These are notes on mortgages land created in 2019. They follow a structured format which condenses the relevant case law, statutory provisions and academic opinion that are relevant to the topic to aid with exam revision.
Mortgage abolished for mortgages of registered land under the
LRA 2002.
Definition of mortgages: In unregistered land, legal mortgages can be
A mortgage of land is the conveyance or transfer of land created either by charge or by demise.
made to secure the future repayment of a loan or the A first legal mortgage of unregistered freehold or
discharge of some other obligation leasehold land executed after 1 April 1998 will
The land is transferred to the lender but subject to the trigger the need for first registration at HM
provision for redemption which provides that once the Registry.
loan has been repaid the transfer becomes void or the If there is no application for first registration of the
land is transferred back to the borrower mortgagor’s estate within two months, the
The borrower (mortgagor) grants the mortgagee to the mortgage will lapse as a disposition of a legal
lender (mortgagee) charge.
A mortgage takes effect both in property law and in the The mortgagor will still have a legal estate, but the
law of contract mortgage will merely be a contract to create a
The development of mortgages at common law and in legal charge and will take effect in equity only.
equity Historically, mortgages in unregistered land could
be made by deposit of title deeds, as this was an
The common law: effective safeguard against attempts to deal in the
estate without notifying the first mortgagee.
Before 1926 when the mortgagee took out a mortgage These mortgages, if made after 1 April 1998, will
they actually conveyed the land to the lender stipulating trigger first registration of title.
that on a certain date, the mortgagee would reconvey Mortgages made before this date should have
the property back to the mortgagor been registered at the Land Charges Registry as a
The repayment had to be on the date agreed and there Class C(i) land charge if the mortgagee wished the
was no scope for varying the date mortgage to have priority over other charges.
Failure to repay on the agreed date meant that the It was the only legal interest in land (called a
mortgagor lost the property to the mortgagee even if puisne mortgage) that could be registered at the
the value of the property was far more than the Land Charges Registry.
outstanding amount on the loan Today, the creation of a mortgage will always act
as a trigger for compulsory registration of the title.
Equity:
Equity modified the effects of the common law in the The creation of equitable mortgages:
seventeenth century and allowed the repayment to be There are many different forms of equitable mortgage.
made after the redemption date, called the ‘equitable These are some examples:
right to redeem’. A mortgage of a mortgagee’s equitable interest in land –
Under the rules of equity, the mortgagor remained the this must be equitable because the mortgagee only has
owner of the property even during the currency of the an equitable estate, e.g. a beneficial interest under a
loan, but subject to the loan. trust of land.
As a result of the rules of equity, if the mortgagee went An informal or incomplete mortgage of a legal estate in
into possession of the property then he/she had to land – e.g. a defect in the creation of a legal mortgage or
account to the mortgagor for any profit made if the failure to register the charge at the Land Registry.
property was subsequently sold. An equitable charge – land charged with an obligation,
such as the repayment of a debt but, unlike a mortgage,
The creation of mortgages:
no property passes to the chargee, only the right to sue
Legal mortgages and charges for the debt.
Legal mortgages can only be created where the Mortgage by deposit of documents of title, coupled with
borrower has a legal interest (fee simple or term of a written and signed contract of loan.
years) in the property Before the LP(MP) Act 1989, a mortgage could be
In registered land, a legal mortgage is created by a created by depositing title deeds without the need for
registered charge which can take two different forms. written documents (Russel v Russel). Today, there must
a) The most usual form is a charge by way of legal be a written contract in order for it to take effect as an
mortgage: equitable mortgage.
This is effective at law once it has been
Protection for the borrower/mortgagor:
registered by the chargee (lender) in the
Charges Register; There are four main ways that equity has attempted to
If it is not registered, then it will only be protect the mortgagor:
effective in equity and will take effect as a protecting the equitable right to redeem;
minor interest also requiring protection by striking down oppressive interest rates;
notice or caution on the Charges Register. preventing extortionate credit bargains;
preventing unfair collateral advantages.
b) It was possible to create a mortgage by ‘charge by way
of demise of a term of years’, which meant that the Protecting the equitable right to redeem:
mortgagee got a leasehold interest of 3,000 years in the
property. This means of creating a mortgage was The equity of redemption:
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