MORTGAGES
MORTGAGES
1. Rights/responsibilities are same in ALL mortgages (TT/OST, equitable/legal).
PENALTIES
• s93 CA: regardless of Mg, Mgor CAN pay Mg debt early and discharge BUT if use s93 ( have to pay interest on principal for the unexpired term of the Mg.
• CANNOT increase interest rate where Mgor defaults: Strode v Parker (1694). BUT can be circumvented by clause that says interest is reducible (to normal rate) if paid on time.
• If default ( principal plus interest to end of mortgage becomes immediately due/payable.
• Interest beyond day of repayment is unenforceable UNLESS genuine pre-estimate of Mgee’s anticipated loss.
• Wanner v Caruana (1974): Mg interest at 10% reducible to 9% pa to be repaid over 6 yrs. On default, all principle and 10% interest for whole of balance for 6 years due and payable.
o Held: acceleration of interest ( void as Mgee had demanded it when Mgor defaulted.
• O’Dea v All States Finance (1983): affirmed above.
o No penalty where present debt is payable either in future or in lesser amount (provided certain conditions met).
o BUT requirement that Lessee pay further lease payments after goods repossessed ( penalty/unenforceable.
POWER OF MORTGAGEE
Right to sue (personal covenant)
2. Mgee may sue Mgor for any default – personally (does not run with land).
3. If Mgee sells (upon Mgor default) ( can sue Mgor for shoftfall of funds: s100 CA.
Right to possession
• OST: 1st Mgee has legal estate ( owner. Thus: right to possession at any time, even if no default. But can be contracted out.
• TT:
o No Mgee has legal estate, only have charge: s57 RP. Thus: no right to immediate possession
o Mgee gets possession when Mgor defaults: s60 CA.
o Must comply with notice provisions s57(2)(b) RP.
Right to appoint a receiver
• On default, appoint receiver to manage profits/rents: s 109(1)(c) CA.
• Obligations/rights of receiver: s115A (eg. act in good faith, not sacrifice interests of Mgor, manage Prop, receive income etc).
Right to lease/get rent
• Can grant leases ................
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