Are the rights of the parties under a mortgage balanced?
Mortgages Essay
How successfully do you consider the law of mortgages balances the legitimate interests of lender and borrower, and what changes (if any) might usefully be made?
A mortgage is a security for a loan. It is both a contract between a lender and a borrower, and the grant of a proprietary interest over the land of the mortgagor, granted to the mortgagee, with the provision that the mortgagee’s proprietary right over the mortgagor’s land shall cease on payment of the principle debt and interest and costs accrued. The duality of the mortgage means that both parties may have rights arising on both a contractual basis and a proprietary basis.
The nature of the mortgage is that it is merely a security for the loan, thus the mortgagor should be able to redeem the mortgage and retain his property in an unencumbered state, so long as he repays the principle debt, and any costs and interests accrued. The importance of a mortgagor’s right to redeem is highlighted by the fact that he is entitled to both a contractual right to redeem, which is usually 6 months after the starting date of the contract, whilst also being entitled to the equitable right to redeem, which starts once the contractual right for redemption ends. This demonstrates that the mortgagor should always have the right to redeem as signified by the maxim, ‘once a mortgage, always a mortgage.’ Thus any attempts by the mortgagee to limit or exclude the mortgagor’s right to redeem is seen as undesirable. Consequently, the equity of redemption steps in to protect the mortgagor’s rights under the mortgage. For instance, any provision that removes or renders the right to redeem illusory will be struck out. This was illustrated in Toomes v Consent, whereby a mortgage provision stated that the property would become the mortgagor’s if a certain event had occurred. However, this provision was struck out as it would prohibit the mortgagor from being able to retain his property, which goes against the very
How successfully do you consider the law of mortgages balances the legitimate interests of lender and borrower, and what changes (if any) might usefully be made?
A mortgage is a security for a loan. It is both a contract between a lender and a borrower, and the grant of a proprietary interest over the land of the mortgagor, granted to the mortgagee, with the provision that the mortgagee’s proprietary right over the mortgagor’s land shall cease on payment of the principle debt and interest and costs accrued. The duality of the mortgage means that both parties may have rights arising on both a contractual basis and a proprietary basis.
The nature of the mortgage is that it is merely a security for the loan, thus the mortgagor should be able to redeem the mortgage and retain his property in an unencumbered state, so long as he repays the principle debt, and any costs and interests accrued. The importance of a mortgagor’s right to redeem is highlighted by the fact that he is entitled to both a contractual right to redeem, which is usually 6 months after the starting date of the contract, whilst also being entitled to the equitable right to redeem, which starts once the contractual right for redemption ends. This demonstrates that the mortgagor should always have the right to redeem as signified by the maxim, ‘once a mortgage, always a mortgage.’ Thus any attempts by the mortgagee to limit or exclude the mortgagor’s right to redeem is seen as undesirable. Consequently, the equity of redemption steps in to protect the mortgagor’s rights under the mortgage. For instance, any provision that removes or renders the right to redeem illusory will be struck out. This was illustrated in Toomes v Consent, whereby a mortgage provision stated that the property would become the mortgagor’s if a certain event had occurred. However, this provision was struck out as it would prohibit the mortgagor from being able to retain his property, which goes against the very