Mortgage in Law - Essay Example

Mortgage Language Style: English UK Grade: 2 a) A mortgagee has an immediate right to possession (Four -Maids ltd v Dudley Marshall (properties) ltd1. This right may have been excluded until the mortgagor was in default, but the borrower is in arrears with his payments it is almost certain to apply. The lender Has such a right because he either has a legal term of years in the property under S .85(1) or s. 86(1) Low of property Act 1925 or, where the mortgage is created by A chare by deed by way of legal mortgage under s. 87, he has the same Protection, powers and remedies as if he had a legal term of years in the Property. The property consists of an occupied dwelling -house, and therefore a Court order for possession will be required (protection from eviction Act 1977). If the lender brings a court action for possession of property, which consists of or includes a dwelling house, the mortgagor could obtain longer to repay by asking the Court to delay possession. The court has both an inherent and a statutory jurisdiction to delay possession. Using its inherent jurisdiction. In Birmingham permanent building society v Caunt the court grant a 28 days short delay to enable the Borrower to repay in full the sums owing. In Abbey National Building Society v Cann2 An aunt acquired rights in property owned by her nephew, through her rights under the 'right to buy' legislation. She was on holiday on the actual date of moving. However, her belongings were moved by removal men. The actual move started some 35 minutes before completion and some of her furniture was moved into the premises. The court decided that this was insufficient for her to claim that she was in actual occupation. In Lloyds Bank v Rosset3 a husband and wife, recently married, decided to purchase a semi-derelict property. They could not move in until a certain amount of renovation work had been done and much of it was supervised the wife. The work was still in progress after the transfer but the issue was whether the wife could be in actual occupation when she was not in permanent occupation. She had spent a considerable amount of time at the property but could not be said to be in permanent occupation. The builders were working at the premises permanently. Although the court accepted that it was not necessary for the wife to be living there, it drew a distinction between intending to move in and actually living in the premises. The builders were held not to be in actual occupation on behalf of Mrs. Rosset. In Chhokar v Chhokar4 a married couple split up. The wife remained in the property but had to leave when she had to go to hospital to have a baby. It was held that this did not constitute a break in actual occupation. The case suggests that brief absences will not interfere with actual occupation of land. So in order to get right of possession in case of actual occupation must be proved. b) The mortgagee has a right to sell the property without; a court order once the Conditions in SS. 101 and 103 Law of property Act 1925 are fulfilled. Discuss the Sections briefly and co-relate with the given set of facts. For a long time, it has been established that the mortgagee need not wait until the Market is favorable before exercising the power of sale (Warner Vs Jacob). Indeed, Provided the power to sale is exercisable, the mortgagee cold sell the property at the least advantageous time for the mortgagor (Duke v Robson). In the aftermath of Cuckmere, it was thought to be arguable, that it might be the case that the mortgage should exercise reasonable care as to when the property is out onto the market. This Argument was rejected, however, in China and south sea bank Ltd Vs Tan soon Gin, Where the privy council held that a mortgagee could not be liable for failing to Exercise its power of sale when market conditions were ore favorable than they Subsequently became, as the timing of the sale was a matter entirely for the Mortgagee. This has recently been confirmed in Silven properties Ltd Vs Royal Bank of Scotland plc. Further it was stated in Silven that when and if the mortgagee does exercise the power of sale, he comes under a duty in equity to the mortgagor to take reasonable Precautions to obtain the fair or the true market value at the date of the sale and not the date of the decision to sell. However, the mortgagee is not obliged to take those Steps which an owner might take in selling the property, so there is no obligation On the mortgagee to pursue planning application or the grant of leases or to sell Certain fixtures separately which might be make the property more valuable. The mortgagee has a duty to obtain the best price reasonably obtainable for the Property (Cuckmere). In addition, the sale must be a true sale. A sale by the Mortgagee to itself or a nominee will not be a true sale. If a mortgagee sells to a Company in which it 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 it cannot discharge it, it is liable. However, if the Mortgagee so desires, the mortgagee may apply to the court under s. 91 Law of Property Act 1925 for authority to sell to itself, in which case the property of the Transaction will be assessed by the court (Bradford). c) The court can exercise its jurisdiction under s. 36 Administration of justice Act 1970 to postpone, adjourn or suspend possession where there is a reasonable likelihood that the borrower will be able to pay the sums owing within a reasonable period. The Borrower needs to convince the court that there is a realistic chance that he will be Able to discharge the arrears within a reasonable period and maintain payment of the Current installments (s 8 Administration of justice Act 1970). It will not include the Whole sum borrowed, even if the terms of the mortgage make this repayable on Default. The borrower may, for example, anticipate that he will obtain employment Shortly or that his income is likely to increase. However, the court needs convincing Evidence from the borrower, not mere speculation as to his future prospects. In Re Citro (a Bankrupt)5 the trustee in bankruptcy applied for sale of the family home. The wife applied for the sale to be deferred on the basis that the children were young and would be forced to move school in the event of sale. These were not seen as exceptional circumstances under s 335A of the Insolvency Act 1986. It is not uncommon for a wife with young children to be faces with eviction in circumstances where the realization of her beneficial interest will not produce enough to buy a comparable home in the same neighbourhood, or indeed elsewhere. They are melancholy consequences of debt and improvidence with which every civilized society has been familiar. In Re Holliday6 Property was purchased as the matrimonial home in 1970,after the couple had three children. The wife had filed for divorce and almost immediately after she had applied for ancillary relief the husband had filed his own bankruptcy petition. The wife was without any capital of her own and the court found that she would need 26,000 in order to purchase property of similar quality. The court refused sale because it held that the circumstances in this case were exceptional, as the husband had deliberately filed for bankruptcy to thwart the wife's efforts to gain ancillary relief. So Court consider exceptional circumstance in this situation. Bibliography: 1. Dr Martin Dixon, Modern Land Law, 5th edition, (2005), Cavendish Publishing Limited. 2. Jacqueline Martin & Chris Turner, Unlocking Land Law, 1st edition, (2006), Hodder &Stoughton. pg. 351-388. 3. Gray & Gray, Elements of Land Law, 4th edition, (2004), Oxford University Press. 4. Margaret Wilkie & Peter Luxton, Land Law, 5th edition, (2005-2006), Oxford University Press. Read More