Mortgage Taking and Renters Rights - Essay Example

MORTGAGE TAKING AND RENTERS’ RIGHTS: CASE STUDY by Property rights is a complex area to grasp. Brenda and Christina as rental tenants do have various rights as provided for by laws, rules, standards and regulations encompassing housing as a standard social norm. Accordingly, landlord-tenant law is part of prevailing common law that details not only the rights but also duties of both property owners and tenants. This is also inclusive of some elements of both contract law and real property law with specific focus on conveyances. In accordance with the aforementioned, what defines the landlord-tenant relationship is the existence of leasehold estates/ properties. In this case, it is the 5 Belmont Gardens /property (Randy, 2003:11). Anthony, as the mortgage sole holder converted this large house into three apartments two of which are not generating capital as his sister (Brenda) and himself occupy two of the apartments rent-free. It is only on the remaining one apartment that some income is generated where Christina is the renter having signed a written contract that is legally binding as from 2013, 1 March to 2020, 31 January. After some time, the property did appreciate in value, by a margin of £200,000 resulting in Anthony’s decision to raise more capital for re-investment in the same property. His raising of another £150,000 for capital was secured by a second charge on the property this time by another firm – Jaywick Finance Ltd. However, he first sought consent of HOC Bank plc that had provided the initial mortgage. From this information, Anthony as the property owner had secured two loans using the property as the guarantee for the two loans. On the one hand, there was the need for him to securely repay the mortgage. However, the fact that the property still guaranteed the second loan was a challenge. The loss of his job and the lack of a tenant resulted in his inability to finance his monthly payments. The direct result of this is that it is inevitable for him to pay the two loans. This means that he faces a default first by way of mortgage defaulting, and secondly through the loan default. This is influenced by the fact that the mortgage will be resettled through property repossession. The HOC Bank plc will have to settle it with Jaywick Finance Ltd. This may be primarily due to the former’s consent to the fact that Anthony secured a loan on the property, under mortgage procedures. One way or the other, Anthony will have to give up the property, or find an urgent avenue of gaining capital to settle the two loans (Randy, 2003:17). Brenda and Christina are tenants and as such have rights as provided above despite the fact that their situations are different. On the one hand, Brenda being Anthony’s sister was living there free while Christina had signed a contract of renting part of the property for a given number of years. The existing landlord-tenant law does generally recognize the differential nature of commercial leases from residential ones. This primarily concerns the latter being much riskier due to the bias that comes as a result of bargaining powers therein, as Ewan (2005) alludes. Landlords are required to protect tenants from retaliatory or constructive eviction, as well as breach of contract. It is perhaps on the latter clause that some form of legal interpretation may be required (Ewan, 2005:10). As is known, common legal systems recognize the legal validity of contracts. Accordingly, a contract is regarded as pertaining to an agreement, between two or more individuals that is recognized legally (Ewan, 2005:13). Each of the parties involved is accordingly vowed to create and uphold the legal obligation(s) between them. In this regard, the elements of a legally binding contract are ‘acceptance’ and ‘offer’ by two or more competent persons possessing legal capacity in their consideration of each party’s mutual obligation. Proof of all or some of these aspects need be in writing though other acceptable forms are by either conduct or orally (Ewan, 2005:15). Legally as Willmott et al. (2009) provide, the remedy for a breach of contract is often in the form of ‘damages’ where monetary compensation can be enforced. Another option would be the enforcement of specific activity performance, which is often by way of legal injunctions. Both of these offer the losing party remedy, by way of ‘benefit of the bargain’ aspect (Willmott et al., 2009:47). In this regard, expectation damages, reliance damages and promissory estoppels, may be some of the avenues through which an aggrieved party would seek some form of protection/ security cover. As is envisaged in legal justice systems, contracts are legal documents that are between two or more juristic parties/ individuals (Willmott et al., 2009:49). As Ewan (2005) portrays, this means that a contract is a legally enforceable undertaking/ promise that is only dissolvable under specific legal undertakings and interpretation (Ewan, 2005:18). In the case of Catherine, where there was a form of contractual agreement; allowing her to rent out the space for a specified duration of time, the aspect of ‘due consideration’ may become applicable. This might be in the form of enforcing subjective fairness (or an equivalent) in situational contexts that do not meet the sufficient threshold (Ewan, 2005:20). While having attempted at providing information on how Catherine is more likely to gain some form of compensation, it is important to note that two other contracts do exist, in this case scenario (Ewan, 2005:24). One is these is between Anthony and HOC Bank plc, and the other between Anthony and Jaywick Finance Ltd. These two, being commercial contracts of a higher value representation, would also hold in a court of law. Anthony is most likely to lose the house to either, and still be indebted. Thus, in my interpretation of the scenario, Catherine may get reprieve through some monetary compensation or a measure equal in measure. However, both Brenda and her, as the two tenants present, cannot apply and be successful in resisting repossession of the property; except under maybe one option. This option, in my view would entail the two aiding Anthony source the capital needed to continue on his two mortgages thereby successfully stopping the two contracts from being deemed ‘null and void.’ It is only through such an avenue that the two firms can appease the financing entities be thereby enabling Anthony keep ‘possession’ of the property under due diligence. In my interpretation, and founded on Willmott et al. (2009) analysis, the two contractual agreements between Anthony and the two financing partners was duly signed under Anthony’s sole name (Willmott et al., 2009:34). Thus, any other affected parties would legally be placed to deal directly with Anthony concerning any contractual agreements without attaching the two financing entities to this matter. As a court judge would legally interpret, there was no form of contractual agreement between the renters (Brenda and Catherine) and the two financial parties (Willmott et al., 2009:37). In conclusion, property rights must be well understood for instance the tenant-landlord rights so that when a case arises, the parties could know what to do especially where the property under question has been listed as a guarantee to a loan or mortgage. However, it is always a complex process of legal battle. In this case, Brenda and Catherine, as the two tenants could only stop/ resist repossession of the property through financial measures. If not, they will have to let the law to take its course and Anthony may have to face the consequences himself. The property contractual agreements were between him and the financing partners solely without the attachment of any other party. Hence, in this case scenario, the two tenants would have to find alternative accommodation; sorting their issues with Anthony solely on their part. Reference List Ewan, M. 2005, Contract Law - Text, Cases and Materials. Oxford University Press. Randy, E.B., 2003, Contracts. Aspen Publishers. Willmott, L., Christensen, S., Butler, D., & Dixon, B., 2009, Contract Law, (3rd Ed.). Oxford University Press. Read More