Mortgages
a. Definitions
- When creditors lend to debtors, they would seek assurance that the loan will be
repaid; will thus take a property right in the land to hold as security
- If loan is not repaid, bank can have recourse to the property right to obtain its debt
- Currently, the most common security in land is a ‘charge by way of legal mortgage’
- Debtor keeps title to the land, but creditor has the property right
Relevant Statutes
- LPA 1925
o LPA s.1(2): ‘Only charge able to be created/conveyed at law is a charge by
way of legal mortgage’
o LPA s.2/27: Overreaching available where C has a legal charge and pays
capital money arising to at least 2 trustees
o LPA s.87(1): If mortgagor has a freehold, s.87 says that the mortgagee has the
protection/powers/remedies as if they had a lease for 3000 years. If mortgage
is of a lease, the mortgagee is treated as if they have a lease of one day less.
o LPA s.91(2): Mortgagee/mortgagor can apply to courts for order of sale
o LPA s.101: Statutory power of sale/appointing a receiver
o LPA s.103-114: Qualification of creditor’s powers
- LRA 2002
o s.23 LRA 2002: Registered owners can only enter into a mortgage of a
registered estate by way of charge
o s.27(2)f LRA 2002: Legal charges must be registered
o s.28 LRA: Preserving priority of rights first in time
o s.30 LRA: Where C acquires and registers a legal charge for valid
consideration, C will take free from B’s pre-existing property right unless B’s
right is either: (i) protected by an entry on the register; or (ii) overriding
o s.52 LRA 2002: Protection of C where statutory power of sale has arisen
- Administration of Justice Act 1970 s.36
o Court has discretion to suspend execution of judgment or order, or to
postpone date of possession for reasonable periods if property is a dwelling
house and creditor can repay
b. Charge by Way of Legal Mortgage
- Split into content and acquisition questions
- Refer to earlier priorities and defences notes
a. Definitions
- When creditors lend to debtors, they would seek assurance that the loan will be
repaid; will thus take a property right in the land to hold as security
- If loan is not repaid, bank can have recourse to the property right to obtain its debt
- Currently, the most common security in land is a ‘charge by way of legal mortgage’
- Debtor keeps title to the land, but creditor has the property right
Relevant Statutes
- LPA 1925
o LPA s.1(2): ‘Only charge able to be created/conveyed at law is a charge by
way of legal mortgage’
o LPA s.2/27: Overreaching available where C has a legal charge and pays
capital money arising to at least 2 trustees
o LPA s.87(1): If mortgagor has a freehold, s.87 says that the mortgagee has the
protection/powers/remedies as if they had a lease for 3000 years. If mortgage
is of a lease, the mortgagee is treated as if they have a lease of one day less.
o LPA s.91(2): Mortgagee/mortgagor can apply to courts for order of sale
o LPA s.101: Statutory power of sale/appointing a receiver
o LPA s.103-114: Qualification of creditor’s powers
- LRA 2002
o s.23 LRA 2002: Registered owners can only enter into a mortgage of a
registered estate by way of charge
o s.27(2)f LRA 2002: Legal charges must be registered
o s.28 LRA: Preserving priority of rights first in time
o s.30 LRA: Where C acquires and registers a legal charge for valid
consideration, C will take free from B’s pre-existing property right unless B’s
right is either: (i) protected by an entry on the register; or (ii) overriding
o s.52 LRA 2002: Protection of C where statutory power of sale has arisen
- Administration of Justice Act 1970 s.36
o Court has discretion to suspend execution of judgment or order, or to
postpone date of possession for reasonable periods if property is a dwelling
house and creditor can repay
b. Charge by Way of Legal Mortgage
- Split into content and acquisition questions
- Refer to earlier priorities and defences notes
