Mortgages Part II: Rights of a Mortgagor

Flashcards covering the legal and equitable rights of a mortgagor, relevant case law, and the concept of legal fiction in mortgage agreements.

What are the three categories of rights enjoyed by a mortgagor in a mortgage transaction?

The rights include: legal rights to redeem, equitable rights to redeem, and equity of redemption.

How is 'Equity of Redemption' defined?

It is the interest the mortgagor has as owner of the property that prevents the property from being sold, disposed of, or unduly held by the mortgagee.

What is the legal status of a clause in a mortgage deed that creates limitations or denies the mortgagor's right to redeem?

Such a clause is considered void.

Which case from $1979$ established that there must be no 'clog' in the right of redemption?

Multi Service Banking Limited v. Merdan ($1979$).

According to Ndaba v. UBN ($2007$), what must not exist in the right of redemption?

There must be no clog, bridge, or blockage in the right of redemption.

Under what two circumstances does the right of equity of redemption cease to exist?

The right ceases when the mortgagee exercises a valid power of sale or when the court issues an order for foreclosure absolute.

Which $1903$ case is cited regarding the cessation of the equity of redemption?

Bradley v. Carrott ($1903$).

What is the primary exception to the rule that the equity of redemption shall not be clogged?

Cases of debenture are an exception, as seen in $\text{Section } 196$ of CAMA.

What characterizes the 'Legal Right to Redeem'?

The right of the mortgagor to redeem the property anytime from the date of creation of the legal mortgage to the legal due date, provided the mortgage sum and interests are settled fully.

What is the 'Legal Fiction' or fictional due date in mortgage practice?

It is a shorter due date, usually set around $6\,\text{months}$ after the creation of the mortgage, intended to protect the interest of the mortgagee.

Why is the legal due date often set at a shorter time rather than a longer one?

If the mortgagor defaults, the mortgagee can use their power of sale or recover money instead of waiting a long time for the legal due date to pass.

Which case discusses the dangers of placing a legal due date too far away from the date of creation?

Twentieth Century Banking Corp Limited v. Wilkinson ($1977$).