Mortgages and Charges Over Land PDF

Mortgages and charges over land

An overview of the law of mortgages and charges over land.
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Introduction
Security When a person borrows money the lender has rights in contract against the borrower for repayment. If the lender wants additional protection for repayment, beyond the personal covenant of the borrower, then it may take security. Where a lender takes security for the debt, the lender acquires rights over an asset or against a third party that may be exercised to ensure repayment of the debt. There are different types of security: legal, commercial and third party. Legal security comprises liens, pledges, mortgages and charges. Commercial security includes devices such as retention of title clauses and hire-purchase arrangements. Third party security includes arrangements such as guarantees and indemnities, insurance policies, bonds and bank guarantees. This note is concerned only with mortgages and charges over land (including unpaid vendors liens and purchasers liens to secure deposits, both of which are within the definition of mortgages in the Law of Property Act 1925 (LPA 1925)). For notes on liens in general, pledges and commercial security see Practice note, Taking security. For information on guarantees and indemnities, see Practice note, Guarantees and indemnities. Mortgages in practice Mortgage finance is one of the chief means of raising money for the acquisition and development of land. Secured lending over a companys assets in general is also used to provide general finance and working capital for a business. Mortgages and charges can also arise in other situations and transactions; sometimes by operation of law (for example, an unpaid vendors lien), sometimes by statute (for example, by virtue of a local land charge), sometimes by an act of the courts (for example, a charging order). This note concentrates on the legal framework of mortgages and charges and is intended as background to the different types of mortgage that arise as part of broader land transactions. It also outlines the means of enforcement of a mortgage, but it does not cover the detailed rules, nor those that apply when a lender enforces a general security package in the broader context of the insolvency of the borrower where both secured and unsecured lenders are involved. For notes on the various insolvency regimes under the Insolvency Act 1986 (IA 1996) (as amended
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by the Insolvency Act 2000 (IA 2000) and the Enterprise Act 2002 (EA 2002)) see Practice note, Corporate insolvency: a guide. Mortgages and charges over land The traditional form of a legal mortgage over land was a conveyance of land to the lender as a security for the payment of a debt, subject to a proviso for redemption once the debt was repaid. Title to the borrower/mortgagors estate in the land was conveyed to the lender/mortgagee and then back to the mortgagor following repayment. In some cases mortgages took the form of leases. A charge differs conceptually from a mortgage in that, although the land is allocated as security for repayment of the debt, there is no conveyance to the lender/chargee: the estate remains with the borrower/chargor. However, since the legislation of 1925, the distinction between a legal mortgage and a charge in relation to land has been of little practical significance. Under the LPA 1925, a legal mortgage of land must be created in one of the following two ways: A demise (or sub-demise in the case of leasehold land) for a term of years, subject to a provision for cesser on redemption. A charge expressed to be by way of legal mortgage. (sections 85 and 86, LPA 1925). It ceased to be possible to create a legal mortgage in the traditional way by means of conveyance. Under a charge by way of legal mortgage, the chargee/mortgagee has the same powers, protection and remedies as if the mortgage had been created by way of a demise for a term of years (section 87, LPA 1925). Whether created by way of demise or by way of charge, a legal mortgage confers a legal interest on the mortgagee (section 1, LPA 1925). The modern method of creating a legal mortgage (whether of freehold or leasehold land) is almost always by a charge by way of legal mortgage. Mortgages by demise or sub-demise are not used in practice. This reality is recognised in the LRA 2002 which provides that in relation to registered land, a legal mortgage may only be created by a charge by way of legal mortgage (section 23, LRA 2002). In relation to legal mortgages of land, the terms "mortgage" and "charge" have become largely interchangeable.
Types of mortgages and charges

The basic distinction for land law purposes is between legal or equitable mortgages and charges. Within those broad categories, mortgages and charges over land take various forms and have various descriptions. The registration requirements in relation to different types of mortgage and charge are dealt with later on in this note at: Registration at Companies House. Registration in the statutory books.
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Registration at the Land Registry and Land Charges Department. See also, Practice note, Taking security over freehold and leasehold property. Legal mortgages As mentioned above, the modern method of creating a legal mortgage is as a charge by way of legal mortgage. This method is used for both freeholds and leaseholds. The charge must be expressed to be by way of legal mortgage (sections 85 and 86, LPA 1925) (although this has been held not to be strictly necessary in the case of registered land (Cityland and Property (Holdings) Ltd v Dabrah [1968] Ch 166)). The charge (whether over registered or unregistered land) must be by deed and be executed by the chargor but it is not necessary for the chargee to execute. A legal charge is a disposition and not an agreement for a disposition and is not therefore within section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989). For more information on section 2, see Practice note, The requirement for written land contracts and section 2 of the LP(MP)A 1989. If created over registered land, then the charge takes effect as a legal charge only when registered, and the chargee is entered as proprietor of the charge in the charges register of the chargors title (section 51 and paragraph 8, Schedule 2, LRA 2002). Until registration, it takes effect only as an equitable charge (ES Schwab v McCarthy (1975) 31 P&CR 196). If created over unregistered land, a (first) legal mortgagee would traditionally take deposit of the title deeds to protect the mortgage, although as a matter of law this is not necessary to create a legal mortgage. Now a first legal mortgage with deposit of deeds will trigger first registration of the land (see Types of mortgages and charges: Mortgages protected by deposit of title deeds, below). A first legal mortgage is the best security over an asset that a lender can take (although the value of the security ultimately depends on the value of the asset when compared with the level of the debt). In practice, legal mortgages over land are used as security both for funding the acquisition and/or development of a single site and as part of overall security packages in connection with the provision of finance to a business. Equitable mortgages and charges General An equitable mortgage of a legal estate arises where there is an agreement to create a legal mortgage or where there is an intention to create security but the formalities for the creation of a legal mortgage have not been complied with. An equitable charge can also be created by express intention and terms. Floating charges and liens are also equitable charges. For further information, see the following notes: Floating charges. Unpaid vendors liens. Purchasers liens to secure a deposit. A mortgage of an equitable interest is necessarily equitable. An equitable mortgage must be by deed if the mortgagee is to have the power of sale and other statutory powers under section 101
of the LPA 1925. If it is not by deed then corresponding express powers are needed. If there are no express powers, then a court order would be required. Agreements to create a legal mortgage An agreement to create a legal mortgage must comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989 (namely, it must be in writing, incorporate all the expressly agreed terms and be signed by or on behalf of each party). For further information, see Practice note, The requirement for written land contracts and section 2 of the LP(MP)A 1989. Where a bank issues a facility letter or offer of advance (in respect of which it intends to take a legal mortgage), it is a matter of construction as to whether the letter amounts to an agreement to create a legal mortgage (and often it will not). Before the LP(MP)A 1989 came into force (27 September 1989) an equitable mortgage often arose intentionally where the debtor merely deposited the title deeds or land certificate with the lender, often accompanied by a memorandum recording the deposit and the terms agreed between the lender and borrower. This allowed for a relatively informal means of taking security. Since 27 September 1989, however, it has not been possible to create an equitable mortgage by mere deposit. Deposit of title deeds is part performance of an agreement to create a legal mortgage and so the provisions of section 2 of the LP(MP)A 1989 must be complied with (United Bank of Kuwait v Sahib [1997] Ch 107) (the memoranda of deposit in these situations were often not in terms that would satisfy section 2). Equally, in relation to registered land, it is no longer possible to create an equitable mortgage by depositing the land certificate with the mortgagee and noting that deposit on the register. (Under the Land Registration Act 1925, rules were made to this effect following the decision in Sahib. The provision in the Land Registration Act 1925 (LRA 1925) that allowed for deposit of the land certificate is not replicated in the LRA 2002.) The agreement to grant the mortgage must comply with section 2. Equitable mortgages of a legal estate Other equitable mortgages of a legal estate may result where the formalities for creating a legal mortgage are not complied with, chiefly because it is not created by deed or because of a failure to register the charge in registered land. If the document could be construed as an agreement to create a legal charge, then section 2 must be satisfied. Equitable charges Under an equitable charge of land, the land is appropriated as security for the repayment of a debt but without there being any intention to transfer ownership of the land (in contrast to the traditional, although now obsolete, form of legal mortgage which did transfer ownership). An equitable charge must be in writing (section 53(1)(c), LPA 1925, Murray v Guinness [1998] NPC 79 and Kinane v Mackie-Conteh, [2004] 19 EG 164 (CS)). In practice, such a charge will often be by deed. Mortgages of equitable interests A mortgage of an equitable interest in land is necessarily an equitable mortgage and takes the form of an assignment of the equitable interest with a proviso for reassignment following
repayment. The assignment must be in writing and signed by the assignor (mortgagor) or its agent (section 53(1)(c), LPA 1925). A mortgage of an equitable interest may be created by a beneficiary under a trust of land or where, for example, a contractual purchaser grants a charge over its interest in the agreement to purchase. A mortgage of an equitable interest under a trust of land will be overreached on a sale of the land provided the requirements for overreaching are complied with. Puisne mortgages A puisne mortgage is a legal mortgage that is not protected by the deposit of title deeds. It is, therefore, relevant only to unregistered land and in practice (although not as a matter of law) it will be a second or subsequent mortgage. Mortgages protected by deposit of title deeds In unregistered land, a first legal mortgagee would traditionally take possession of the title deeds in order to protect the mortgage. It was the possession of the deeds that gave priority (and, where relevant, still is), and the LPA 1925 includes a statutory right for the mortgagee to take possession of the deeds (sections 85(1) and 86(1), LPA 1925). Although deposit of the title deeds is not a necessary feature of a first legal mortgage, and an equitable chargee or subsequent legal chargee may take the deeds if they are available, in practice a first legal mortgagee will take deposit. The grant of a first legal mortgage of unregistered land that is freehold or leasehold with a residue exceeding seven years at the date of the mortgage, which is protected by deposit of title deeds, triggers first registration of the estate charged (whether or not the mortgage is granted in connection with a broader transaction that would trigger first registration in any event) (section 4, LRA 2002). As a result, the mortgage must be protected by registration at the Land Registry, rather than by deposit of title deeds. (Even if the mortgage does not of itself trigger first registration (for example, if it is a second mortgage), it may be given in connection with an overall transaction, for example, a sale, that does). As mentioned above, the practice of taking an equitable charge merely by deposit of deeds is no longer possible (section 2, LP(MP)A 1989 and United Bank of Kuwait v Sahib [1997] Ch 107) although equitable charges created before 27 September 1989 (when the LP(MP)A 1989 came into force) by deposit of the deeds are still valid as equitable charges. In registered land, there are no title deeds and, as mentioned above, protecting a mortgage by depositing the land certificate is no longer possible. Second and subsequent mortgages A landowner may create more than one mortgage over its land, whether legal or equitable. A second or subsequent legal mortgage in unregistered land may be protected by deposit of title deeds if they are available (although that will be rare in practice); if not, it is known as a puisne mortgage (see above). See note, Priorities of mortgages for information on the priority between successive mortgages (essentially the order in which the proceeds of sale on default by the mortgagor are applied). Third party mortgages
A third party mortgage describes a mortgage of land that is owned by someone other than the contractual debtor. It includes a mortgage by co-owners where only one of them is the contractual debtor and vice-versa. Where individuals are involved, issues of misrepresentation and undue influence are often of particular relevance in connection with third party mortgages (see Void and imperfect securities below). In the case of companies, a companys objects may prevent it charging its assets for the debt of another company (the chargee may be protected by section 40(1) of the Companies Act 2006, but this was not wholly free from doubt in relation to its predecessor section (section 35, Companies Act 1985), see Practice note, Contracts: capacity: Companies Act companies). Floating charges The mortgages and charges described above are all fixed charges: that is charges over a specific piece of land. A different type of charge is a charge over a general class of assets: this is known as a floating charge. The classic description of a floating charge, set out in Re Yorkshire Woolcombers Association Ltd [1903] 2 Ch 284, is a charge which has at least the three following characteristics: It is a charge on a class of assets of a company, present and future. That class is one in respect of which the assets will, in the ordinary course of business of the company, be changing from time to time. It is contemplated that until some future step is taken by or on behalf of those interested in the charge, the company may carry on its business in the ordinary way as far as it concerns that particular class of assets. The assets secured by a floating charge are described generically, for example, the borrowers trading stock or its undertaking and assets. The group of assets may fluctuate from time to time either through the borrower disposing of them in its ordinary business or through the acquisition of assets of the class described after the floating charge was created (i.e. future or after-acquired assets). A floating charge will provide that if a specified event occurs, or if the lender takes a specified step, the charge crystallises. This means that the floating charge becomes a fixed charge and the borrower can no longer dispose of the assets. Crystallisation typically occurs on specified events of default or events of insolvency of the borrower. A floating charge may affect land where, for example, the land is acquired after the charge is entered into, or where the charging document identifies land (as an asset class) as within the floating charge but does not make specific property titles the subject of fixed charges. This may happen where, for example, a company trades in land, but in practice this is relatively rare. Whether a document creates a series of fixed or one floating charge is a matter of intention of the parties and construction of the document. The distinction is important because of the different treatment of fixed and floating chargeholders on an insolvency. In Ashborder v Green Gas Power Ltd [2004] EWHC 1517 (Ch), the High Court held that a charge over particular property was a floating charge, even though the documents purported to create a fixed charge. As the company could deal with the property in the ordinary course of its business, the security was construed as a floating charge. For more information, see Legal update, Ordinary course of business.
