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MORTGAGES - Coggle Diagram
MORTGAGES
EQUITY OF REDEMPTION
Recognises that a mortgage is security for a loan not an opportunity for the lender to gain something more. A.k.a a bundle of rights which the borrower has.
Protection from clauses which postpone or prevent of the right to redeem
(redemption can only be postponed if the borrower gains some benefit from any 'lock in' and gets back exactly what was mortgaged)
Protection from clauses which grant collateral advantages to the lender
collateral advantage will be struck out if is unconscionable, in the nature of a penalty, or repugnant to the equitable right to redeem
e.g. a solus tie that extends beyond the term of the mortgage
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Unconscionable terms
these must be more than simply hard bargains and must be imposed in a morally reprehensible manner. e.g., taking advantage of the borrower's vulnerable position
UNDUE INFLUENCE
Banks are regarded as put on inquiry whenever one party in a non-commercial setting stands as surety for another.
Etridge Guidelines
Where the bank is put on inquiry, it must
- Write to the spouse granting the benefit not for their benefit, explaining that it needs confirmation from an independent solicitor that they have explained the transaction to them
- Ask that party to nominate an independent solicitor, and provide all the information to the independent solicitor, and
- It must not proceed to lend until confirmation is received from the independent solicitor that the transaction has been fully explained.
If a party can show that there is a relationship of trust and confidence (e.g. trustee- beneficiary, solicitor-client, husband-wife) and a transaction that requires explanation (would usually not be expected in the relationship concerned), then unless the alleged wrongdoer can provide evidence to the contrary, the court will conclude that the transaction is a product of undue influence.
PRIORITIES
OF MORTGAGES
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If an equitable mortgage is protected by entry of a notice at the Land Registry, it will take priority over subsequent mortgages- even if that mortgage is a legal mortgage.
LENDER'S RIGHT
TO POSSESS
A lender's rights to take possession of the mortgaged property when there's a breach can be exercised without a court order, but in practice lenders often apply for a court order (just to be safe)
According to section 36 AJA, the
following must be satisfied in order
for the court to postpone possession
of the property by the lender
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The borrower must be able to pay any sums due.... (the arrears and accrued interest, not the whole of the mortgage debt)
...within a reasonable period (CoA stated that the starting point for pinpointing this was the remainder of the mortgage term)
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