages of land offered to consumers are regulated under the FSMA
regime by the FCA
...


The Rights of the Mortgagee under a Legal Mortgage: Remedies for Default
The particular remedy by the mortgagee will depend on the precise nature of the default of the mortgagor
and the particular requirements of the mortgagee
...
If instalment missed, the
mortgagee may have the personal judgment debt satisfied in the normal way, including execution against the
property of the mortgagor or by making the mortgagor bankrupt: Alliance & Leicester v Slayford
...
Since technically, it is not based on
breach of contract per se, but an action on the debt
...
The debt will be unrecoverable should the mortgagee fail to commence proceedings during this
period: ​Wilkinson v West Bromwich BS (2004)
...
It has been said to counter the general rule that parties’
admissions against their own interests are admissible as evidence against them, thereby providing parties with a
safe framework within which they can negotiate resolutions openly and honestly, free from the concern that such
admissions will be used to their counterparties’ advantage, subject to certain exceptions
...

The power of sale
Mortgage will usually contain the express power of sale, but if not, a power of sale will be implied into every
mortgage pursuant to section 101(1)(i) of the LPA 1925, unless a contrary intention appears
...
The power of sale must have arisen- power of sale will arise as soon as the legal (contractual) date
for redemption has passed or instalment is in arrears, as the case may be
...
g
...
101
LPA not effective as principal not due, but there had been a breach of the mortgage conditions
because the interest payments were not kept up with
...


2
...
These require either that notice requiring payment of the whole of
the mortgage money has been served by mortgagee, and mortgagor is three months in arrears with
such payments since the notice was served; or interest under the mortgage is in arrears and unpaid for
two months after becoming due; or that the mortgagor has breached some provision of the mortgage
deed, or another relevant provision of LPA 1925 (example, the mortgagor has left the property
without permission, or failed to insure the Property
...
36 application there must be
likelihood of being able to pay off all​ ​sums due - i
...
arrears and interest
...
The mortgagor’s title technically become overreached
...

Regulating the power of sale
In addition to the limitation on the circumstance in which a sale by mortgagee may be undertaken, the mortgagee
is placed under common law and statutory obligations with respect to the conduct of the sale
...
It is as if the mortgagee had transferred only the mortgagee’s
right to the purchaser
...
He
later got planning permission for 35 houses
...

D refused C's request to postpone sale, and as a result the property was sold at an undervalue
...


Where power of sale has both arisen and become exercisable, the mortgagor must rely on equity to protect his
position
...

In effect, the mortgagee is under a duty of case to the mortgagor to obtain the best price reasonably Obtainable
(​Standard Chartered Bank v Walker​​)
...
If
several offers are received, the court will look at manner the mortgagor took to sell the property
...
Further, there is no liability to the mortgagor even if the proper
steps to sell are ​not taken if this does not, in fact, result in a lower price than that which is reasonably obtainable
...
25 Similarly, the mortgagee is not a trustee of the power of sale, in that he is
exercising his power for himself, and not for the mortgagor
...

The mortgagee may not sell the property to himself or his agent or his employee (Williams v Wellingborough
Council), and if a mortgagee sells to a company in which he has an interest, or is even associated with, the burden
of proof of establishing that the sale was at the best price reasonably obtainable lies with the mortgagee, and if he
cannot discharge it, he is liable ​(Mortgage ​Express v Mardner (2004); Bradford & Bringley v Ross (2005);
Alpstream v PK Airfinance)
...

However, note that this does not absolve mortgagee of any wrongful sale (​​Alpstream v PK Airfinance)
...

Bradford & Bringley v Ross​​- In exercising a power of sale, there was no hard and fast rule that a ​mortgagee
might not sell a property to a company in which it had an interest
...

Alpstream v PK Airfinance​​- it was held that a mortgagee’s duties (in respect of an aircraft ​mortgage) were
owed to the residual beneficiary of the proceeds of the sale
...

Judicial Sales
As noted above, mortgagee may apply to court under section 91 of the LPA 1925 for an order requiring a sale
...

Further, the mortgagor will be liable on their personal contractual promise to repay the whole sum borrowed,
although insurance can be obtained for this eventuality
...
A's company then went into insolvent liquidation
...

The mortgagees declined to agree to the sale as they had obtained a suspended order for possession and wished to
let the property until the housing market improved
...
A and
B applied for an order for sale
...

Issue: The Court of Appeal were required to determine whether the discretion afforded to the courts under s
...