In practice, a lender will often take both fixed and floating charges as an overall financing and security package, and the charging document will often expressly require the borrower to execute a fixed charge over after-acquired land and once that is done, the fixed charge will protect the lender (subject to the relevant registration requirements). The lender may take a power of attorney as security for this. The terms of a charging document that includes a floating charge will generally mean that it must satisfy section 2 of the LP(MP)A 1989 and be executed as a deed. If a lender wishes to take a fixed charge over property and a floating charge over other assets, the documents should provide that the fixed charge assets are specifically excluded from any permission to deal with the assets in the ordinary course of business. A floating charge can be created by a company and a limited liability partnership but not by an individual (although floating charges may be created by farmers over their farming stock and assets (but not land) under the Agricultural Credits Act 1928). Building societies are forbidden from creating floating charges (section 9B, Building Societies Act 1986) other than in favour of HM Treasury, the Bank of England, another central bank of a member state of the European Economic Area or the European Central Bank (article 7, Building Societies (Financial Assistance) Order 2010 (SI 2010/1188)) (see PLC Financial Services, Legal update, The Building Societies (Financial Assistance) Order 2010 is published on OPSI). Debentures A debenture describes any document that creates or acknowledges a debt (such as debenture stock or bonds) made by a company or an unincorporated body. A debenture is also used to describe a global security document that includes charges, both fixed and floating, over the assets of the company. In this note debenture is used in the sense of global security document unless otherwise indicated. To the extent that a debenture creates legal charges over land, it must be by deed and in practice it will always be by deed. The chargee under a debenture may hold as trustee for numerous beneficiaries. Mortgages created to secure a debenture (in the acknowledgement of debt sense) may be irredeemable (section 739, Companies Act 2006 (which replaced section 193, Companies Act 1985 on 6 April 2008)) despite the general rule prohibiting irredeemability of mortgages. Unpaid vendors liens On exchange of contracts an unpaid vendors equitable lien over the property arises in favour of a vendor of land by operation of law. The lien is discharged on completion to the extent that the purchase money is paid (Barclays Bank v Estates & Commercial [1997] 1 WLR 415). An unpaid vendors lien only really becomes important if the seller transfers the legal estate or gives possession before the purchase money is paid in full. Allowing access to the property will not necessarily amount to giving possession. An unpaid vendors lien allows the vendor to enforce payment by making an application to the court for a declaration as to the existence of the lien and an order for sale (e.g. Hewett v Court (1983) 149 CLR 639) and in certain cases will allow the vendor to rescind the contract and recover possession (Lysaght v Edwards (1876) 2 Ch D 499).
In certain circumstances, a vendor will be taken to have waived a lien that would otherwise have arisen, usually where the vendor accepts other security. However, it is a matter of intention as to whether the vendor has agreed to waive the lien by reason of taking (or agreeing to take) the other security. In Clifford Harris & Co v Solland International Ltd, [2005] EWHC 141 (Ch), a case dealing with a solicitors lien over settlement monies, the High Court held that there had to be an inconsistency between the security and the continued existence of a lien for there to be a waiver of the lien. For more information, see Legal update, Waiver of solicitors lien by a legal charge. Purchasers liens to secure a deposit A purchaser has an equitable lien for a deposit paid under a contract where the contract remains unperformed through no fault of the purchaser (e.g. Rose v Watson (1864) 10 HL Cas 672 and Hewett v Court (1983) 149 CLR 639). The contract does not have to be specifically enforceable (Chattey v Farndale (1997) 6 EG 152). The lien operates as an equitable charge allowing the purchaser to apply to the court for a declaration and order for sale. Purchasers liens can be important in cases where a developer/seller becomes insolvent after exchange and before completion (as illustrated by Chattey v Farndale). Charging orders under the Charging Orders Act 1979 The court may make a charging order against property of a judgment debtor to secure payment of the judgment debt (section 1, Charging Orders Act 1979). The order may affect land held by the debtor either legally or beneficially and if the latter, then the charge will sever any beneficial joint tenancy and the creditor may also apply for an order for sale in order to realise the beneficial interest (section 14, Trusts of Land and Appointment of Trustees Act 1996). A charging order has "the like effect .... as an equitable charge created by the debtor by writing" under hand (not seal) (section 3(4), Charging Orders Act 1979). Note that to realise funds to satisfy the judgment debt, the judgment creditor must go on to also obtain an order for sale. Statutory charges Certain statutes allow a creditor to charge property of the debtor. Charges may, for example, arise under: Legal aid legislation in respect of legal costs. The Agricultural Holdings Act 1986 in respect of compensation due to a tenant from its landlord. The Solicitors Act 1974 in respect of unpaid legal costs. The Environmental Protection Act 1990 (as amended by the Environment Act 1995) in respect of the costs of clean-up of contaminated land. The nature and effect of these charges depends on the terms of the relevant statute.
Form and contents of a legal mortgage

The form and content of a legal mortgage will largely be determined by the type of property being mortgaged and the context of the transaction.
The form and content may also be affected by the Unfair Terms in Consumer Contracts Regulations 1999 and/or the Consumer Credit Act 1974. For details, see note, Regulation of mortgages. For details of the usual provisions in a legal mortgage, see note Contents and powers. An equitable mortgage or charge will often contain similar provisions to those contained in a typical legal mortgage. In some cases a legal mortgage may be a relatively short document and incorporate by reference a longer document, typically the facility agreement. A mortgagee should avoid including matters that could be characterised as a clog on the equity or a collateral advantage (see Practice note, Redemption of mortgages, clogs, collateral advantages and consolidation). The LRA 2002 provides a standard form of legal mortgage but it is not mandatory to use this form: form CH1. (The Land Registry is also consulting on rules which will extend the use of electronic legal charges for residential property but it is thought that any such rules, if introduced, may later be applied to commercial property (see Legal update, Third Land Registry consultation on e-conveyancing legislation).) See also LR Practice Guide 30 - Approval of mortgage documentation, which deals with the approval by the Land Registry of lenders standard forms. If the legal mortgage is registered or referred to at the Land Registry, it is open to public inspection unless and to the extent it has been designated as an "exempt information document". For details on exempt information documents and how to make a designation, see Practice note, Exempt information documents. Scope of a mortgage The mortgage deed or document describes the estate and the land which is the subject of the mortgage. What if the mortgagor holds only a beneficial interest? If the mortgagor holds only a beneficial interest then the mortgage is necessarily only of that interest and takes effect only in equity. What if the lender is taking a mortgage over only part of land in a title? Occasionally, a lender will take a mortgage over only part of land in a title. This may happen, for example, where the financing relates to only part of the borrowers business and that part uses and occupies part only of a site. In this situation, if the borrower defaults, the mortgagee would exercise its power of sale over only part of a site. In conveyancing terms, this means that the mortgage of part should allow for a transfer of part and so, for example, include covenants for the grant and reservation of suitable easements. These covenants can be secured by a power of attorney and protected by a notice on the register (if title to the land is registered) or by a Class D(iii) land charge and caution against first registration (if title is unregistered).
For further information see: Practice note, Easements - The law, registration requirements and transaction issues. Practice note, Protection of third party rights under the Land Registration Act 2002. LR Practice Guide 03 - Cautions against first registration. Appurtenant rights and fixtures The mortgage will extend to: Appurtenant rights (section 62, LPA 1925). There is an exception for trade fixtures installed by a tenant under a lease granted while the mortgagor is in possession. Such fixtures remain the property of the tenant (Sanders v Davis (1885) 15 QBD 218). Fixtures, since these are part of the land, whether the fixtures are fixed before or after the mortgage is created (Reynolds v Ashby [1904] AC 466). Note that a mortgage will not extend automatically to chattels, but these can be covered by a floating charge if the mortgagor is a company or a limited liability partnership, or specific fixed charges. A lender would be likely to want to take security over chattels if the mortgaged property is being run as a hotel. If the mortgage is granted by an individual, chattels are not normally charged because of the difficulties in registering chattel mortgages granted by individuals as bills of sale. Contents and powers The basics of a legal mortgage are straightforward: Charging provisions: see note, Charging provisions. Description of the property to be charged: see note, Description of the property to be charged). Date for repayment: see note, Date for repayment. Covenants: see note, Covenants: express and implied. Statutory powers: see note Statutory powers. Representations and warranties: see note, Representations and warranties. Further advances: see note, Further advances. Negative pledge: see note, Negative pledge. Repayment of the debt: see note, Repayment of the debt. Restrictions on disposal: see note, Restrictions on disposal. Charging provisions
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The charge of the property, which should be expressed to be a charge by way of legal mortgage. The charging provisions will usually describe the liabilities that the legal mortgage will secure. Description of the property to be charged A description of the property charged. If the legal mortgage is of registered land, the land must be identified by its title number(s). Covenants: express and implied The LRA 2002 does not imply any covenants into a legal mortgage of registered land. The LP(MP)A 1994 does, however, imply certain covenants for title on the part of a chargor of leasehold property to comply with the lease covenants where the charge is made with full or limited title guarantee (section 5, LP(MP)A 1994). See note, Title guarantee. A legal mortgage will always include a title guarantee, usually a full title guarantee and will generally include various additional covenants by the mortgagor such as a covenant to: Keep the property in repair. Comply with statute. Pay the mortgagees costs. Where the security is taken over let property there may also be covenants relating to the management of the property, such as covenants to enforce the lease covenants and use best endeavours to let (or re-let) vacant units. For more information on implied covenants for title, see Practice note, Implied covenants for title. There will also be a covenant: To repay the loan. The legal mortgage should contain a covenant by the mortgagor to repay the loan on a specified date or dates. This covenant will be implied in any event (except in the case of a third party mortgage) by reason of acceptance of the loan, and in the case of mortgages to secure fluctuating accounts (such as overdrafts) repayment will be on demand. To pay interest. A covenant by the mortgagor to pay interest (although in the absence of an express provision a mortgagee may be entitled to interest. The basis of this rule is that it was considered inequitable to allow redemption without payment of interest (Carey v Doyne (1855) 20 Beav 49; Re Kerrs Policy (1869) LR 8 Eq 331; Re Drax [1903] 1 Ch 781; Ezekiel v Orakpo [1997] 1 WLR 340). See also, Legal update, Interest on equitable charges in the absence of contractual right). Statutory powers Where the mortgage or charge is by deed (and a legal mortgage must always be executed by the borrower as a deed), the following statutory powers are implied: While the mortgagor or the mortgagee is in possession, a power of leasing and to accept surrenders for each respectively (sections 99 and 100, LPA 1925).
A power of sale for the mortgagee (section 101, LPA 1925). A power for the mortgagee to appoint a receiver of the income of the property (section 101, LPA 1925). A power for the mortgagee to insure against fire for up to two-thirds of the reinstatement value (section 101, LPA 1925). All the above powers are subject to the express terms of the mortgage. In practice, a legal mortgage will usually contain express provisions that will modify and/or extend the statutory powers. For example: The power to insure is regarded as insufficient. The power of leasing is almost always excluded or made subject to the mortgagees consent. If, however, the mortgagor is required to grant a renewal lease under the Landlord and Tenant Act 1954, this is deemed to be pursuant to the statutory power (section 36, Landlord and Tenant Act 1954). Representations and warranties A legal mortgage may include representations and warranties, for example, about the propertys planning status or compliance with environmental laws. Further advances After a lender has made the initial loan, and the legal mortgage to secure that loan has been entered into and registered (where required), the lender may make further advances, which it will also need to be secured by the legal mortgage. A legal mortgage is capable of securing such further advances. The issue is one of priority: will the legal mortgage secure the further advance in priority to a subsequent mortgage or charge? The legal mortgage may contain provisions as to further advances and consolidation. For information, see, note, Priorities of mortgages and Practice note, Redemption of mortgages, clogs, collateral advantages and consolidation). Negative pledge Debentures securing all monies owing to the lender (and having fixed and floating charges over all the borrowers assets) will usually include a provision prohibiting the borrower/chargor from creating other security over its assets (a negative pledge or restrictive clause). A global negative pledge clause is not generally needed in a legal mortgage over a single property, but the legal mortgage will generally contain a prohibition on the mortgagor creating further security over the mortgaged property. Repayment of the debt The traditional form of mortgage by demise would include a proviso for cesser of the mortgage term on redemption (that is, repayment of the debt). A charge would mirror this with a proviso for the discharge of the charge on redemption. These are not essential terms (since the term will cease or the charge be discharged upon repayment in any event) and some modern charges will not include them.
