LAND:
MORTGAGES
Introduction
Borrower = mortgagor, lender = mortgagee
Mortgage = a charge by deed by way of legal mortgage (s.85 and 87 LPA 1925)
Proprietary interest in land given by the mortgagor (land owner) as security for a
loan.
Land can be mortgaged several times = second mortgage: Puisne mortgage
“a conveyance of land… as security for the payment of a debt or the
discharge of some other obligation” (Santley v Wilde)
FORMALITIES
Legal Mortgages
Capable of being legal after 1st January 1926 under s.1(2)(c) LPA 1925
Must be created by deed (s.52(1) LPA 1925) i.e. signed, witnessed, dated and
headed a deed (s.1 LP(MP)A 1989)
S.4 LRA 2002 if its mortgage in relation for unregistered land (triggering event,
triggers the land to be registered)
Two ways to create a legal mortgage s.85 LPA 1925:
1. By demise (lease)
o For term of years absolute subject to a cessor on redemption (usually 3,000
years). Legal right to redeem expires on contractual ‘date for redemption’.
o S.23(1)(a) LRA 2002 now prohibits the creation of mortgages by demise for
land with registered title
2. A charge over the property = security right, meaning if the mortgagor goes
bankrupt and can’t repay mortgagee gets priority in bankruptcy by having to
resort to the property subject to the charge (i.e. the right to sell it) and use the
proceed towards repayment.
1
, o Not a legal estate but s.87(1) LPA 1925 “the mortgage shall have the
same protection, powers and remedies as if a mortgage term of 3,000
years… had been thereby created in favour of the mortgagee”
Legal mortgage must be entered on the charges register of the table in order to be
protected against a purchaser for valuable consideration (s.27(2)(f) LRA 2002)
If not registered = equitable mortgage
Equitable Mortgages
Created when:
1. Mortgage is being granted over a mere equitable interest e.g. a beneficial
interest under a trust of land. Must be in writing and satisfy s.53(1)(c) LPA
United1925
Bank of Kuwait v Sahib – Equitable mortgages of a legal estate. Contract must be in
writing, signed by both parties and record all the agreed terms in order to create a valid
equitable mortgage
De Serville v Argee Ltd – Exchange of letters does not satisfy s.2 LP(MP)A 1989 for contract
2. Formalities for creating a legal mortgage not been met, failed attempt amounts
to a contract: s.2 LP(MP)A 1989
1. In writing
2. Signed by both parties Equitable mortgage
3. Containing all agreed terms
3. Where the land is registered and the mortgage created has not been registered
as a charge at the Land Registry: s.27(2)(f) LRA 2002
4. The parties expressly create an equitable mortgage. Must be compliance with
s.53(1)(a) LPA 1925
RIGHTS OF THE MORTGAGOR
Mortgagor’s rights at law
Mortgagor has contractual right to redeem the mortgage on the date stated in the
mortgage contract; known as ‘legal date of redemption’
Little protection for mortgagor, if he failed to repay the loan on the date,
mortgagee entitled to keep the mortgagor’s land
2
MORTGAGES
Introduction
Borrower = mortgagor, lender = mortgagee
Mortgage = a charge by deed by way of legal mortgage (s.85 and 87 LPA 1925)
Proprietary interest in land given by the mortgagor (land owner) as security for a
loan.
Land can be mortgaged several times = second mortgage: Puisne mortgage
“a conveyance of land… as security for the payment of a debt or the
discharge of some other obligation” (Santley v Wilde)
FORMALITIES
Legal Mortgages
Capable of being legal after 1st January 1926 under s.1(2)(c) LPA 1925
Must be created by deed (s.52(1) LPA 1925) i.e. signed, witnessed, dated and
headed a deed (s.1 LP(MP)A 1989)
S.4 LRA 2002 if its mortgage in relation for unregistered land (triggering event,
triggers the land to be registered)
Two ways to create a legal mortgage s.85 LPA 1925:
1. By demise (lease)
o For term of years absolute subject to a cessor on redemption (usually 3,000
years). Legal right to redeem expires on contractual ‘date for redemption’.
o S.23(1)(a) LRA 2002 now prohibits the creation of mortgages by demise for
land with registered title
2. A charge over the property = security right, meaning if the mortgagor goes
bankrupt and can’t repay mortgagee gets priority in bankruptcy by having to
resort to the property subject to the charge (i.e. the right to sell it) and use the
proceed towards repayment.
1
, o Not a legal estate but s.87(1) LPA 1925 “the mortgage shall have the
same protection, powers and remedies as if a mortgage term of 3,000
years… had been thereby created in favour of the mortgagee”
Legal mortgage must be entered on the charges register of the table in order to be
protected against a purchaser for valuable consideration (s.27(2)(f) LRA 2002)
If not registered = equitable mortgage
Equitable Mortgages
Created when:
1. Mortgage is being granted over a mere equitable interest e.g. a beneficial
interest under a trust of land. Must be in writing and satisfy s.53(1)(c) LPA
United1925
Bank of Kuwait v Sahib – Equitable mortgages of a legal estate. Contract must be in
writing, signed by both parties and record all the agreed terms in order to create a valid
equitable mortgage
De Serville v Argee Ltd – Exchange of letters does not satisfy s.2 LP(MP)A 1989 for contract
2. Formalities for creating a legal mortgage not been met, failed attempt amounts
to a contract: s.2 LP(MP)A 1989
1. In writing
2. Signed by both parties Equitable mortgage
3. Containing all agreed terms
3. Where the land is registered and the mortgage created has not been registered
as a charge at the Land Registry: s.27(2)(f) LRA 2002
4. The parties expressly create an equitable mortgage. Must be compliance with
s.53(1)(a) LPA 1925
RIGHTS OF THE MORTGAGOR
Mortgagor’s rights at law
Mortgagor has contractual right to redeem the mortgage on the date stated in the
mortgage contract; known as ‘legal date of redemption’
Little protection for mortgagor, if he failed to repay the loan on the date,
mortgagee entitled to keep the mortgagor’s land
2
