Land S4a: Mortgages, creation and remedies.

A mortgage is a ? granted by ? in favour of ? to secure ?

A mortgage is a security interest over land granted by the borrower in favour of the lender to secure any amounts owing to the lender under a loan.

The mortgagor…

The mortgagee…

The mortgagor gives the mortgage to the lender; they are the borrower.

The mortgagee is the lender who is taking security of the borrower’s land; they are given the mortgage by the borrower.

What type of interest is a mortgage?

What is required for its creation?

A mortgage is a legal interest in land, created by deed.

In the event that a borrower fails to repay money owing to the lender, this will be considered…

a default in the loan agreement, allowing the lender to exercise its security interests and enforce the mortgage.

A lender has multiple remedies available if the borrower defaults:

Debt Action

This is…

the lender suing on the personal covenant to repay the outstanding amount due under the mortgage.

A lender has multiple remedies available if the borrower defaults:

Possession

A lender can…

If the property is residential,…

If the property is a dwelling house in occupation,…

take possession of a property following a default by the borrower.

the lender should attempt to resolve any arrears (e.g. reschedule the debt) prior to taking back the property.

the lender should obtain a court order to obtain possession.

A lender has multiple remedies available if the borrower defaults:

Appointment of a receiver

A receiver may be appointed who has the power to…

demand and receive income from the property (where it is an income producing property with tenants) and will use the income to pay any outgoings, insurance, interest and/or capital outstanding.

A lender has multiple remedies available if the borrower defaults:

Power of sale

Lenders may sell the mortgaged property and use the proceeds to pay the sum they are owed under the mortgage.

The power of sale may be expressed in the mortgage document or,…

The power of sale must have…

Secondly, the power of sale must be… S.103 LPA 1925 sets out 3 possible events that meet this requirement, they are…

it is implied into every legal mortgage (s.101 LPA 1925).

arisen, meaning that mortgage payments are overdue.

exercisable. S.103 LPA states that after it has arisen, the power of sale is exercisable if:

—a) Lenders have served notice on the borrowers requiring payment and they have failed to comply with that notice for 3 months after service; OR,

—b) Interest due under the mortgage is 2 months or more in arrears; OR,

—c) The borrowers have breached a term under the mortgage deed.

A lender has multiple remedies available if the borrower defaults:

Foreclosure

Foreclosure vests the…

Foreclosure is available by…

It’s effect is…

There are protections for the borrower to avoid foreclosure. Any person interested in the mortgage money or in the right of redemption (which includes ?) may…

property in the lender free from any rights of the borrower.

application to the High Court.

ending the mortgage and giving the lender the title to the property.

(which includes the borrower) may request that the court makes an order for sale instead of foreclosure.