Restrictions on disposal Legal mortgages commonly include a restriction to prevent the mortgagor disposing of the property or granting third party rights without the mortgagees consent. This restriction is entirely separate from any restrictions on leasing as referred to in note, Statutory powers. The restriction on disposals or grant of third party rights must appear on the register at the Land Registry along with the registration of the legal mortgage. The legal mortgage must contain an application to the Land Registrar to put a restriction on the title. Restrictions must be in one of the standard forms provided for by the LRA 2002 unless the legal mortgage is in Form CH1 or in an approved form. For more information, see Practice note, Protection of third party rights under the Land Registration Act 2002.
Grant of a mortgage
The following notes generally assume that the mortgagee is intending to take a mortgage (and generally a legal mortgage) by a specific and intended transaction. Issues to consider before the grant of a mortgage Who can act on the grant of the mortgage? See note, Conflicts of interest and acting for both parties. Is there a risk that the mortgage will be void? See note, Ensuring the mortgage will not be void. Does the mortgagor have capacity to take the mortgage? See note, Capacity of a mortgagor. Is it necessary to get a landlords consent before the mortgage is granted, if the mortgage is to be over leasehold property? See note, Requirements for a landlords consent. Will the property over which the mortgage is to be taken, provide "sound" security in terms of its value, title, physical state and associated liabilities? See note, Pre-completion: investigation of property to be mortgaged or charged and note, Pre-completion: valuations. Conflicts of interest and acting for both parties The Solicitors Code of Conduct 2007 (Code) limits the situations where a solicitor may act for both the lender and the borrower on the grant of a mortgage over land. The basic rule is contained in rule 3.16 of the Code which provides that: "You must not act for both lender and borrower on the grant of a mortgage of land:(a) if a conflict of interests exists or arises;(b) on the grant of an individual mortgage of land at arms length; (c) if, in the case of a standard mortgage of property to be used as the borrowers private residence only, the lenders mortgage instructions extend beyond the limitations contained in 3.19 and 3.21, or do not permit the use of the certificate of title required by 3.20; or(d) if, in the case of any other standard mortgage, the lenders mortgage instructions extend beyond the limitations contained in 3.19 and 3.21." For further information, see Practice note, Solicitors Code of Conduct 2007 - Solicitor acting for a lender and a borrower in a conveyancing transaction.
The Solicitors Regulation Authority is consulting on a new outcomes-focused code of conduct which it is intended will replace the existing Code in October 2011. For more information on the consultation, see Legal update, Further consultation on new regulatory handbook proposed by the SRA. Ensuring the mortgage will not be void The lenders lawyers will also need to take steps to ensure that the mortgage will not be void, for example for undue influence or because the transaction is reviewable because of the borrowers insolvency. For more information, see note, Void and imperfect securities. Capacity of a mortgagor A prudent mortgagee will check that a corporate or trustee mortgagor has capacity in its memorandum of association (or other constitutional documents) or the trust deed, to enter into the mortgage (and in particular any associated facility agreement) (see Practice note, Execution: capacity). Requirements for a landlords consent Many leases include covenants against alienation: A covenant against underletting is breached by a mortgage by sub-demise but probably not by a charge by way of legal mortgage (Gentle v Faulkener [1900] 2 QB 267 and Grand Junction v Bates [1954] 2 QB 160). The covenant may be qualified (that is, landlords consent is required) and may include a proviso (either express or implied by section 19 of the LTA 1927) that landlords consent is not to be unreasonably withheld. Mortgages by sub-demise are no longer commonly encountered. A covenant against charging will be breached by a charge by way of legal mortgage. Again the covenant may be qualified and may include a proviso (express or implied by section 19 of the LTA 1927) that landlords consent is not to be unreasonably withheld. There is no authority as to whether such a covenant is breached by the creation or crystallisation of a floating charge (although a specific covenant against creating floating charges obviously would be). Where there is a proviso that landlords consent is not to be unreasonably withheld (whether express or implied by section 19 of the LTA 1927) the landlord has a statutory duty not to unreasonably withhold consent (section 1, Landlord and Tenant Act 1988). The duty is owed to the tenant/mortgagor and not the mortgagee. For further information, see Practice note, Landlords consent for dealings with a lease and the Landlord and Tenant Act 1988. In the case of mortgages of residential leaseholds, lenders will generally require that the only restriction on mortgaging and assigning is the consent of a person whose consent cannot be unreasonably withheld (paragraph 5.10.3, CML lenders handbook). Once the mortgage has been granted, it may be necessary to give a formal notice of the mortgage to the landlord. See note, Post-completion: notices to landlords and prior mortgagees. Pre-completion: investigation of property to be mortgaged or charged A lenders lawyers will always require a full investigation of the property to be mortgaged. The lender needs to be sure that:
It will have good and marketable title to the property and can sell it in the future if it has to enforce its security, and realise enough money to cover the debt secured on the property by the mortgage. It is aware of potential liabilities that it may have in relation to the property by taking the mortgage or if it becomes a mortgagee in possession. The lenders lawyers may carry out the investigation and report to the lender, and may take warranties from the borrower to support that investigation. Alternatively, the lender may rely on the borrowers lawyers carrying out the investigation and certifying the results of that investigation. Often the form of certificate is the CLLS certificate of title or is based on this (see CLLS Certificate of title (long form)). Sometimes, where a portfolio of properties is to be mortgaged, investigation is carried out by the lenders lawyers for a selection of properties (strategic, flagship or a random sample), with the borrowers carrying out and certifying the investigations for the remainder of the properties. For further information on the investigation process, see: Practice note, Investigating the property. Checklist, Investigation of property. Practice note, Investigating the property: Title investigation. Overriding interests, particularly those in favour of persons in actual occupation, have given rise to much litigation with lenders over the years, (for example, Williams and Glyns Bank v Boland [1981] AC 487, City of London Building Society v Flegg [1988] AC 54 and Abbey National v Cann [1991] 1 AC 56, HSBC Bank Plc v Dyche & Anor [2009] EWHC 2954 (Ch) and Link Lending Ltd v Hussein and another [2010] EWCA Civ 424 (see Legal updates, Bank left without security after it failed to make enquiries of occupier and Possession proceedings, mental incapacity and actual occupation (Court of Appeal)). The court has also considered the priority of interests between lenders and occupiers under a sale and lease back scheme (Various Mortgagors v Various Mortgagees and others (Re North East Property Buyers litigation) [2010] EWHC 2991 (Ch); see Legal update, Priority between lenders and occupiers under sale and rent back scheme). The LRA 2002 clarifies, modernises and limits the scope of overriding interests, although rights of those in occupation are still be capable of overriding a disposition (including a charge), but in more limited circumstances. For more information, see Practice note, Overriding interests and the Land Registration Act 2002. Practice note, Investigating the property: The survey. The survey may also extend to investigation for contamination and environmental liabilities (for more information on these, see note, Pre-completion: environmental issues). Pre-completion: environmental issues If contamination is a possibility, the lender may require detailed investigations, indemnities, insurance or a combination. If problems are revealed, the lender may refuse to lend since a
lender can be liable for contamination (including historic contamination) under Part IIA of the Environmental Protection Act 1990 (see note, Remedies of a mortgagee: Possession). The Law Society advises all solicitors acting on a mortgage to advise of the potential liabilities associated with contaminated land, see Contaminated land Law Society warning card.) For more information, see Practice note, Contaminated land regime: a quick guide. Environmental liability, generally, is a growing area of concern in the UK and as a result lenders are increasingly taking a more cautious approach to environmental risk. For an overview of environmental issues in finance transactions and how these are managed by lenders, see PLC Environment, Practice note, Environmental issues in finance transactions: overview. For example, as part of its due diligence, a lender may need to check if the mortgagor has to participate in, and buy carbon allowances under the CRC Energy Efficiency Scheme (CRC). The CRC is a UK-wide mandatory emissions trading scheme, which applies to large businesses and public sector organisations. For a note on how the CRC may affect lenders and borrowers in finance transactions, see PLC Finance, Practice note, CRC Energy Efficiency Scheme: issues for finance transactions. Pre-completion: valuations In most cases, the lender will instruct valuers to value the property to be mortgaged. The loan to value ratio is one of the key measurements of the risk the lender is taking. As well as assumptions and information about the title to the property, the valuation will be informed by a survey of the property. For more information, see note, Pre-completion: investigation of property to be mortgaged or charged. Any certificate of title will usually include a statement that there is nothing in the valuation report that is inconsistent with the certificate. One type of inconsistency would be that the assumptions made by the valuers are not borne out by the legal facts and circumstances. Litigation by lenders against valuers over negligent valuations following default by the borrower on the loan is not uncommon. Pre-completion searches When the parties are ready to complete the mortgage, the mortgagee and the mortgagees lawyers need to carry out certain checks to ensure that once granted, the mortgage can be properly registered at the Land Registry and that there are no potential problems that might impact on the value of the security. Registered land: registered mortgages Where a legal mortgage is to be taken over registered land, the lenders lawyers will carry out a pre-completion priority search at the Land Registry. It is not necessary for there to be any agreement to grant the security, it is sufficient that the prospective mortgagee intends to take a legal mortgage. The search gives a priority period of 30 days in which the completed legal mortgage must be registered. The effect of this is that: If the legal mortgage is registered within the priority period, the mortgagee will take the property free of any other application that has been lodged during the priority period by any other person.
If the legal mortgage is not registered within the priority period, the mortgagee may find that another person has applied to register an interest against the property and that other interest may take priority over the legal mortgage, so that the mortgagee would have to take the property subject to that other interest. It is possible to submit a second priority search to acquire a second priority period. This can be done before or after the expiration of the priority period conferred by the first priority search. It is important to appreciate, however, that a second (or indeed subsequent) priority search will not actually extend the first priority period. This means that if the legal mortgage is registered within the priority period of the second search, the mortgagee will take free of any application lodged during that second priority period but subject to any application lodged during the first priority period. Any such pending application should be revealed by the second priority search and may give rise to contractual remedies or obviate a contractual obligation to advance the loan. Nevertheless, this is not satisfactory and a notice should be lodged if the initial 30 day priority period will be exceeded (see note, Registered land: noted charges). For more information on priority searches, see Practice note ,The day list, priority searches and outline applications and LR Practice Guide 12 - Official searches and outline applications. Registered land: noted charges If the charge will not be substantively registered (and so will take effect only in equity) but will be protected by a notice, a priority search cannot be made, but a search without priority can be. This is done by making an outline application, but this can only be made once the interest (that is, the charge) exists. For more information on outline applications, see: Practice note, The day list, priority searches and outline applications. LR Practice Guide 12 - Official searches and outline applications. For information about protecting a charge with a notice, see Practice note, Protection of third party rights under the Land Registration Act 2002 and note, Registration at the Land Registry and Land Charges Department. Unregistered land: mortgage to be followed by first registration Property that is not registered must be registered at the Land Registry following certain trigger transactions. In the context of mortgages, first registration is triggered by the following: A first legal mortgage of a freehold that is protected by the deposit of title deeds. A first legal mortgage of a lease that has at least seven years of the term left to run (Section 4, LRA 2002). For information on first registration, see Practice note, First registration of title under the Land Registration Act 2002. In these cases: A Land Registry priority search cannot be carried out because at this stage, the land is not registered land.
