Sale of the Mortgaged Property by the Mortgagee - Assignment Example

LAND LAW UK College: A mortgage is in land or property is a way in which parties to a mortgage can secure fulfillment of obligation. In the event that the mortgager is not in, the position of fulfilling the pledges of a mortgage, under the mortgage law the mortgager is entitled to the rights over the mortgager in recovering or getting the reimbursement from the costs of the mortgage (Stroud, 2013). Mr and Mrs Brown purchased this Cosy Nook five years ago through mortgage but have defaulted to take care of the mortgage repayments due to a drop in their income.Under mortgage, terms both the parties would have rights as well as obligations under both the old mortgage law and the new as well. This will ensure that there will be no party in the agreement that goes to a loss. Under the law, the bank as the mortgagee would exercise the following remedies against the borrowers here referred to as the mortgager. The mortgager while going through with their repayments for the property owns title over the property, but: the mortgagee is entitled to the following rights relating to the title of the mortgager. One of such is the right to make perfect the title where in case the mortgagee is the second mortgagee after the first one, he buys the first mortgagee and hence becomes the first. Secondly, the mortgager has the right to improve the property as a representation for the security for the loan but such expenditure are required to be reasonable compared with the amount borrowed so that repayment is not hampered (Stroud, 2013). In addition, it is normally the order of the day that the mortgager receives back the substance of the mortgage upon redemption of the mortgage. Therefore, if the mortgagee makes more expenditure than is reasonable then the mortgagee is not entitle to claim reimbursements for the money spent. This is as in the case of South well v Roberts (1940) 63 CLR 581. In the event that the mortgager does not meet the obligation to repay as in our case; then the bank has two major remedies. First, this is the right of the bank to exercise the power of sale as stipulated in the mortgage document as well as the statutes. Secondly, the mortgagee has the remedy of foreclosure as stated in section 100 of the Conveyancing Act. Under the old system, foreclosure can only be effected by court order while foreclosure under the Torrens system, it is required that an application is made to the registrar general to make an order of foreclosure under section 61 of the law. Sale of the mortgaged property by the mortgagee In the event of mortgage defaulting all mortgages, have the power entitling the mortgagee to sell the property in the event of default. Notice that is to be complied with by the mortgagee concerning the same is contained in both the Conveyancing Act and the Real Property Act. These are contained in section 109 conferring power of sale whether one is or not included in the mortgage document. On the other hand, section 111(3) of the Conveyancing Act stipulates the clear notice of requirement before the sale under both the old system and the Torrents system. The manner of distributing the proceeds of the sale is contained in section 58(3) of the Real Property Act. The notices as provided by the two acts must be taken care of, specifically sections 111 and 57 by the mortgagee before enacting a sale lest the sale is put at risk. The mortgagee is only allowed to claim the principal if it actually exists and has fallen due for payment. This therefore means otherwise that the bank can only claim the interest if it is interest that has fallen overdue as it is interest that can be claimed to be unpaid. Under the old system, the mortgagee is the owner of the property and the mortgager only plays the roles of a tenant as stipulated under the atonement clause. The mortgage also goes further to give the mortgagor right of possession until default occurs. In the event the mortgagee contravenes this provision, the mortgager is entitled to the action for breach of contract. See Butt [1893] – [1894].Under the Torrens, the mortgagee does not acquire the legal title to the land hence no right to possession as this is provided by the Real Property Act only upon notice to such. Under this act therefore and with a tenant involved, the mortgagee can only claim rent until a decision is made as to whether the property should be sold, See sections 60, 63, and Butt [1895].When exercising the sale the mortgagee is only allowed to sell necessary since the power of sale can only be real sale. For example in the case ANZ Banking Group v Bangadilly Pastoral Co. Pty Limited [1978] 139 CLR: where an appeal under sale in unusual circumstances was considered. The case, Palk v Mortgage Services Funding [1993] 2 All ER 48 also handles a scenario where the mortgager owes more money than the property is worth. Furthermore, the mortgagee is not a trustee to the power of sale and has no fiduciary duty to the mortgagor: see case Warner v Jacob. He has the duty to act