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Found 1 result

  1. I have a residential mortgage offer that has not been signed by the lender. Is a mortgage offer - fulfilling all of the characteristics of a contract (for a disposition of land), with its own terms and conditions, subject to the Law Of Property Miscellaneous Acts 1989 section 2? If so, and if it fails to comply, is it void? Following on from this: if it the mortgage agreement is void due to technical error, is the mortgagee deed therefore void ab initio? This thread only raises questions relevant to residential mortgages. This thread makes a clear distinction between a mortgage agreement and a mortgage deed, and asserts in accord with recent legal precedent that a mortgage deed does not have to comply with the formalities of Section 2 e.g. Lamb vs Mortgage Business, and Eagle Star vs Green. This thread assumes a mortgage contract to be a contract for the creation of a future disposition as was highlighted in Section 27 of Helden v Strathmore Ltd [2011] 2 EGLR 39: http://www.bailii.org/ew/cases/EWCA/Civ/2011/542.html. The contract (agreement) therefore is a distinct legal entity from the mortgage deed, and agreement by the borrower precedes granting the charge by deed. Section 27. Mr Helden's case on section 2 is hopeless. It proceeds on a fundamental misunderstanding of the reach and purpose of that section, a misunderstanding, it is fair to say, which appears to be not uncommon. Section 2 is concerned with contracts for the creation or sale of legal estates or interests in land, not with documents which actually create or transfer such estates or interests. So a contract to transfer a freehold or a lease in the future, a contract to grant a lease in the future, or a contract for a mortgage in the future, are all within the reach of the section, provided of course the ultimate subject matter is land. However, an actual transfer, conveyance or assignment, an actual lease, or an actual mortgage are not within the scope of section 2 at all. I have two sets of terms and conditions - one for the mortgage agreement and another set for the mortgage deed. The terms for the mortgage offer define an agreement for the precise terms to be used in the mortgage deed. If the terms of the agreement are void due to failure to comply with LPMPA1989 section 2, what becomes of the terms of the deed (whose terms were assented to by contract)? It has been observed that lender community is relying on earlier precedent (following the "mortgage deed is not a contract" defense) and suggest that neither mortgage charges nor deeds are subject to section 2 (a point that this thread agrees with) as they are actual disposition not contract for the creation of the disposition. However I have yet to see a statement from a lender relating to the applicability of LPMPA1989 section 2 to the mortgage contract itself (the offer) that was used to define the terms and conditions for the presentation, terms and and execution of the deed. A standard mortgage offer clearly takes on the form and function of a contract. LPMPA1989 section 2 is here: http://www.legislation.gov.uk/ukpga/1989/34/section/2. Section (3) states: "The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract". Based on this information the questions posed here are: Is a standard residential mortgage offer/contract/agreement void if it fails to meet LPMPA1989 section 2? What is the legal status of a mortgage deed if the mortgage agreement is deemed void?
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