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If there is a prior agreement to enter into the legal mortgage, a caution against first registration may be registered by the mortgagee (section 15, LRA 2002). See Practice note, Cautions against first registration under the Land Registration Act 2002 on the procedures for registering a caution. If there is an agreement to create a legal mortgage, then there is an argument that the agreement should be registered: as a Class C(iv) land charge at the time the agreement is made (assuming that at that stage the obligation to make an application for first registration has not yet been triggered); and possibly also as a Class C(iii) land charge if the agreement is not protected by deposit of title deeds (the deposit of title deeds at the pre-completion stage of a conveyancing transaction would be unusual). For more information on this argument see Fisher and Lightwood, paragraph 3.106 and Pagets Law of Banking, paragraphs 32.3432.42. If this line of argument is followed, then the priority notice procedure for registering a land charge (see below) should be used at the agreement to charge stage (see note, Unregistered land: charge not to be followed by first registration). Where a person is under a duty to make an application for first registration and there is a dealing with the relevant estate, then the LRA 2002 applies to the subsequent dealing as if that dealing had taken place after the date of first registration (rule 38, LRR 2003). In other cases, first registration may be triggered by another transaction, for example a sale, in connection with which the legal mortgage is granted. The grant of a second ranking legal mortgage does not of itself trigger first registration of property but if first registration is triggered by another transaction, that second ranking legal mortgage must then be registered at the Land Registry. Unregistered land: mortgage or charge not to be followed by first registration If first registration of the property is not triggered by the grant of security or any associated transaction), the security will need to be registered as a land charge. In this case, the priority notice and search procedure under the LCA 1972 should be used: A priority notice should be lodged (using form K6). This should be done at least 15 working days before the security is entered into. A search of the register of land charges should be made (using form K15). A certificate of search will be issued. This confers a priority period of 15 working days. The security should then be entered into. This should be done within 15 working days of the date of the certificate of search (that is, within the priority period conferred by the certificate). The substantive application to register the security should be made (using form K1). This should be done no later than 30 working days after the date of the priority notice. Where this procedure is followed, the registration of the land charge takes effect on the date of completion of the security, anyone else making a search or registering another priority notice will
take subject to the mortgagees own priority notice and the mortgagee will take free of all land charges and priority notices except those revealed on its own certificate of search (section 11, LCA 1972). The class of land charge will vary depending on the type of security: A legal mortgage not protected by deposit of title deeds (a puisne mortgage) is a Class C(i) land charge. An equitable charge not protected by deposit of deeds is a Class C(iii) land charge. An estate contract is a Class C(iv) land charge. An estate contract arguably includes an equitable mortgage that includes an express or implied agreement to create a legal mortgage whether or not protected by deposit of title deeds. However, registration where the charge is protected by deposit of deeds is against the general scheme of the LCA 1972 and the "better view" is that a protected equitable mortgage is not registrable (Fisher and Lightwood, paragraph 3.106). Insolvency searches An insolvency search should be carried out to check for any registrations in relation to the insolvency of the borrower. If the mortgagor is a company, the lender should carry out searches at: Companies House. Central Registry of Winding-Up Petitions (0906 7540043). The Land Charges Department (if the property charged is unregistered). If the mortgagor is an individual, the lender should carry out searches at: The Land Charges Department, which maintains a record of all bankruptcy petitions and court orders, whether or not the bankrupt owns property. The Insolvency Service (see Insolvency Service: Search the Individual Insolvency Register). The Land Registry Bankruptcy Unit (0800 0685 029), which is the central department that deals with bankruptcy restrictions where a bankrupt owns property that is registered at the Land Registry. Other than the bankruptcy search, these searches do not confer any priority and so should be carried out as close to completion as possible. Completion of the legal mortgage or charge The security document must be executed as a deed by the mortgagor or chargor if it is to be a legal mortgage and if the various statutory powers are to be implied (see note, Statutory powers). If the instrument of charge includes an agreement to create a legal mortgage, then section 2 of the LP(MP)A 1989 must be satisfied.
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See Practice note, Execution of deeds and documents for notes on the formalities required for execution. For more information on the formalities, see Practice note, Perfection of security over freehold and leasehold property: Formalities. Post-completion: Stamp Duty Land Tax (SDLT) Mortgages and charges are not liable to SDLT. A "security interest" is an exempt interest and the legislation defines a security interest as any "interest or right (other than a rentcharge) held for the purposes of securing the payment of money or the performance of any other obligation" (section 48, Finance Act 2003). Equally, there is no requirement submit a Land Transaction Return or complete a self certificate (sections 77 and 79, Finance Act 2003). This continues the position that had existed for many years in relation to stamp duty. Where a property is transferred subject to a mortgage and the buyer assumes the debt, then the amount of the debt is chargeable consideration for the purposes of SDLT (para 8, Schedule 4, Finance Act 2003). For general information about SDLT, see Practice note, Stamp duty land tax. Post-completion: registrations to perfect security Various formalities and registrations must be completed to perfect security interests over property. The steps required vary depending on: The type of security interest. Whether the property interest subject to security is legal or beneficial. Whether title to the property is registered or unregistered at the Land Registry. The identity of the borrower. Completion of these procedural requirements is often necessary to make the security valid against third parties or to achieve a particular priority position. For more information on priority, see Practice note, Priority of security over freehold and leasehold property. Registration at Companies House Mortgages and charges over property (or an interest in property) located in England or Wales and floating charges created on or after 1 October 2009 by the following are security interests registrable at Companies House: A company registered in England and Wales or Northern Ireland. An overseas company which has registered particulars in respect of one or more UK establishments in accordance with Part 2 of the Overseas Companies Regulations 2009 (SI 2009/1801) and has not subsequently closed those establishments (registered overseas company). A limited liability partnership registered in England and Wales (LLP).
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(Section 860, Companies Act 2006, Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (SI 2009/1804) and Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 (SI 2009/1917)). Chapter 2 of Part 25 of the Companies Act 2006 deals with charges created by companies registered in Scotland. For details, see Practice note, Perfection of security over freehold and leasehold property: Registration against the borrower: Companies House registration. Registration in the statutory books Companies registered in England and Wales or Northern Ireland, registered overseas companies and LLPs must keep a register of charges at their registered office (or, in the case of registered overseas companies, a location in the UK at which it carries on business and which has been notified to the Registrar) (sections 876 and 877, Companies Act 2006, Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 and sections 24 and 25, Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009). If a registrable security interest is not noted in the statutory books it is not invalidated but the officers of an entity who knowingly or wilfully authorised or permitted the omission are liable to a fine. For details, see Practice note, Perfection of security over freehold and leasehold property: Registration in the statutory books. Registration at the Land Registry and Land Charges Department Security interests over property often have to be registered at the Land Registry (if title to the property is registered at the Land Registry) or at the Land Charges Department (if title to the property is unregistered). Registration is important because it binds a future lender or a purchaser of the property meaning that they cannot take free of the registered mortgage or charge. For more information on priority of interests, see Practice note, Priority of security over freehold and leasehold property. In respect of registered land, registration in the charges register of the title to the property is required so that the security takes effect as a legal mortgage. Other security interests can be noted to protect their priority position. In respect of unregistered land, the general scheme under the LCA 1972 is that security interests over unregistered land protected by deposit of title deeds do not need to be registered at the Land Charges Department. Those that are not protected by deposit of title deeds do need to be registered. For details, see: Practice note, Perfection of security over freehold and leasehold property: Registration against the asset: Land Registry and Land Charges Department registrations. LR Practice Guide 29 - Registration of legal charges and deeds of variation of charge. Note, Land Registry requirements to identify parties involved in a transaction.
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Land Registry requirements to identify parties involved in a transaction When a solicitor (or other person within the definition of conveyancer in rule 217(1) of the Land Registration Rules 2003 (LRR 2003), which is subject to a Land Registry consultation to change it so that it includes all persons authorised to provide conveyancing services under the Legal Services Act 2007; see Legal update, Consultation on changes to land registration legislation to include alternative business structures) lodges an application at the Land Registry, the Land Registry relies upon the conveyancer to take appropriate steps to verify the identity of its client. These checks reduce the risk of property fraud. To increase the protection against fraudulent transactions, the Land Registry introduced an identity checks regime in relation to parties (and any attorneys executing relevant documents on their behalf) to certain transactions with effect from 10 November 2008. The regime is set out in the Land Registration (Amendment) Rules 2008 (LRAR 2008), which amended the LRR 2003. The Land Registrys LR Practice Guide 67 - Evidence of identity - conveyancers, which was reissued in September 2010 sets out the requirements. It is essential that the Land Registrys requirements are complied with. If confirmation of identity is required for an application, but is not provided, the Land Registry will reject the application. If the parties to a transaction are represented by a conveyancer, it will be sufficient to provide the conveyancers details. If a party is not represented by a conveyancer, or if the person lodging the application is not legally represented, the obligations to provide evidence of identity are more onerous. Note that the Land Registrys requirements are not confined to identifying the parties to the document but may extend to other parties involved in the transaction. For example, on a sale of a mortgaged property, where the mortgage will be discharged, the buyer must be ready to confirm the identity not only of the seller, but also of the mortgagee. For more information, see Practice note, Confirmation of identity: Land Registry requirements. Post-completion: notices to landlords and prior mortgagees Notice of the mortgage may need to be given to the following: A landlord, if the mortgage is over leasehold property. Any prior mortgagee in order for the mortgage to take priority over further advances made under a prior mortgage. Trustees where the mortgage is of an equitable interest only. For more information, see see note, Priorities of mortgages.
Void and imperfect securities

Misrepresentation As with any contract, a mortgage may be rescinded (and/or damages awarded) where there has been a misrepresentation; that is, where Party A has made an untrue statement of fact or law to Party B which induced Party B to enter the contract and caused Party B loss as a result (see Practice note, Misrepresentation).
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In relation to mortgages, there may be a misrepresentation not only as between the lender and the borrower but also as between the borrower and the borrowers guarantor or co-mortgagor. Even though the mortgagee did not make the misrepresentation, the mortgage may still be set aside if it can be shown that the (mis)representor made the misrepresentation as agent of the mortgagee or the mortgagee had actual, constructive or imputed notice of the misrepresentation. (The Lending Code provides that those giving third party security in respect of the debts of consumers, businesses employing less than 10 persons and with a turnover or annual balance sheet that does not exceed EUR 2 million or charities with an annual income of less than 1 million will be told of the extent of their liability, including the addition of interest and charges after demand has been made (paragraphs 122 and 123, Lending Code). In respect of third party mortgages or guarantees in favour of lenders that subscribe to the Lending Code, a misrepresentation by the borrower to the provider of third party security or guarantor as to the extent of the latters liability should not therefore have a detrimental effect on the basis that there would not be reliance on the misrepresentation.) The principles that apply to the lender being fixed with notice of the undue influence also apply in relation to misrepresentation (Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44), and in many cases where there is misrepresentation there may also be undue influence. Undue influence Where a person gives security for a loan that is made to another, and that person was induced to do so by the undue influence of that other, the security may be unenforceable by the lender. In cases where the chargor is an individual and the relationship between the chargor and the borrower is non-commercial (including cases where the borrower is a co-chargor), the lender needs to consider the possibility of the borrower having unduly influenced the chargor or its co-chargor (see Practice note, Guarantees by individuals vitiated by undue influence). Following a series of cases, the House of Lords (in Royal Bank of Scotland v Etridge (No 2), 11 October, 2001) gave guidance as to what lenders are expected to do for future transactions (and what they are expected to have done in respect of past transactions) to make sure that their security is not void for undue influence (see Practice note, Practical guidance from the House of Lords for banks and solicitors dealing with guarantees by individuals). Even if a legal charge is void for undue influence, the lender may have other remedies, for example, if the person who unduly influenced the chargor is in fact a co-chargor, the lender may have a valid charge over that co-chargors beneficial interest which can be enforced, see for example, First National Bank plc v Achampong, 1 April 2003. Insolvency Where the debtor becomes insolvent, two broad issues arise in relation to security. First, the court has certain powers under insolvency legislation to review transactions entered into by the debtor within certain time limits before particular insolvency actions and in certain circumstances. These transactions include charges that are: Transactions at an undervalue or which are a preference. Floating charges created for prior consideration. Extortionate credit transactions.
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These are discussed in Practice note, Insolvency: reviewable transactions. For more on what constitutes a transaction at an undervalue, see also Legal update, Transactions at an undervalue. Secondly (although not a matter of "imperfect security"), if the debtor becomes subject to one or more insolvency regimes following its insolvency, then the rights of secured creditors may be affected by the law of the relevant regime(s) (see note, Enforcement: Insolvency of the borrower). Failure to register For information on the requirement to register at either the Land Registry or the Land Charges Department, see note, Registration at the Land Registry and Land Charges Department and Practice note, Perfection of security over freehold and leasehold property: Registration against the asset: Land Registry and Land Charges Department registrations. Where a charge should be registered at the Land Registry, failure to register will mean that the charge will take effect only in equity and not at law. Where a charge should be registered at the Land Charges Department, failure will mean that a purchaser of the land (including a subsequent mortgagee) will take free of the charge. Where a charge is created over unregistered land, but the charge or an associated transaction triggered first registration, failure to register within the statutory period of two months will mean that the mortgage will take effect as a contract to create a mortgage (section 7, LRA 2002). Remember, however, that a contract to create a mortgage will be void if it is not in writing and does not comply with the requirements of section of the LP(MP)A 1989. Failure to register a charge by a company or LLP at Companies House that is required to be registered under the Companies Act 2006 means that the charge is void against a liquidator or administrator of the company (or LLP) and against any creditor of the company (other than the chargee). For more information, see note, Registration at Companies House and Practice note, Perfection of security over freehold and leasehold property: Registration against the borrower: Companies House registration. Other reasons why security may be prejudiced A mortgagee may find its security prejudiced for a number of other reasons. Some of these are matters of general law, others are specific to mortgages. They include: Mistake. The general rules of law on mistake and rectification apply to mortgages. Where rectification would involve an alteration of the register, the relevant Land Registration rules and procedures must be followed. Illegality. Securities may, in certain cases, be prejudiced by reason of fraud or forgery, or by reason of being taken as security for an illegal transaction or in connection with gaming or betting transactions (there are proposals to reform this, see Bulletin, Gaming rules). Another example is a mortgage made in contravention of the financial assistance rules under sections 677 to 683 of the Companies Act 2006 (Re Hill & Tyler (in administration) v Loveday [2004] EWHC 1261 (Ch)). See PLC Corporate, Practice note, Financial assistance: 1 October 2009 for more on the financial assistance regime from 1 October 2009. Consumer protection legislation. The court may re-open a mortgage that is an extortionate credit bargain within the meaning of the Consumer Credit Act 1974 so as to do justice between the parties (section 137, Consumer Credit Act 1974). The debtor must be an
individual but the other exemptions from regulation under the Consumer Credit Act 1974 are not relevant. This statutory power is: separate from the power of the court to review extortionate credit transactions under insolvency legislation (see note, Insolvency); and in addition to the regulation of mortgages and their terms under the Consumer Credit Act 1974 and the Unfair Terms in Consumer Contracts Regulations 1999 (see note, Regulation of mortgages).