Held: In allowing B's appeal, the Court of Appeal held that the discretion given to the court by the s
...
Moreover, it was just and
equitable to order a sale as unfairness and injustice would otherwise follow
...


Sale before possession
A mortgagee may seek to take possession before the sale, as this would minimize risk of mortgagor sabotaging
the sale, especially as purchasers tend to want vacant possession (which should lead to a higher price)
...
As such Horsham was entitled to possession of the property as of
right against the mortgagors/trespassers
...

A private member's Bill - THE HOME REPOSSESSION (PROTECTION BILL) was introduced in February
2009 to remedy this situation but this was later dropped due to lack of parliamentary time and support
...

- There was no infringement of mortgagor’s human rights under ECHR - ​Doherty v Birmingham ​City
Council-​​The House of Lords has confirmed that county courts should apply the principles set ​out in ​Kay v
Lambeth LBC​in deciding whether or not a defendant has a defence under Article 8 of the European Convention
of Human Rights, ie if the defendant has ​no legal or equitable right​​to remain in possession then he has no
defence unless one of the two "gateways" applies; ie (a) if there is a ​seriously arguable challenge to the law​​itself
under Article 8 or (b) on public law grounds that the decision was ​unreasonable​​
...
However, mortgagor may seek
possession without necessarily selling with the aim to use property to generate income
...
Note though that an order of court is not required before a mortgagee may take

possession, not even of a dwelling house (Ropaigealach v Barclays Bank)
...

Ropaigealach v Barclays Bank
The plaintiff was not residing in the property at the time when the defendant took possession and sold the property
at auction
...

Issue: ​The court held that section 36 of the Administration of Justice Act 1970 did not require the defendant to
obtain such an order for possession
...
Section 36 gives the Court the discretion to delay
making a possession order to enable a borrower to pay off arrears
...
This purpose would be frustrated if the lender could
resort to alternative self-help remedies and avoid bringing proceedings for possession
...

Held: ​The appeal was dismissed
...
Section 36 was enacted to provide the Court with the power to refuse or suspend an order for
possession following the case of ​Birmingham Citizens ​Permanent Building Society v Caunt [​ 1962] Ch
883​​
...

The consequences of the mortgagee taking possession
A mortgagee in possession will be called to account strictly for any income generated by their Possession ​(White
v City of London Brewery)​​
...
The mortgagee may actually be liable to
any difference between actual or what should have been
...

White v City of London Brewery-​​Mortgagee was a brewery company, had taken possession of the ​property, a
pub, and leased it to a tenant as a tied house
...
Held: liable to the mortgagor for the
amount they could have received if they had rented it out as a free house
...
Under section 36 (as amended), an application by a mortgagee for possession of a dwelling house
may be suspended, adjourned or postponed by the court in its discretion, if it appears that the mortgagor would
be likely to be able to pay within a reasonable period any sums due under the mortgage
...

By virtue of section 8 amendment, ‘any sums due’ may be treated only as those instalments that have not been
paid by the mortgagor as they fell due and not, as most mortgages provide when one mortgage payment is
missed, the whole mortgage debt
...


Additionally, if the mortgagee takes possession without a court order (as It is entitled to), the court has no
jurisdiction to control or suspend possession (​​Ropaigealach v Barclays Bank​​)
...
However, before ordering suspension, the court must be satisfied ​that the mortgage will be paid off in
full ​(Cheltenham & Gloucester Building Society v Krausz​​); or that the borrower will pay a sum in court to
cover any possible shortfall (LBI HF v Stanford)
...

2
...

4
...


How much the mortgagor can afford to pay given his other commitments
...
Over what period it is reasonable to expect the mortgagee to wait for repayment of the arrears, bearing in
mind that the mortgagee could be asked to wait even longer than the original mortgage term
7
...

Of course, many would argue that this is just as it should be; after all, what use is a security if the creditor cannot
realise it easily
...
It can render a family homeless or require
 them to live apart
...
Most of the possible ‘solutions’ to this ‘problem’
are either narrow in scope or arise in very special circumstances
...

1
...
Maltby​​(1979), Lord Denning suggested that a court of equity could restrain a mortgagee
from taking possession whenever there was no justifiable reason for that possession
...
Obviously, this
directly contradicts the mortgagee’s pure right of possession springing from their status as a deemed
holder of estate in the land
...

