MORTGAGES: Duties of the mortgagee which are a reflection to the fact that equity has always regarded the

mortgagor as the true owner of the property and the mortgagees rights are simply security. Statutory restrictions on the right to possession, and the way they are applied, demonstrate the same principle.

A mortgage is usually been taken out where a person wishes to buy land but in order to achieve this needs a loan. The person who receives the mortgage and has the burden is called the mortgagor and the person who provides the loan and has the benefit is called the mortgagee. The mortgagor will borrow a sum of money and will provide his property as security for that sum of money. A legal definition of a mortgage can be found in the case of Stantley v Wilde which says that a mortgage is ...a conveyance of land... as security for the payment of the debt or the discharge of some other obligation. Here, even though the first bit of the statement is now legally incorrect, what is important and efficient is that a mortgage is a security for the payment of the debt. It secures the right of the mortgagee (the lender) in case the mortgagor (the borrower) is not able to pay the debt of the loan taken. In other words, in the case where the mortgagor fails to repay the debt or is in default the mortgagee will be entitled to obtain the secured land and sell it in order to take his money back. To start with the mortgagee has certain rights regarding mortgages in order to protect his interest namely; foreclosure, sale and possession. Firstly, the mortgagee possesses the right to redeem. This will be applicable only after the pass of the legal date for redemption. The courts will give the mortgagor six months to pay off the mortgage and only if no payment is made within the six months foreclosure will be made absolute. However, foreclosure is hardly ever used. Moreover, if the mortgagor fails to repay the loan then it is likely that sale will take place. It is said that this remedy is more advantageous over foreclosure. Section 101 (1) (i) LPA 1925 states that the power of sale is implied into every mortgage made by deed. A mortgagee will be able to sell the mortgaged party if two conditions are satisfied namely; the power of sale has arisen and the power of sale has become exercisable provided that one of the conditions in s. 103 LPA has been satisfied. Additionally, according to s. 105 LPA 1925, the proceeds of sale are applied in the following order: 1) Discharge of any prior mortgage; 2) payment of costs incurred by the sale; 3) payment of mortgage debt and interest; 4) any other person so entitled and finally 5) to the borrower. The fact that the mortgagee owes to the mortgagor the remaining money from the proceeds of the sale,

empowers the opinion that the mortgagor is the actual owner of the mortgaged property and that the mortgagee has only a security interest over the property. The right to possession is old and, unless it is expressly forbidden in the contract, it is exercisable immediately as Harman J stated before the ink is dry on the mortgage Four Maids v Dudley Marshal. The courts approach is that it is not recommended for the mortgagee to exercise this right as a mortgagee in possession must account for any income or profit generated by their possession White v City of London Brewery. ++++++ However there are statutory restrictions regarding the right to possession which are to be found under s. 36 Administration of Justice Act 1970 as amended by s. 8 Administration of Justice Act 1973 and which states that an application by the mortgagee for possession may be postponed by the courts if it appears that the mortgagor would be able to pay within a reasonable period any sums due under the mortgage. Any sums due would have the meaning of the instalment which has not been paid by the mortgagor and not the whole of the debt. In addition the mortgagor must be able to pay the sums within a reasonable period. In the case of Norgan the starting point for determining the reasonable period for payment of the outstanding arrears is the outstanding term of the mortgage. The courts in deciding whether s. 8 applies have set out a number of key points such as how much the borrower afford to pay now and in the future; if it is a temporary difficulty in paying how long will that difficulty be likely to last; what was the reason for the arrears; how much remains of the original term; when is the principal due to be repaid; was it reasonable to expect the lenders to recoup the arrears over the entire term. This is only applied in mortgages of dwelling houses or in land including a dwelling house. In conclusion, taking into account what was discussed above, it can be said that the mortgagee has rights but however Equity does not regard him as the actual owner rather his rights are a security interest over the property. ++++++