Clogs on the equity. Provisions in or relating to a mortgage that are clogs on the equity of redemption or collateral advantages to the mortgage security may be unenforceable. For details, see Practice note, Redemption of mortgages, clogs, collateral advantages and consolidation.
Redemption of mortgages
See Practice note, Redemption of mortgages, clogs, collateral advantages and consolidation for information on the following: The legal and equitable rights of redemption. The rule on clogs on the equity of redemption. The rules on collateral advantages. Consolidation.
Discharge of a mortgage
General Once the mortgage money has been repaid the charge will be discharged. (It is open to a lender to discharge a charge even if money remains outstanding; the debt will then be unsecured.) This right to have the mortgage discharged is essentially the same as the right to redeem: in this section the procedural aspects of discharge following repayment of the debt are considered. Registered land In registered land a registered charge must be discharged in form DS1 (under cover of either form DS2 or form AP1) or, if the discharge is of part only of a title, in form DS3 (under cover of form AP1) (rule 114, LRR 2003). Where Form DS3 is used, the land being discharged must be identified in an accompanying plan (which must be signed by or on behalf of the lender) or by reference to the filed plan. Many lending institutions have special arrangements with the Land Registry as to the evidence needed to show that a form DS1 or DS3 has been properly executed by the lender, but for the Land Registrys requirements on execution in general, see LR Practice Guide 31 - Discharges of charges. On 23 June 2010, the Land Registry changed its policy relating to identity (ID) evidence for attorneys. If the lender acts by an attorney in executing a form DS1 or form DS3, the Land Registry will no longer ask for ID evidence in respect of the attorney. ID evidence may still
be required in respect of the lender (see note, Land Registry requirements to identify parties involved in a transaction). For more information, see Legal update, Land Registry changes identity requirements for attorneys. Where the original charge is sent to the Land Registry in connection with a discharge, the original may be destroyed unless a certified copy is also supplied (rule 203, LRR 2003). If the loan will remain outstanding after discharge of the charge (and so become unsecured) the lender will need to have the original returned. For charges that are not registered charges, the rules for removing these entries are as follows: Charges noted under section 49, LRA 1925: these are removed as if they were agreed notices under the LRA 2002 (paragraph 2(1), schedule 12, LRA 2002). Charges protected by a caution under section 54, LRA 1925: these are discharged by the withdrawal of the caution in form WCT (rule 222, LRR 2003). Charges noted under section 32, LRA 2002: If the charge has been noted by means of a unilateral notice, the notice is removed using form UN2. If it has been entered as an agreed notice, the notice is cancelled using form CN1. Where an equitable charge is protected by deposit of the land certificate and notice of the deposit (such as charge being valid only if created before 27 September 1989), it is discharged by the return of the land certificate and the cancellation of the notice of deposit. Electronic discharges Some lenders use an electronic discharge (ED) or E-DS1 to discharge registered security, although this is more common in the context of residential mortgages. An ED is sent by a lenders computer system direct to the Land Registry. If everything is in order, the entry relating to the charge is cancelled automatically, and in most cases, immediately. An ED does not need to be followed up by a separate formal paper application to discharge the charge. The system can only, however, be used for a discharge of whole. The ED system will eventually form part of the integrated e-conveyancing system. For more information, see LR Practice Guide 31 - Discharges of charges. The system for lenders to discharge registered security by way of electronic notification of discharge (END), which is different from an ED, was withdrawn on 3 January 2010 (see Legal update, Electronic notification of discharge (END) service withdrawn from 3 January 2010). Unregistered land In unregistered land a receipt endorsed on the deed of charge which names the payer and is executed by the mortgagee operates as a discharge if the payer is the mortgagor (and this applies whether the charge is by way of legal mortgage or by way of demise) (section 115, Law of Property Act 1925). However, if the payer is not the mortgagor then the receipt operates as a transfer of the mortgage to the payer. Any land charge registered at the Land Charges Department should be cancelled (using form K11 which needs to be signed by the chargee or its solicitor). For further information, see LR Practice Guide 63 - Land Charges - Applications for registration, official search, office copy and cancellation.
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A pre-27 September 1989 equitable charge by deposit of the title deeds is discharged by the return of the deeds. Companies House forms Where a charge has been registered at Companies House, it (or the reference to the relevant property in it) should be cleared from the charges register using: Form MG02 or, for a limited liability partnership, form LL MG02: Statement of satisfaction in full or in part of mortgage or charge; or Form MG04 or, for a limited liability partnership, form LL MG04: Application for registration of a memorandum of satisfaction that part [or the whole] of the property charged: (a) has been released from the charge; or (b) no longer forms part of the companys (or, in the case of a limited liability partnership, limited liability partnerships) property, as appropriate. (These forms replaced forms 403(a) and form 403(b).) There are equivalent forms for overseas companies which have registered particulars in respect of one or more UK establishments in accordance with Part 2 of the Overseas Companies Regulations 2009 (SI 2009/1801) and Scottish companies. All forms are available on the Companies House web site (see Companies House Forms List). There is no fee. (The titles and text of some of Companies Houses security discharge forms (MG04, LL MG04, MG04s, LL MG04s, MG05s, LL MG05s and OS MG03) are due to change on 14 March 2011, from which date the new versions of the forms must be used; see PLC Finance, Legal update, Companies House security form changes.) The company (or LLP) should record the discharge in its own statutory register of charges. Undertakings In most residential transactions and some commercial ones, where there is a linked sale and the mortgage is to be discharged out of the proceeds of sale, the form of discharge will not be available from the bank at completion (but will be forwarded by the bank once it has received the due part of the completion moneys needed to discharge). As a result, the buyers solicitors will rely on an undertaking from the sellers solicitors to discharge the mortgage and forward the form of discharge after completion. Relying on such an undertaking is not ideal and may, in some circumstances be negligent. Following the case of Patel v Daybells [2001] EWCA Civ 1229, the Law Society issued guidance on this issue, but uncertainties still remain: see Practice note, Undertakings to discharge a mortgage Law Society guidance.
Priorities of mortgages
The rules governing the priority of successive mortgages and fixed charges over freehold and leasehold property located in England and Wales are complex. They differ for registered and unregistered land. For details, see Practice note, Priority of security over freehold and leasehold property.
Remedies of a mortgagee
The following remedies apply in general to legal mortgages over commercial property (and in some cases to equitable mortgages if they are made by deed): Action in contract on the covenant to pay (see note, Action on the covenant to pay). Consolidation (see note, Consolidation). Possession (see note, Possession). Sale (see note, Power of sale). Appointment of a receiver (see note, Appointment of a receiver). Foreclosure (see note, Foreclosure). On 20 October 2010, the Secured Lending Reform Bill, which is a private members bill, was published. This Bill aims to reform certain rights of mortgagees and chargees to enforce their security. Although private members bills do not often become law, they may create publicity about an issue and so affect legislation indirectly, for example, by being adopted into the governments legislative programme. In particular, the Bill excludes some of the contractual extension of receivers powers that is a frequent feature of security documents. For more information, see PLC Finance, Legal update, Secured Lending Reform Bill published. There are special considerations in respect of residential mortgages, which are not discussed fully below. For an overview of schemes and guidance available to residential mortgagors, see Practice note, Help for residential borrowers struggling with mortgage repayments). If the borrower is insolvent, there are a number of insolvency regimes that may be relevant. Enforcement of security will be affected by the procedural restraints and regulations under these regimes. For more information, see note, Insolvency of the borrower. Whenever a lender is considering enforcement action, careful consideration needs to be given to the limitation periods applicable. For details, see note, Limitation. If the security is over leasehold property, there are special issues that need consideration. For details, see note, Issues with leasehold properties. In relation to other equitable mortgages and to equitable charges remedies beyond an action on the covenant to pay generally involve an application to the court for a relevant declaration and order for sale of the property. They will be subject to general equitable principles. Action on the covenant to pay The simplest remedy a mortgagee has is an action in contract on the mortgagors covenant to pay. This right survives the exercise of the power of sale if there is a shortfall on the proceeds of sale (Bristol & West plc v Bartlett [2002] EWCA Civ 1181). Consolidation Although not strictly a remedy, consolidation can have a remedial effect in practice. If a mortgagee holds two or more mortgages over different properties given by the same mortgagor, the mortgagee is entitled to consolidate them if at least one of the mortgages reserves the right to consolidate (section 93 of the LPA 1925 excludes the right to consolidate). The effect of this
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is that the mortgagor cannot redeem one mortgage without redeeming all of them. (See also Practice note, Redemption of mortgages, clogs, collateral advantages and consolidation). Possession A legal mortgagee has a right to possession of the property (e.g. Four Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317 and acknowledged in section 95(4), LPA 1925), although this can be circumscribed by statute (for example, section 36 of the Administration of Justice Act 1970 and the Protection From Eviction Act 1977 in relation to residential properties). There is doubt as to whether an equitable mortgagee has, in the absence of an express provision in the mortgage, a right to possession. In any event, both legal and equitable mortgagees will generally seek a court order for possession. In the absence of a court order, "possession" does not require physical occupation of the land but does require the mortgagee to have taken the management of the property away form the mortgagor (Noyes v Pollock (1886) 32 Ch D 53). Although a mortgagee may need to take possession in certain cases to be certain of selling with vacant possession (assuming there are no leases binding on the mortgagee), in most cases, and particularly where the property is let, a mortgagee will want to avoid possession and will appoint a receiver instead. This is because with possession come responsibilities and liabilities. These include: A mortgagee has to account for rent received and if it grants a lease it must attempt to do so at a full open market rent; if the mortgagee occupies beyond a reasonable time for the purposes of a sale, then it must itself pay a full rent. In certain circumstances a mortgagee in possession may become liable on lease covenants. A mortgagee must take reasonable care of the property and will be liable to the mortgagor in negligence if it fails to do so (for example, Palk v Mortgage Services Funding plc [1993] Ch 330). In some circumstances, a mortgagee may be in rateable occupation of the property and so liable for non-domestic rates. Liability under the Occupiers Liability Act 1957 (if the mortgagee is in fact in control of the property). A particular worry for many commercial lenders is their potential liability for clean-up costs under the contaminated land regime of Part IIA of the Environmental Protection Act 1990. If a mortgagee becomes involved in the management of the mortgagors business (for example, in order to manage environmental risk) then it may incur liability as a Class A person (a person who has caused or knowingly permitted the contamination); even if it does not incur liability as a Class A person, it may incur liability as a Class B person (assuming no Class A person can be found) as the current owner or occupier. Only a mortgagee not in possession is not an owner or occupier for these purposes. (See sections 78A to 78YC of the Environmental Protection Act 1990 inserted by section 57 of the Environment Act 1995 and Chapter D of Annex 3 of the Statutory Guidance set out in DETR Circular 2/2000: Contaminated Land). A mortgagor will not necessarily escape clean-up liability by appointing a receiver (see Appointment of a receiver) and ultimately the question is one of risk assessment at the time the mortgage is entered into.
