Land Law and How a Mortgage Is Created - Essay Example

Land Law-Assignment 2 Introduction A mortgage is a registered security on possession that permits the mortgagee or lender to take and put up for sale the property if the mortgagor fails to repay the money. It can be placed on goods or real estate, if money is borrowed to buy it. Lenders are required to send a reminder notice or letter of demand if payments are defaulted1. If the payment default is not corrected as expected in the demand letter, the lender should send a default notice, making it clear how he will remedy the default to allow the borrower a maximum period of 30 days as per the date of the note to do so. When a mortgager of residential property fails to repay his mortgage, he will find it difficult, though not impossible to prevent the mortgage from recovering the property and selling it. Mortgage in English law is resulted from two different influences. Its form and origin belong to the common law; the constraints by which it is made to act as security only, belong to the courts equity. The English law states that, if the mortgagor did not pay on the contractual date, he at one time can forfeit the mortgagee and can be sued in contract to for money repayment. Accordingly, the legal right to redeem is very limited. The mortgagee’s right to possess the residential property is exactly what is expected. By virtue of how legal mortgages are created, the lender is considered as having an estate in the residential land, thus he is given an immediate right to possession instantly the ink dries on the mortgage. Notably, the mortgagee may posses the property at any moment even when the mortgage is not in default, basing only to the provision contrary in statute or in the mortgage itself. In the usual course of events, this right will not be exercised by the mortgagee and will be content to permit the mortgagor to continue possessing the property so long as the terms of mortgage are adhered to and payments are done as agreed. Indeed, the mortgagee could have promised in the contract not to seek possession except if the mortgagor breaches any other obligation or defaults repaying. If this happens, possession may be granted in virtue of the mortgagee’s right, not in virtue of a solution to be requested from the court2. In this context therefore, mortgaged property can only be taken and sold basing on the procedure of mortgage creation, the rights of the lender, and the rights of the mortgagor. How a mortgage is created Before property is taken and sold, the mortgagee and the mortgagor should both consider the way this mortgage was created. The first step is to involve a mortgage advisor to offer an agreement in principle or approval. This illustrates what the provider will likely be willing to lend, basing on specific terms and conditions. Such a step can be helpful when a mortgagor has chosen his mortgage and the property is to be offered. A mortgagor should never be tempted to overstate his income since he can end up with a mortgage he can not afford to repay. To legalize a mortgage, a licensed conveyance or a conveyance solicitor must be included in this creation so that he can draw up contract, make local searches, and carry out other legal paperwork. Some lenders may refer a mortgage to a specified solicitor but a personal recommendation may be a choice. After this, it is important that the property is valuated3. The lender will often have the prosperity valued to ensure that it is worth the agreed upon price. If it’s not, then it will affect the amount to be lent. It is therefore advisable for a mortgagor to get his own survey done as well or to upgrade the valuation of the lender’s survey into a more detailed one. After mortgage offer, the mortgagor’s solicitor can set a date for contract exchange with the seller’s solicitor. A percentage of the buying price is paid by the mortgagor at this time, as a non-refundable deposit and entrust to paying the rest upon the agreed completion time, that is, when he owns the property. A mortgage can be created over a personal property that has the ability to be monetarily valued, and on a share or percentage of that property. Given that the immovable asset is improved within the effectiveness of the mortgage, then the mortgage will also relate to the improvements. A mortgage agreement can be secured by a prospect property, though the mortgage may be registered in real estate record only if the property comes into existence. Moreover, a mortgage cannot be detached from the encumbered fixed property even if a third party acquires its ownership. At the time when a mortgage is created, the exact amount claimed is not yet known; the highest amount of the claim secured must be precisely outlined in the mortgage agreement. A claim is more specific if the debtor or creditor, the amount and the legal grounds are determined. Most importantly, a mortgage can be created based on an agreement between a court decision, the parties, or when requirements are laid down by law are met. If not all requirements for registration are met, then a mortgage may be initiated by pre-registration, on grounds that the preregistration