2
...
Palk ​in the Court of Appeal, it appears that a court

may suspend a mortgagee’s possession application or order if it concurrently orders sale of the property at
the request of the mortgagor under section 91 of the LPA 1925
...
However, if the sale proceeds would not pay off the whole debt – as in Palk itself – section 36
is inapplicable and so the suspension of the mortgagee’s possession in Palk seems to have derived from
the wide discretionary power found in section 91 itself
...
Krausz​​,the Court of Appeal appears to have held that there is no power

to suspend a mortgagee’s possession unless section 36 could be used
...
Polonski (1999)), because Palk is said to be limited to its ‘special
facts’
...
Therefore, for the present, if the mortgagor applies for sale under section 91 of the LPA 1925,
there may be an opportunity for the court to utilise an ancillary power to suspend a mortgagee’s
possession order while the sale takes place, whether or not the sale would pay off the entire debt
...
Albany Home Loans v
...

In that case, the mortgage of the house had been executed by the man and woman jointly and they were in
default
...

In consequence, possession of the land could not be ordered, even though the man would remain living on
the land with his partner
...
Achampong- ​Undue ​influence, the ​mortgage will not be totally ineffective, there will be
an effective mortgage of the​ ​husband's beneficial interest in the property
...
63(3) of the LPA
...
There are other statutory restrictions on the mortgagee’s right to possession, which arise in very particular
 circumstances
...
Ashe​​(2008)- The borrower remained in
possession for more than 12 years after the bank’s right to possession had arisen
...
Or in contravention of
the Consumer Credit Act 197 (as amended), the Rent Act 1977 and the Housing Acts 1985–96, or
contrary to the dictates of the insolvency legislation
...
It remains to be seen whether a mortgagor can claim that the mortgagee’s exercise of the right of
possession contravenes the borrower’s right to peaceful enjoyment of their property or their right to
family life guaranteed by the European Convention on Human Rights as implemented in the United
Kingdom by the Human Rights Act 1998
...
On the other
hand, a mortgagee’s claim to possession is in pursuit of their legitimate rights under the mortgage,
especially if such possessory rights are a proportionate response to the mortgagor’s default
...

Appointment of a receiver
The mortgagee may also appoint a receiver to manage and administer the mortgaged property, and possibly sell,
in order to recover monies owed
...


The power to appoint a receiver is exercisable in the same circumstances as the power of sale
...
This is because the receiver is deemed to be the agent of the mortgagor, not the mortgagee
(​​Chatsworth Properties v Effiom (1972); Lloyds Bank v Bryant (​​1996)) with the consequences that any
negligence in the administration of the property is not attributable to the mortgagee and neither is the mortgagee
liable to account for any income generated (or not generated) by the receiver
...

Chatsworth Properties v Effiom​​- “don’t pay your rent to former landlord but to the receiver we ​have
appointed”
...
This act gives
tenant of a dwelling house one opportunity to apply to the court to postpone possession
...
‘gees are now under obligation to send a notice to the property warning of a
proposed possession order being executed
...
In an action against a purchaser for not completing
his purchase, in which action Plaintiff declared he was possessed of the lease, Held, the Defendant having
 rejected the abstract, that Plaintiff was bound to prove the execution of the lease by calling the attesting witness,
and that it was not sufficient to prove the assignment to Plaintiff
...
He borrowed money and gave the bank a mortgage over the
farm
...
Receivers were appointed and they ran the farming business
...
Despite frequent prompting by the mortgagor, the receivers did not seek
discounts from pig feed suppliers
...

The Court of Appeal held that receivers managing mortgaged property owe duties to the mortgagor and anyone
else interested in the equity of redemption
...
In some cases, they may owe
additional duties
...
They also owe a duty
to manage the property with due diligence
...
If they do run such a business, the duty of due diligence requires them to try to
do so profitably
...
A
successful foreclosure extinguishes the equity of redemption and results in the transfer of the mortgaged property
to the mortgagee, free of any rights of the mortgagor: section 88 of the LPA 1925
...
The right to foreclose arises as soon as the
legal date for redemption has passed, although it is common for the mortgagee to promise not to foreclose
without notice, and only in respect of specified breaches of covenant
...
If sale occurs,
the proceeds will be distributed according to section 105 of the LPA 1925, and mortgagor will receive surplus
funds if any
...

Effect of foreclosure on other mortgages
The rights of mortgagees under mortgages that were created before the mortgage that triggers the foreclosure are
unaffected
...
However, the rights of mortgagees under mortgages created after will be destroyed
...
However, the subsequent mortgagees are given the opportunity to take the place of previous
mortgagees by buying them off
...

The mortgagee has power of sale, power to sue on contract for money owed, but not power to convey legal estate
to purchaser
...




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