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Power of sale Although a mortgagee could always sell the property subject to the mortgagors rights, this was of little value if the mortgagor was in default. (In order to sell free of the mortgagors interest the mortgagee first had to foreclose, which had (and has) disadvantages (see Foreclosure)). Mortgagees therefore began including an express power of sale, free from the mortgagors interest, in mortgage deeds and in time a statutory power was given. The statutory power is now in section 101 of the LPA 1925 and applies to all mortgages made by deed (and thus applies to all legal mortgages (which must be by deed) and to those equitable mortgages that are in fact made by deed). In the case of equitable mortgages the mortgage will often include a power of attorney from the mortgagor in favour of the mortgagee allowing the mortgagee to convey the legal estate (and/or the mortgagor may declare itself trustee of the legal estate for the mortgagee (this is because there remain doubts as to whether an equitable mortgagee can convey the legal estate under the statutory power, notwithstanding obiter dicta in Re White Rose Cottage [1965] Ch 940 that the statutory power does allow this)). In the absence of the statutory or an express power, a court order is needed for sale. The statutory power applies subject to the terms of the mortgage deed and modern mortgages will often include an express power (typically modelled on but modifying (and expanding) the statutory power). There is a distinction between when the statutory power of sale arises and when it becomes exercisable (the distinction is usually mirrored in express powers). The statutory power arises when the mortgage money has become due. This is the legal date for redemption (see above) and will be set out in the mortgage; it is generally three to six months after the date of the mortgage (notwithstanding that that time period will not reflect the commercial reality of the agreement between the mortgagor and mortgagee). The statutory power becomes exercisable when: The mortgage money has become due, the mortgagee has served notice on the mortgagor requiring payment and the mortgagor has not made the payment within three months of the notice; or Interest under the mortgage has become due and is unpaid for two months after becoming due; or There has been a breach of a provision of the mortgage (other than payment of the mortgage money or interest) (section 103, LPA 1925). These requirements are often modified by express provision in the mortgage. The distinction between the power of sale arising and becoming exercisable is important because a purchaser of the mortgaged property is interested only in seeing that the power has arisen and not whether it has become exercisable or whether it is being properly exercised (section 104, LPA 1925), although the courts will not allow this protection to be used as an instrument of fraud.
Whether or not the power of sale has arisen should be apparent on the face of the mortgage deed (which the purchaser can inspect) but determining whether the power has become exercisable will not always be so simple. A sale by a mortgagee under the statutory power or an express power transfers title to the purchaser subject to interests having priority to the mortgage but free of other interests (sections 88 and 89, LPA 1925 and see Duke v Robson [1973] 1 WLR 267). The mortgagee must act in good faith but does not have a fiduciary duty to the mortgagor (although the duty is an equitable one and not one in contract or tort (Medforth v Blake [2000] Ch 86 andYorkshire Bank v Hall [1999] 1 WLR 1713)). As part of that general equitable duty to act in good faith, a mortgagee must take reasonable care to obtain a proper price on a sale (Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 and Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295). That duty is owed both to the mortgagor and any guarantor of the mortgagor (Standard Chartered Bank Ltd v Walker [1982] 3 All ER 938). The issue of whether the mortgagee has acted in good faith can, in particular, arise if the mortgagee retains the assets over which security has been granted in discharge or reduction of the secured debt (that is, it exercises the power of sale in favour of itself). In Royal Bank of Scotland plc v Highland Financial Partners LP and others [2010] EWHC 3119 (Comm), the High Court held that the sale process conducted by the mortgagee (albeit in the context of a portfolio of loans rather than properties) created a serious conflict of interest which meant it was in breach of its obligation to act in good faith in exercising the power of sale. In that case, some of the loans held as security were to be retained by the mortgagee and some sold, with the price in each case to be determined by a bids wanted in competition process to be carried out by the mortgagees sales team. The mortgagee was found to have breached its duty of good faith because its sales team, which did not know which of the loans were being retained and which sold, was trying both to keep the price for the loans low to benefit the mortgagee (in its role as a buyer of some of them) and trying to obtain a good price for the benefit of the mortgagor as it was obliged to do as a mortgagee exercising the power of sale. For more information, see PLC Finance, Legal update, High Court tells RBS it cannot rely on sham sale process to price CDO collateral. The court has a discretion under section 91(2) of the LPA 1925 to order a sale on such terms as it thinks fit on the application of either the mortgagor or the mortgagee and the courts have used this power to order a sale, on the application of the mortgagor, in cases where the proposed sale will not clear the debt but delaying a sale would effectively be gambling on a rise in prices (Palk v Mortgage Services Funding plc [1993] Ch 330 and Polonski v Lloyds Bank Mortgages Ltd (1998) 31 HLR 721). A mortgagee may purchase the property itself by obtaining a court order under section 91(2) (Palk v Mortgage Services Funding plc [1993] Ch 330) but otherwise the mortgagee may not sell to itself. When a mortgagee exercises a power of sale and there is a surplus from the proceeds of sale, the mortgagee holds the money on trust to be paid in the following order: The discharge of prior encumbrances if the property was sold free of them. Payment of expenses of the sale. The discharge of money due under the mortgage.
The balance is paid to the next subsequent mortgagee or if there is none, then to the mortgagor (section 105, LPA 1925 and British General Insurance v Attorney-General [1945] LJNCCR 113). In unregistered land the mortgagee is deemed to have notice of charges registered as Class C(i) and C(iii) land charges (section 198, LPA 1925) and must therefore search the land charges register to discover who is the next subsequent chargee. In relation to registered land, there was no equivalent of section 198 (the old Open Register Rules were merely permissive, they did not deem a person to have knowledge of the register). Even though in most cases a subsequent mortgagee would have given notice to the earlier one (because of the position on further advances) and the mortgagee could always have searched the register, the legal position under the LRA 1925 was unsatisfactory. Recognising this, the LRA 2002 removed the uncertainties on this issue: for the purposes of the application of the proceeds of sale in accordance with section 105 of the LPA 1925, a chargee is deemed to have notice of anything on the register immediately before the disposition and will therefore need to inspect the register (section 54, LRA 2002). In relation to residential owner-occupier mortgages, the Ministry of Justice is consulting on the proposal that a lender cannot exercise its power of sale under such a mortgage without either a court order or the borrowers consent (see Legal update, Consultation on prohibiting lenders from selling residential property without a court order or the borrowers consent). This follows on from the interest generated by the decision in Horsham Properties Group Ltd v Clark & Anor [2008] EWHC 2327 (Ch), which confirmed that a lender can sell a defaulting borrowers home without first obtaining a court order for possession (see Legal update, Human rights challenge to sale by receivers appointed by mortgagee). Appointment of a receiver In addition to the statutory power of sale, there is also a statutory power, where the mortgage (whether legal or equitable) is made by deed, for the mortgagee to appoint a receiver of the income of the property (section 101, LPA 1925). The power arises when the mortgage money has become due and becomes exercisable at the same time that the (statutory) power of sale becomes exercisable (section 109, LPA 1925). As with the power of sale, the mortgage deed will typically include an express power to appoint a receiver that extends the statutory powers of the receiver, in particular by: Conferring a power of sale on the receiver. Allowing appointment whether or not the property produces an income. Providing that the power becomes exercisable as soon as it has arisen. The Secured Lending Reform Bill (see Remedies of a mortgagee) is seeking to restrict receivers powers so that it will no longer be possible to give them the power to: Bring possession proceedings for any property. Exercise a right of peaceable re-entry. Sell the property or receive the proceeds of sale, except where a court order for possession of the property has been granted. For more information, see PLC Finance, Legal update, Secured Lending Reform Bill published.
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Receivers appointed under fixed charges (whether by virtue of the statutory power or an express power) are referred to as "LPA receivers" so as to distinguish them from administrative receivers (and administrators) who are appointed under floating charges. LPA receivers are generally surveyors and they do not have to be insolvency practitioners. A receiver appointed under the statutory power is the agent of the mortgagor (and express powers will provide for the same) but the receivers primary duty is to the mortgagee (see, for example, Silven Properties Ltd v Royal Bank of Scotland Plc, [2003] EWCA Civ 1409). Nevertheless, a receiver must act in good faith and must deal fairly and equitably with the mortgagor (Downsview Nominees v First City Corporation Ltd [1993] AC 295 and Medforth v Blake [2000] Ch 86). Also, a receiver owes the same duty to the mortgagor (and any guarantor) to obtain a proper price on a sale that a mortgagee in possession does (Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949). Notwithstanding the agency relationship, a receiver is personally liable on contracts entered into by the receiver in "the performance of the receivers functions" unless the contract provides otherwise (section 37, Insolvency Act 1986). Contracts, especially land sale contracts, will normally provide otherwise. In addition the receiver will usually expect to be indemnified by the mortgagee for liabilities incurred in the course of the receivership. In relation to clean-up liability for contaminated land, a receiver is liable only for acts and omissions that it is unreasonable for a person acting as a receiver to do or make (section 78X(3), Environmental Protection Act 1990) but the receiver would expect the indemnity to extend to any liability that it did have. For Land Registry requirements on disposals by receivers, see LR Practice Guide 36 Administration and Receivership. Foreclosure Foreclosure is the process by which the mortgagors rights in the property are extinguished and the property becomes vested in the mortgagee who may then sell free of the mortgagors rights. The mortgagees right to foreclose arises when the legal date for redemption has passed. Foreclosure is now rarely used in practice: A two stage court process is needed (the mortgagor being given time to pay between after the first stage and so prevent the second). Foreclosure extinguishes the debt, so the mortgagee cannot then sue if there is a shortfall. The foreclosure may still, in certain circumstances, be re-opened after the second stage. The mortgagees statutory power of sale allows the mortgagee to sell free of the mortgagors rights in the property. Insolvency of the borrower Inevitably, a lender will often be enforcing its security when the borrower is insolvent. The lender may not be the only creditor and one of the insolvency regimes under the Insolvency Act 1986 (as amended) may be relevant. There are a number of procedural restraints and regulations under these regimes that effect the enforcement of security, for example, in certain cases a secured lender cannot enforce its security without the leave of the court. A lack of or inadequacy in the borrowers assets can have a more fundamental effect, for example:
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If sale of the secured asset fails to produce sufficient funds to repay the amount owed under a fixed charge, the balance will be owed to the erstwhile mortgagee as an ordinary unsecured creditor who will then take its place in the queue for payment under the insolvency dividend behind expenses, preferential debtors and floating chargeholders. In a liquidation, a floating chargeholder ranks behind fixed chargeholders, the expenses of the insolvency and preferential debtors. For further information on enforcement of security in an insolvency, see the Practice note, Corporate insolvency: a guide. Insolvency of the borrower can also mean that a charge is reviewable by the court under insolvency legislation, see Void and imperfect securities: insolvency above, and Practice note, Insolvency: reviewable transactions. Limitation The limitation period for the enforcement of a debt secured by a mortgage made by deed is governed by section 20 of the Limitation Act 1980. It is twelve years from the date the cause of action accrued in relation to the principal. In relation to payments of interest it is six years from the date the interest became due. Sections 29 to 31 of the Limitation Act 1980 extend the limitation period in cases where the defendant makes some acknowledgement of the claimants right of action. In particular, where a right of action has accrued to recover (inter alia) a debt or other liquidated pecuniary claim, time starts running again from the date, if any, on which the debtor "acknowledges the claim or makes any payment in respect of it" (section 29(5), Limitation Act 1980). This provision applies only to debts or any other liquidated pecuniary claims: it does not apply to unliquidated claims for damages. In John Howard Ashcroft v Bradford & Bingley plc [2010] EWCA Civ 223, the Court of Appeal considered the effect, for limitation purposes, of payments made by a mortgage debtor where the amount of the debt was in dispute (see Legal update, Court of Appeal considers effect of part payment of debt for limitation purposes). The fact that the mortgagee has exercised its power of sale (and so is suing the mortgagor for a shortfall) does not affect the position (Bristol and West plc v Bartlett [2002] EWCA Civ 1181). It also makes no difference whether or not there is an express covenant in the mortgage deed to repay the principal (Scottish Equitable plc v Thompson [2003] 07 EG 137 (CS)). No action for recovery of land may be brought after 12 years from the date the right of action first accrued (section 15, Limitation Act 1980) and once the limitation period has expired the mortgagees title is extinguished (section 17 Limitation Act 1980). For more information, see discussion of National Westminster Bank PLC v Ashe [2008] EWCA Civ 55 in Legal update, Court of Appeal upholds High Court decision denying bank the right to recover possession of mortgaged property. Lenders who are members of The Council of Mortgage Lenders agreed in January 2000, despite the legal position, to limit the recovery of a shortfall on a residential mortgage to six years after the sale (see the CML press release: CML agrees to limit mortgage shortfall recovery to 6 years). The duties of a mortgagee in possession (for example the mortgagees duty to obtain a proper price, are duties in equity and not in tort or contract (Medforth v Blake [2000] Ch 86 and Yorkshire Bank v Hall [1999] WLR 1713). The limitation period for any action for breach of the
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duties is six years (and not 12 years despite the mortgage being by deed) (section 36, Limitation Act 1980 and Raja v Lloyds TSB Bank plc [2001] EWCA Civ 210). There are plans to reform the law of limitation, which would lead, in general, to a ten year limitation period in relation to mortgages, see Legal update, Law Commission report on reform of limitation periods. Issues with leasehold properties Forfeiture of the lease A landlords rights of forfeiture (notwithstanding that they are circumscribed by various statutory rules) clearly put the value of the tenants mortgagees security at risk and a provision that allows for forfeiture on the tenants insolvency will generally make a lease with a capital value unacceptable as sole specific security (see for example, paragraph 5.10.2 of the CML lenders handbook in relation to mortgages of residential leaseholds). A landlord will often also have a right to forfeit on breach of covenant. The tenants legal mortgagee has a right to apply for relief (section 146(4), LPA 1925). An equitable chargee does not have a direct right to apply for relief, but may obtain relief indirectly by joining in the tenants application (Bland v Ingrams Estates Ltd [2001] Ch 767). Even with its rights under section 146(4), there are weaknesses in the tenants mortgagees position: A mortgagee in possession is not entitled to be served with a section 146 notice (which must be served on the tenant) (Smith v Spaul [2002] EWCA Civ 1830) even though in practice the notice may come to the attention of the mortgagee. However, if a claimant (such as a landlord) knows of any person (including a mortgagee) that is entitled to claim relief against forfeiture as underlessee under section 146(4) of the LPA 1925 or in accordance with section 38 of the Senior Courts Act 1981, or section 138(9C) of the County Courts Act 1984, the particulars of claim must state the name and address of that person (Part 55.4, CPR). In addition, the claimant would be advised to file a copy of the particulars of claim for service on that person along with a copy of the section 146 notice, so that any possible relief from forfeiture claim is dealt with earlier on in the proceedings. If the landlord forfeits by peaceable re-entry rather than by court action, it does not need to give the tenants mortgagee notice of the forfeiture. The mortgagee may therefore find that its security has been lost without it having the opportunity to do anything to protect its position (although the mortgagee does retain its right to apply for relief (section 146, LPA 1925 and Billson v Residential Apartments Ltd [1992] 1 AC 494)). If the mortgagee (as opposed to the tenant) does obtain relief, then the mortgagee obtains a new lease (which is subject to the tenants equity of redemption) and the personal liability that goes with it. If there is an undertenant, the head landlord may, instead of forfeiting the headlease, serve Law of Distress Amendment Act 1908 notices on the undertenant so that the undertenant has to pay rent direct to the head landlord; this overrides the right of the tenants mortgagees receiver to receive the underlease rent (Rhodes v Allied Dunbar Pension Services Ltd [1989] 1 All ER 1161). If a landlord serves a section 146 notice on a tenant in respect of a breach of a repairing covenant and the lease has at least three years left to run, the notice must inform the tenant
of its rights under the Leasehold Property (Repairs) Act 1938. The tenant then has 28 days to serve a counter-notice under the 1938 Act. If it serves a counter-notice, the leave of the court is needed for the landlord to take any action to forfeit the lease or to claim damages for the breach of the repairing covenant. The circumstances in which the court may grant leave are limited. A mortgagee in possession is not entitled to serve a counter-notice under the 1938 Act (and although it may require the tenant/mortgagor to do so, the time limit is short) (Smith v Spaul [2002] EWCA Civ 1830). Exercising the power of sale A covenant against parting with possession will be breached by the mortgagee taking possession if the mortgage or charge was in breach of covenant, but not if the mortgage or charge was permitted by the lease (or the landlords consent, where required, was obtained). If the landlords consent is needed for the mortgagee to take possession, and the relevant covenant is qualified, then again the covenant may include a proviso (express or implied by section 19 of the Landlord and Tenant Act 1927) that landlords consent is not to be unreasonably withheld. A covenant against assignment may be breached if the mortgagee exercises the power of sale (there is an argument that the covenant will not be breached if the mortgage is itself permitted under the terms of the lease see Fisher & Lightwood, paragraph 19.7). If the covenant is qualified then the landlord cannot unreasonably withhold consent (section 89(1), LPA 1925 although there is no authority, it appears that section 89(1) does not apply where the covenant against assignment is absolute). If the court orders the assignment (for example on the insolvency of the tenant), there will be no breach of covenant. In many cases the landlord will have a duty not unreasonably to withhold consent to an assignment or parting with possession by virtue of the Landlord and Tenant Act 1988. The duty is owed to the tenant and not the mortgagee (although in some cases the mortgagee will enforce through an insolvency officer who acts as agent for the mortgagor/tenant, for example, an LPA receiver). (See Practice note, Landlords consent for dealings with a lease and the Landlord and Tenant Act 1988.)