notices are justified later and that everything required for the preregistration is convened. This shall be allowed if the legal ground and the claim for establishment of the mortgage are proved to be real. The provision of this law on mortgage creation by registration in real estate is applicable to changes and incase of termination of the mortgage. Above all, a mortgage cannot be created primarily on a will. Rights of a lender A mortgagee has a right to sue for the mortgage money. However, this right is available to him only on certain conditions: If the mortgage deed has an agreement to repay If there is no fault of the mortgagee or the mortgagor, the mortgaged asset is deprived partly or wholly destroyed Where the mortgagee is denied wholly or partly of his security by default or by a wrongful act of the mortgagor If the mortgagee to be entitled to possession, the mortgagor does not secure similarly to the mortgagee. In the first two cases above, the court may ask the mortgagee to put into effect his claim first against the security of the mortgage. The mortgagee also has the right to sell the mortgaged asset without the court intervention. The power is practical where the mortgage in question is an English mortgage and none of the parties is a Buddhist, a Muslim, or a Hindu, or any of the recognized classes4. It is also exercisable where the mortgagee is the crown, a power given by the mortgage deed, or if the mortgaged asset is located in any of the presidency cities and that such power is given by the mortgage alone. The power can not be exercised, except when a written note for payment of the ideal sum is served on the mortgagor and a three months default has occurred, or if interest has not been paid for three months following its due. The mortgagee can appoint a recipient of the returns of the mortgaged property in cases where he is empowered to sell. Where an individual is named in the mortgage act, he can be appointed as a receiver, but if no such an individual is mentioned, the mortgagee is responsible for appointing as recipient someone mentioned by the mortgagor. Failure of such a contract, the mortgagee should apply to the court to make an appropriate appointment. The lender is also entitled to the gains of any accession to the property, as the mortgage continues under section 70, such as installing electricity or digging a well on the mortgaged residential land by the mortgagor, regardless of whether the mortgagee possesses it or not. Where the mortgagor attains a lease, entitlement to the gain by the mortgagee is also guaranteed as the mortgage continues. Moreover, if the mortgaged property is vended for land revenue arrears or is obtained under the put down land acquisition act or else, the mortgagee is allowed to claim payment of part of the mortgage, out of the proceeds of such acquisition or sale. Rights of a mortgagor A mortgagor is entitled to the right of redemption; he is supposed to naturally own the property and thus is acceptable that his interests and wishes in the property must be natural and be respected. His rights are to be legal and statutory for which legal remedies should be availed to him to set up his rights at the end of it all. At any given time after the principal amount has become due, he has a right, on tender repayment, at a proper time5. Section 32 under the mortgage Act in England requires that notice of the exercise of the authority to sell can not be offered until default has lasted for at least 15 days. A longer period may be provided under the mortgage article itself6. No previous demand is needed to ascertain default in making a payment of interest or principal. However, a mortgagee must give a notice of a violation of other agreements prior to the 15 day time starts to run. Conclusion Summarily, if the mortgagor defaults repayment, the mortgagee can take possession of the property. Additionally, a mortgagee can take the property where there is a specified provision in the mortgage deed. On the other hand, if the mortgagor fails to honor his obligation by not paying within the agreed time, a mortgagee cannot exercise the rights of taking possession or selling the asset only if he first gives the mortgagor with the suitable notice .The notice must include: the nature and scope of the default being complained of, the rights entitled to the mortgagee if the mortgagor fails to remedy the default within the period specified, and the date by which the remedy of the default should be carried out. Indeed, a mortgagee is not entitled to prevent the right of the mortgagor to redeem the property, but at the same time, he is entitled to take possession if default occurs. This means that the mortgagor should repay the amount owing prior to the date specified in the agreement. References Blackstone, William. Commentaries on the Laws of England. London: The Law-book Exchange, Ltd., 2009. Print. Dixon, Martin. Modern Land Law. (7th Ed). London: Penguin Books, 2011. Print. Hill, Gerald. Nolo's Plain-English Law Dictionary. Birmingham: Nolo Press, 2009. Print. Nell, George and Philip, James. Introduction to English law. Heinemenn: Butterworths, 1996. Print. Read More