Mortgages

o Mortgage: borrowing of money to buy a property, banks ask for it in order to secure
that loan (this means they get various rights.)
o Mortgagor: the borrowe, the one buying the property.
o Mortgagee: the lender.
o Equity of Redemption: is the name that we give to the bundle of rights that the
borrower has.
o Collateral Advantage: only in commercial mortgages, when a business uses it, they
try to give themselves an extra benefit, an extra arrangement, EJ: brewer gives the
pub a mortgage in order for them to sell their beer.
o Foreclosure: a remedy that is rarely used these days, don’t use it in exams. The press
sometimes uses this meaning in the American way when they actually want to say
repossession.
o Arrears: when payments are not made, there is a built of mortgage arreas, when
they become too much – repossession (4-6 months usually)
o Repossession: legal but also personal and family level. They resell it to a new owner
to pay the unpaid mortgage.
o Negative equity: when you owe more than your property is worth. Can happen in
recessions or with devaluation.

Define mortgage.

“a property interest that exists to ensure payment of a debt, more commonly by selling the
land if the debt is unpaid.

Social Background: the home ownership has risen in the past years, this is due to the easier
avaliabilty of mortgages.

Creation of Mortgages: “ little short of scandalous that there is no modern legislative

statement of what a mortgage or charge is and of the rights which such a mortgage is and of
the rights which such a mortgage or charge confer. Instead, registered charges are described
as having the same effect as mortgages created using old, now obsolete methods.

Legal Mortgages;

o Section 1 of the LPA 1925

o Lists a mortgage as one of the 5 interests that are capable of being a legal
interest. This depends on how you create it.
o Section 23(1) of LRA 2002
o Tells you that a legal charge is now the only way to create a mortgage of
registered land.
o Section 27 & Section 51 of LRA 2002
o If it is going to take effect as a legal interest, it must be registered in the land
register as a registrable charge, if not it will just be an equitable interest.
Equitable Mortgages;
o It will arise when a party only has an equitable interest.
o First National Securities v Hegarty
 When a signature is forged in a legal mortgage, they have an
equitable just against the person that has committed the forging.
o When they tried to create a legal mortgage but did not get the formalities right.
(informal mortgage of a legal interest)
o You need a deed to create a legal mortgage, if you do not have one but you
have enough to create a legal contract, you can still have an equitable
mortgage.
o S2 LP (MP) A 1989
o Does not exist anymore
o Before you could trade an equitable mortgage, deposit of title deeds.
o Russel v Russel