Transfer of mortgages and sub-mortgages

Transfers A mortgagee is, in general, entitled to transfer its mortgage without the consent of the mortgagor. Exceptions to this include the transfer of mortgages where a local authority is the mortgagee (section 7, Local Government Act 1986) and building society mortgages where the rules of the building society preclude transfer. If the mortgagor is not a party to the transfer, the transferee is bound by the state of accounts between the mortgagor and mortgagee. A transfer of a legal mortgage must be by deed (section 52(1), LPA 1925). A transfer of an equitable mortgage must be in writing (section 53(1), LPA 1925). In registered land the proprietor of a registered charge will (in favour of a disponee) have power to transfer a charge unless there is a restriction to the contrary on the register (sections 23 and 26, LRA 2002). A transfer of a registered charge must be in form TR4 (or AS2 if the transfer is by way of assent) and must be completed by registration of the transferee as proprietor of the charge (rule 116,
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LRR 2003 as to the forms and section 27 and paragraph 10, Schedule 2, LRA 2002 as to the requirement for registration). A transfer of a mortgage may also arise where there is a receipt for the mortgage money endorsed on the mortgage deed and the money appears to have been paid by a person who is not entitled to the immediate equity of redemption (section 115(2), LPA 1925) (a receipt endorsed on a mortgage generally operates as a discharge of the mortgage (subject to the requirements of the LRA 2002) in the case of registered land) (section 115(1), LPA 1925)). On transfers of portfolios of mortgages, see LR Practice Guide 32 - Applications affecting one or more Land Registry Office and LR Practice Guide 33 - Large scale applications (calculation of fees). Sub-mortgages A sub-mortgage is a mortgage of a mortgage; in economic terms the (head) mortgagee charges the debt and interest stream receivable under the (head) mortgage in favour of the sub-mortgagee: The (head) mortgagee lends the debtor 100, the debtor charges its property, agrees to pay interest of 10 a year and to repay the 100 in due course. The sub-mortgagee then lends the (head) mortgagee 100. The (head) mortgagee charges the mortgage for 100, agrees to pay interest of 10 a year and to repay the 100 in due course. A sub-mortgage may also be used in respect of part only of the debt. Sub-mortgages can be used as the legal basis of securitisations of portfolios of residential mortgages. In unregistered land a sub-mortgage may be effected by assignment or by sub-demise, depending on how the (head) mortgage has been effected. They are not registrable as land charges and do not trigger first registration (section 17, LCA 1972). In registered land, a sub-mortgage may only be effected by way of sub-charge of the indebtedness secured by the (head) mortgage; other forms of sub-mortgages (for example, a sub-mortgage by sub-demise) are precluded (section 23(2) and (3), LRA 2002). The sub-charge must be registered in the charges register in order to take effect as a legal sub-charge (sub-charge certificates will not be issued) (section 59(3) and paragraph 11, Schedule 2, LRA 2002).
Regulation of mortgages
Financial Services and Markets Act 2000 The Financial Services and Markets Act 2000 (FSMA 2000) regulates the following through the Financial Services Authority (FSA): Regulated mortgage contracts (RMCs). Home reversion plans (HRPs) (equity release products that involve sale and lease arrangements). Home purchase plans (HPPs) (also equity release products that involve sale and lease arrangements).
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It is not just lending and administration relating to RMCs, HRPs and HPPs that the FSA regulates. The FSA also regulates the marketing and sale of these products. Anyone carrying on any of the activities relating to these regulated products that fall within the scope of the FSMA 2000 must be authorised to do so by the FSA. They must comply with rules and principles in the FSAs Handbook, that cover all aspects of a firms business, from interaction with customers and potential customers, to financial requirements and the systems and controls in place to ensure compliance. The main FSA rules that dictate how firms carrying on regulated business relating to these products should interact with customers and potential customers are found in the Mortgages and Home Finance: Conduct of Business sourcebook (known as MCOB). One of the FSAs current supervisory priorities is to ensure that all regulated organisations treat their customers fairly. In particular, in the mortgage market, the FSA is looking to see if organisations treat their customers fairly in relation to their arrears management and responsible lending practices. The FSA can take enforcement action against organisations that do not treat their customers fairly. In some cases, significant fines have been imposed. For further information, see: Practice note, FSMA overview. Legal update, Revised regulations and rules for 2004 mortgage regulation. Legal update, FSA publishes policy statement and final rules on regulation of home reversion and home purchase plans. Practice note, Help for residential borrowers struggling with mortgage repayments: Safeguards: FSA regulation of first charge lenders. For details of the FSAs proposals for major reforms to the UK mortgage market, see Legal update, FSA mortgage market review: discussion paper (detailed update). FSA regulation results in a significant regulatory burden for these firms and organisations. For more detailed information, see PLC Financial Services. Consumer Credit Act 1974 The Consumer Credit Act 1974 (CCA 1974) regulates certain mortgages. If regulated, the mortgage: Must be in a form prescribed by the CCA 1974. Can only be enforced by a court order. The CCA 1974 has been substantially amended by the Consumer Credit Act 2006 (CCA 2006). For example, see the press release, OFT: OFT welcomes major changes to consumer credit licensing regime. In particular, the CCA 2006: Gives the Office of Fair Trading (OFT) new powers and greater flexibility to regulate mortgages in a risk-based way.
38
Makes it more difficult for a business to get, and keep, a Consumer Credit Act licence, and so makes compliance with OFT guidance more significant. Removed (on 6 April 2008) the 25,000 cap on mortgages that could be regulated under the CCA 1974, which means that, potentially, all loans made on or after 6 April 2008 to individuals or small partnerships will be regulated under the CCA 1974. Introduces new exemptions from the CCA 1974 regime for loans made for business purposes and credit advanced to high net worth borrowers. Further changes will be made to ensure compliance with new EU requirements in connection with consumer credit, which were adopted in 2008. In times of an economic downturn consumers often seek to challenge the terms of loan agreements they have entered into. The CCA 1974 is a complicated piece of legislation which prescribes specific terms and requirements. The CCA 1974 is often difficult to follow as it is supported by various accompanying regulations and has been amended considerably. These factors render it liable to challenge in the courts. For examples of two unsuccessful challenges, see Legal updates, Whether a mortgage was a multiple agreement under the Consumer Credit Act 1974 (Court of Appeal) and Another challenge to a credit agreement regulated by the Consumer Credit Act 1974. For more detailed information on the consumer credit regime, see PLC Financial Services. Unfair Terms in Consumer Contracts Regulations 1999 The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR 1999) apply to mortgages made between the following: A natural or legal person acting in the course of its business (for example, a commercial lender). A consumer (that is, a natural person not acting in the course of their business). The UTCCR 1999 provides that: All the written terms of the mortgage contract must be expressed in plain, intelligible language (regulation 7, UCTTR 1999). A term of the mortgage contract will not be binding on the consumer (borrower) if it has not been individually negotiated and is unfair (within the meaning of the UCTTR 1999) (regulations 5 and 8, UCTTR 1999).
Money laundering and anti-terrorist financing regulations and mortgage fraud

Money laundering involves concealing the identity of illegally obtained money so that it appears to have come from a lawful source. In addition to money laundering, there is increasing financial regulation to help prevent financing of terrorist activities. The key offences in the UK are contained in the following legislation:
The Proceeds of Crime Act 2002 (POCA 2002), as amended by the Serious Organised Crime and Police Act 2005 (SOCPA 2005). The Terrorism Act 2000 (TA 2000), as amended by the Anti-Terrorism, Crime and Security Act 2001. The Money Laundering Regulations 2007 (MLR 2007), which repealed and replaced the Money Laundering Regulations 2003 (MLR 2003). HM Treasury publish and administer UK financial sanctions legislation. Failure to comply with this legislation is a criminal offence. For more information, see Article, When two worlds collide: financial sanctions in the UK and the US. Note that the requirement to comply with the regulations and sanctions is not confined to banks. Law firms and many other institutions may be liable to comply with the requirements. For further information see: Practice note, Money laundering: overview. Practice note, Anti-money laundering measures for lawyers: the 2007 rules. Legal updates, Law Society publishes Mortgage Fraud practice note and Law Society updates Mortgage Fraud practice note. Incentives offered to buyers of new homes must now be disclosed to lenders. Government housing initiatives: risk of mortgage fraud for conveyancers and clients. For more detailed information on the implications of the UKs financial crime regime on FSA authorised firms, see PLC Financial Services.
40
Boxes
WARNING: Read this Practice note in the light of the Land Registrys early completion policy
The Land Registry is introducing an "early completion" policy with effect from 3 August 2009. Please read this Practice note in the light of the following. Once the Law Society has issued guidance and the position has become more settled, this Practice note will be amended: Legal update, Changes to Land Registry practice: new early completion policy from 3 August 2009. Legal update, The Land Registry response to comments on the Early completion policy. Legal update, Land Registry modifies early completion policy. Legal update, A practical way forward with the "early completion" policy?. Your thoughts: Land Registry early completion policy.