Bonafide: case Warner v Jacob and Kennedy v De Trafford as well as duty to obtain proper price. In mortgage contracts, the mortgagor as well has rights and remedies to enact against the mortgagee as an equal party to such contracts. First, the mortgagee has no right whatsoever to gain in the event they are selling the property after the mortgagor is not able to pay. Therefore, when the mortgagee and the new purchaser engage in a fraudulent sale of the subject property and the transfer of the land involved, the mortgagor becomes entitled to have the contract and the transfer set aside. This was as in the case Latec Investments v Hotel Terrigal Pty Limited (In Liquidation) (1965) 113 CLR 265. Here, the mortgagor applied to the courts for the courts to set aside a transfer due to a fraudulent sale exercise. It was also held in the same case that, against the trustee to the debenture holders who had acquired its interest concerning value and without notice of any interest in the mortgagor, the mortgagor was not so entitled. Our case is unique in that, Mrs. Brown left employment three months ago and expects a legacy under which death has not already occurred. In the case: Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 Walsh J. in the supreme court of NSW. The facts considered, stipulates that a proof has to be made that no payment that is due has been made in respect of such indebtness. Again, the plaintiff must not have made any offers to pay the amounts as claimed by the defendant to be due under the mortgage. In our case, the plaintiff has is expecting a large legacy which is not definite as to when. The mortgagee has the right to sale to recover costs but must take caution to obtain the best price reasonably obtainable at the time of sale. This is known as the proper price or the true market value he or she is therefore reasonably free to decide if and when to exercise their power of sale and obtain best price. They should not be in breach of this duty, as they would confer the mortgagee a remedy: see case Madoff Loan Co v. Indigent. See Ropaigealach v Barclay’s Bank [2000] QB 263. Generally, as in the case Inglis v Commonwealth Trading Bank of Australia, the mortgagor has right which are limited to the circumstances when there is a breach of contract, the mortgagee is involved in defamation against the mortgagor, as well as fraud and conspiracy. The exceptions to this rule are in the instances when the amounts that the mortgagee are claiming are wrong.Where a doubt exists concerning the power of sale or whether the sale has become exercisable. It may also be exceptional where the validity of the mortgage is challenged or the contravention of the trade practices. In our case and in my opinion: the bank under the stipulated procedures has the right to claim the costs of the mortgages. The option for an auction is farfetched at this instance as it is only six months. In addition, I do not consider the mortgage due and hence the mortgagee can only claim a default in interest. The mortgagor now can as well sue the bank for breach of procedures. The right of possession of a property by a mortgagee is governed by case law, the law of property together with the amended Administration of Justice Act of 1967. In addition, the contractual provisions that are normally contained within a mortgage deed also apply. Modern mortgages law allows a mortgagee to enter into the possession of the mortgaged property in two major ways: when the mortgagor defaults and the mortgagor wishes to sell the property. In this instance, the mortgagee may enter to obtain vacant possession (Stroud, 2013). When there is not default, the mortgagee may enter in an effort to preserve the value of the property of which he strictly becomes accountable to the mortgagor. Default is quite a serious matter and before the 1970, Act courts were unable to postpone the entry of a mortgagee into possession. However, the act gives the mortgagee the power of sale, a power that they can exercise without commencing possession proceedings. Here, they can sell the property to a third party, use the sales proceedings to pay off the mortgage debts. The new owner can then proceed to the courts for possession proceedings against the former borrower. This was as in the case, Horsham Properties Group Ltd v Clark & Beech [2008] EWHC 2327(Ch) under which the mortgagee sold the property through auction in exercise of its power of sale. The former borrowers were then involved in an eviction case as sought by the new owner accusing them to be trespassers. The courts had no option but to order possession. On the contrary, the mortgagor as well has the right to postpone possession through a court order under which the courts will suspend or stay orders for possession to the advantage of the borrower. Such expensive procedures have seen mortgagees resort to other ways to seek payments from borrowers instead of the costly repossession procedures (Stroud, 2013). References Stroud, A. (2013). Making Sense of Land Law. New York: Prentice-Hall: pages 555-600. . Read More