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Article Information
RESOURCE INFORMATION
The fulltext is available at http://www.practicallaw.com/2-107-4640

General
Article ID: 2-107-4640 Document Generated: 18-Jan-2011 14:15:46

Jurisdiction
England http://www.practicallaw.com/topic9-103-0624 Wales http://www.practicallaw.com/topic4-103-1070

Subject
Mortgages and security: land and buildings http://www.practicallaw.com/topic1-103-1321 Security and quasi security http://www.practicallaw.com/topic6-103-1106 Property finance http://www.practicallaw.com/topic1-201-5202 Insolvency: land and buildings http://www.practicallaw.com/topic1-103-1316 Restructuring and insolvency http://www.practicallaw.com/topic9-103-2072
References
Financial Services and Markets Act 2000 (http://www.practicallaw.com/0-106-4864) Stamp duty land tax (http://www.practicallaw.com/0-107-3726) Cautions against first registration under the Land Registration Act 2002 (http://www.practicallaw.com/0-107-4542) Bond (http://www.practicallaw.com/0-107-6503) Waiver of solicitor's lien by a legal charge (http://www.practicallaw.com/0-200-3756) Consumer Credit Act 2006 (http://www.practicallaw.com/0-202-1958) Perfection of security over freehold and leasehold property: Formalities (http://www.practicallaw.com/0-378-8459) Land Registry modifies early completion policy (http://www.practicallaw.com/0-386-2703) FSA mortgage market review: discussion paper (detailed update) (http://www.practicallaw.com/0-500-5554) Third Land Registry consultation on e-conveyancing legislation (http://www.practicallaw.com/0-501-8684)
Land Registry changes identity requirements for attorneys (http://www.practicallaw.com/0-502-7184) Contracts: capacity: Companies Act companies (http://www.practicallaw.com/1-107-3962) Insurance policy (http://www.practicallaw.com/1-107-6277) Lien (http://www.practicallaw.com/1-107-6319) Law Society publishes Mortgage Fraud practice note (http://www.practicallaw.com/1-381-1360) CLLS Certificate of title (long form) (http://www.practicallaw.com/W1557) The requirement for written land contracts and section 2 of the LP(MP)A 1989 (http://www.practicallaw.com/A16079) Implied covenants for title (http://www.practicallaw.com/A16096) Execution of deeds and documents (http://www.practicallaw.com/A16545) Misrepresentation (http://www.practicallaw.com/A16588) Holder of registered equitable charge can claim relief from forfeiture by claiming in tenant's shoes (http://www.practicallaw.com/A16602) The duties of a mortgagee in possession are in equity and subject to a six year limitation period (http://www.practicallaw.com/A16790) Landlord's consent for dealings with a lease and the Landlord and Tenant Act 1988 (http://www.practicallaw.com/A16911) The day list, priority searches and outline applications (http://www.practicallaw.com/A17410) Law Commission report on reform of limitation periods (http://www.practicallaw.com/A19693) Execution: capacity (http://www.practicallaw.com/A19741) Taking security (http://www.practicallaw.com/2-107-4032) Protection of third party rights under the Land Registration Act 2002 (http://www.practicallaw.com/2-107-4621) Charge (http://www.practicallaw.com/2-107-5890) Pledge (http://www.practicallaw.com/2-107-7016) The Money Laundering Regulations 2007 SI 2007/2157 (http://www.practicallaw.com/2-374-2012) Your thoughts: Land Registry early completion policy (http://www.practicallaw.com/2-385-9243)
43
The Land Registry response to comments on the Early completion policy (http://www.practicallaw.com/2-386-2575) Consultation on prohibiting lenders from selling residential property without a court order or the borrower's consent (http://www.practicallaw.com/2-501-1484) Further consultation on new regulatory handbook proposed by the SRA (http://www.practicallaw.com/2-503-7337) Companies House security form changes (http://www.practicallaw.com/2-504-3404) Guarantees by individuals vitiated by undue influence (http://www.practicallaw.com/A20164) Undue influence - House of Lords restates the law and gives guidance to banks and solicitors (http://www.practicallaw.com/A20186) Practical guidance from the House of Lords for banks and solicitors dealing with guarantees by individuals (http://www.practicallaw.com/A20189) Corporate insolvency: a guide (http://www.practicallaw.com/A20395) Insolvency: reviewable transactions (http://www.practicallaw.com/A20502) FSMA overview (http://www.practicallaw.com/A20660) Companies House Forms List (http://www.practicallaw.com/W2197) Gaming rules (http://www.practicallaw.com/A23413) Law Society guidance on accepting undertakings to discharge a mortgage (http://www.practicallaw.com/A24225) Limitation periods for suing on mortgage debts (http://www.practicallaw.com/A25350) Revised regulations and rules for 2004 mortgage regulation (http://www.practicallaw.com/A25438) Environment Act 1995 (http://www.practicallaw.com/W2548) Limitation periods for suing on mortgage debts (http://www.practicallaw.com/A28521) Overriding interests and the Land Registration Act 2002 (http://www.practicallaw.com/A28576) Undue influence and the Etridge guidelines (http://www.practicallaw.com/A29497) Statutory guidance on the contaminated land regime under Part IIA of the EPA 1990 (DETR Circular 2/2000) (http://www.practicallaw.com/W2996) Investigating the property: Title investigation (http://www.practicallaw.com/3-101-3397) Interest on equitable charges in the absence of contractual right (http://www.practicallaw.com/3-101-5396)
Weblink (http://www.practicallaw.com/3-106-6734) The requirement for written land contracts and section 2 of the LP(MP)A 1989 (http://www.practicallaw.com/3-107-3777) LR Practice Guide 63 - Land Charges - Applications for registration, official search, office copy and cancellation (http://www.practicallaw.com/3-200-7871) Another challenge to a credit agreement regulated by the Consumer Credit Act 1974 (http://www.practicallaw.com/3-500-9089) Duty owed by receiver on sale of mortgaged property (http://www.practicallaw.com/A33470) Application for registration of a Land Charge (http://www.practicallaw.com/W3430) Application for an official search (Not applicable to registered land) (http://www.practicallaw.com/W3435) Application for registration of a Priority Notice (http://www.practicallaw.com/W3443) CML agrees to limit mortgage shortfall recovery to 6 years - news release (CML) (http://www.practicallaw.com/W3669) CML Lenders' Handbook for Conveyancers (http://www.practicallaw.com/W3678) Contaminated land - the Law Society's warning card (Law Society) (http://www.practicallaw.com/W3721) LR Practice Guide 12 - Official searches and outline applications (http://www.practicallaw.com/W3752) LR Practice Guide 31 - Discharges of charges (http://www.practicallaw.com/W3766) LR Practice Guide 36 - Administration and Receivership (http://www.practicallaw.com/W3768) Application to change the register (http://www.practicallaw.com/W3809) Form CH1 - Legal charge of a registered estate (http://www.practicallaw.com/W3816) Cancellation of entries relating to a registered charge (http://www.practicallaw.com/W3830) Application to cancel entries relating to a registered charge (http://www.practicallaw.com/W3831) Release of part of the land from a registered charge (http://www.practicallaw.com/W3832) Application to withdraw a caution (http://www.practicallaw.com/W3876) LR Practice Guide 30 - Approval of mortgage documentation (http://www.practicallaw.com/W3966)
45
LR Practice Guide 32 - Applications affecting one or more Land Registry Office (http://www.practicallaw.com/W3967) LR Practice Guide 33 - Large scale applications (calculation of fees) (http://www.practicallaw.com/W3968) Money laundering: overview (http://www.practicallaw.com/4-102-5253) First registration of title under the Land Registration Act 2002 (http://www.practicallaw.com/4-107-4451) Easements - The law, registration requirements and transaction issues (http://www.practicallaw.com/4-107-4465) Proceeds of Crime Act 2002 (http://www.practicallaw.com/4-201-8082) *DO NOT PUBLISH Confirmation of identity: Land Registry requirements (http://www.practicallaw.com/4-383-9414) Help for residential borrowers struggling with mortgage repayments (http://www.practicallaw.com/4-422-4476) Whether a mortgage was a multiple agreement under the Consumer Credit Act 1974 (Court of Appeal) (http://www.practicallaw.com/4-500-6981) The Building Societies (Financial Assistance) Order 2010 is published on OPSI (http://www.practicallaw.com/4-501-9709) CRC Energy Efficiency Scheme: issues for finance transactions (http://www.practicallaw.com/4-502-0736) Secured Lending Reform Bill published (http://www.practicallaw.com/4-503-6799) An agreement to create a charge is treated as constituting an equitable charge (http://www.practicallaw.com/A40274) Financial assistance: charge to secure funding for loan to purchaser (http://www.practicallaw.com/A41122) Transactions at an undervalue (http://www.practicallaw.com/A43288) Ordinary course of business (http://www.practicallaw.com/A43290) LR Practice Guide 29 - Registration of legal charges and deeds of variation of charge (http://www.practicallaw.com/5-106-6733) Indemnity (http://www.practicallaw.com/5-107-6256) Investigation of property (http://www.practicallaw.com/5-201-2560) Environmental issues in finance transactions: overview (http://www.practicallaw.com/5-202-2489)
FSA publishes policy statement and final rules on regulation of home reversion and home purchase plans (http://www.practicallaw.com/5-205-5795) OFT: OFT welcomes major changes to consumer credit licensing regime (http://www.practicallaw.com/5-381-2697) locator (http://www.practicallaw.com/5-383-2049) Human rights challenge to sale by receivers appointed by mortgagee (http://www.practicallaw.com/5-383-7886) A practical way forward with the "early completion" policy? (http://www.practicallaw.com/5-386-2970) Court of Appeal considers effect of part payment of debt for limitation purposes (http://www.practicallaw.com/5-501-8417) Possession proceedings, mental incapacity and actual occupation (Court of Appeal) (http://www.practicallaw.com/5-502-1603) Investigating the property (http://www.practicallaw.com/6-101-3273) Redemption of mortgages, clogs, collateral advantages and consolidation (http://www.practicallaw.com/6-107-3950) Exempt information documents (http://www.practicallaw.com/6-107-4898) Guarantee (http://www.practicallaw.com/6-107-6675) Solicitors' Code of Conduct 2007 - Solicitor acting for a lender and a borrower in a conveyancing transaction (http://www.practicallaw.com/6-367-8976) Electronic notification of discharge (END) service withdrawn from 3 January 2010 (http://www.practicallaw.com/6-501-0208) LR Practice Guide 67 - Evidence of identity - conveyancers (http://www.practicallaw.com/6-503-3870) Unfair Terms in Consumer Contracts Regulations 1999 (http://www.practicallaw.com/7-106-6510) LR Practice Guide 03 - Cautions against first registration (http://www.practicallaw.com/7-106-6713) When two worlds collide: financial sanctions in the UK and the US (http://www.practicallaw.com/7-372-9999) Anti-money laundering measures for lawyers: the 2007 rules (http://www.practicallaw.com/7-379-1378) Charging order (http://www.practicallaw.com/7-382-6151)
locator (http://www.practicallaw.com/7-383-3043) Consultation on changes to land registration legislation to include alternative business structures (http://www.practicallaw.com/7-504-1836) Terrorism Act 2000 (http://www.practicallaw.com/8-106-5548) Mortgage (http://www.practicallaw.com/8-107-6863) Court of Appeal upholds High Court decision denying bank the right to recover possession of mortgaged property (http://www.practicallaw.com/8-380-7741) http://property.practicallaw.com/8-381-2549 (http://www.practicallaw.com/8-381-2549) Financial assistance: 1 October 2009 (http://www.practicallaw.com/8-382-5504) Contaminated land regime: a quick guide (http://www.practicallaw.com/8-382-8300) Land Registration (Amendment) Rules 2008 (http://www.practicallaw.com/8-382-8710) Law Society updates Mortgage Fraud practice note (http://www.practicallaw.com/8-385-6468) LSB: The Lending Code (http://www.practicallaw.com/8-500-6502) Priority between lenders and occupiers under sale and rent back scheme (http://www.practicallaw.com/8-504-4090) Money Laundering Regulations 2003 (http://www.practicallaw.com/9-106-7368) Investigating the property: The survey (http://www.practicallaw.com/9-107-3784) Bank guarantee (http://www.practicallaw.com/9-200-1381) Guarantees and indemnities (http://www.practicallaw.com/9-200-1437) Taking security over freehold and leasehold property (http://www.practicallaw.com/9-378-7525) Changes to Land Registry practice: new early completion policy from 3 August 2009 (http://www.practicallaw.com/9-386-0832) Bank left without security after it failed to make enquiries of occupier (http://www.practicallaw.com/9-500-9449) High Court tells RBS it cannot rely on sham sale process to price CDO collateral (http://www.practicallaw.com/9-504-2241)
Practical Law Publishing Limited, Practical Law Company 1990 http://www.practicallaw.com. Subscription enquiries +44 (0)20 7202 1210 or email subscriptions@practicallaw.com
2010.
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