Repossession questioned by deeds not being signed

[bhall]

Perhaps Applecart could explain - I'm really interested to know

 

This has been previously posted (indicates desired outcome maybe)

 

 

14 It is in accord with Halsbury’s Law of England, 4th edition 1975 volume 12, para 1360 to find that where the Respondent has benefited from an un-executed deed to say that it is liable to give effect to all the conditions on which the benefit was expressed by the deed to be conferred as more fully set out below:

 

“….where a party named in a deed has without executing the deed, accepted some benefit under it, that person must give effect to all the conditions on which the benefit was expressed by the deed to be conferred, and so must perform all the covenants and stipulations on their part contained in the deed”

 

15 Halsburys Law cited above is in accord with the Torts (interference with Goods) Act 1977 section 3 (2) to find that the applicant is entitled to indemnity against the Respondent due to all benefit it derived as more fully set out in the application at para ‘4’.

 

 

16 The Chamber is humbly requested to give effect to the applicants application and order that the deed is set aside; the register be rectified and find that an indemnity by way of restitution is to be determined and awarded in favor of the applicant.

 

The applicant believes the statements herein are true.

 

Signed:

 

Dated:

 

 

 

The above draft is made available with the normal caveats.

 

Apple

 

However, the interpretation based upon a partial extract (found via a law commission's report, which in turn quotes an older edition of Halsbury's) from Halsbury's is incorrect.

 

what Halsbury's actually says is (well at least this edition)

 

 

Halsbury's Laws of England/DEEDS AND OTHER INSTRUMENTS (VOLUME 13 (2007 REISSUE))/1. DEEDS/(4) EFFECT OF A DEED/64. Accepting benefit without execution.

 

64. Accepting benefit without execution.

 

Where a person named in some deed, whether as a party to it or not, has, without executing the deed, ac-cepted some benefit thereby assured to him, he is obliged to give effect to all the conditions on which the benefit was therein expressed to be conferred; and he must, therefore, perform or observe all covenants or stipulations on his part which are contained in the deed, and on the performance or observance of which the benefit conferred was meant to be conditional1. For example, a mortgagee who has made a loan on mort-gage, but has not executed the mortgage deed (which has been executed by the mortgagor only), is bound to give effect to a proviso contained in the deed for reduction of the rate of interest on punctual payment, or for allowing the loan to remain on the mortgage for a certain term2. If a person enters into land under an assurance made to him by deed (which he has not executed) for a term of years, for his life or in tail, and it subsequently appears that the grantor who made the assurance had no rightful title to the land, the person who has so entered is estopped from asserting, against the remainderman under the deed, a possessory title to the land as derived from his own wrongful entry and the effect of the Limitation Act 19803, even though he may be able to set up such a title against the original rightful owner4. Where a company takes the benefit of an apprenticeship agreement which it has not executed, it will be taken to have adopted it and will be bound by it5.

 

 

1 YB 38 Edw 3, 8a; YB 45 Edw 3, 11, (pl 7); YB 8 Edw 4, 8b; Littleton's Tenures s 374; Bro Abr, Dette (38, 80), Obligation (13, 14, 27); 1 Dyer 13b, pl 65; Co Litt 230b and n (1); Brett v Cumberland (1619) 2 Roll Rep 63; R v Houghton-le-Spring (1819) 2 B & Ald 375; Webb v Spicer (1849) 13 QB 886 at 893 (on appeal sub nom Salmon v Webb and Franklin (1852) 3 HL Cas 510); Linwood v Squire (1850) 5 Exch 234 at 236; Macdonald v Law Union Insurance Co (1874) LR 9 QB 328 at 330 and 332; Aspden v Seddon (1876) 1 Ex D 496 at 503, CA; Westhoughton UDC v Wigan Coal and Iron Co Ltd [1919] 1 Ch 159 at 174, CA; Halsall v Brizell [1957] Ch 169, [1957] 1 All ER 371. Before 1926, a grantee of land, subject to the reservation of an easement thereover, was bound, if he accepted the grant, to give effect to the reservation, though he did not execute the conveyance (May v Belleville [1905] 2 Ch 605); but now the reservation operates to create the legal estate reserved without execution of the conveyance by the grantee (see the Law of Property Act 1925 s 65(1); and PARA 239 post).

 

2 See note 1 supra; and Morgan v Pike (1854) 14 CB 473 at 483-486.

 

3 See the Limitation Act 1980 ss 15, 17 (as amended), Sch 1 (as amended); and LIMITATION PERIODS.

 

4 Dalton v Fitzgerald [1897] 2 Ch 86, CA; cf the Limitation Act 1980 Sch 1 (as amended) (see LIMITATION PERIODS); and see Littleton's Tenures s 374.

 

5 McDonald v John Twiname Ltd [1953] 2 QB 304, [1953] 2 All ER 589, CA.

 

 

 

Nothing about indemnity - rather it says - "For example, a mortgagee who has made a loan on mort-gage, but has not executed the mortgage deed (which has been executed by the mortgagor only), is bound to give effect to a proviso contained in the deed for reduction of the rate of interest on punctual payment, or for allowing the loan to remain on the mortgage for a certain term" it would appear to suggest the loan would continue on the agreed term

[citizenB]

Just called and spoken with the Property Chamber and they say the decision for the case references they previously gave me, is still expected after 20 Feb - It will then take a few days to appear on their website - So hopefully by the end of the month / early next month - we will know what the Property Chamber has to say on this issue, once and for all.

 

 

Yes, please.. only post a couple of extracts with a link to the decision on the Chamber's website. PLEASE DO NOT POST THE WHOLE DECISION ON CAG !!

[Peterbard]

There is number of questions. Firstly just because the deed is void does that mean that the charge is also void.

 

Secondly because the charge/ deed is void does that mean that the loan agreement is unenforceable.

 

I read that most lenders who foreclose on properties do not use their common law rights under the deed to re possess, even though they can. They prefer to enforce the agreement in court and use the judgment to obtain a warrant to evict and take vacant possession.

 

This leads me to believe that there are more options available to a lender than just the ones under the LOPA.

[bhall]

Yes, please.. only post a couple of extracts with a link to the decision on the Chamber's website. PLEASE DO NOT POST THE WHOLE DECISION ON CAG !!

 

lol I promise not to post the whole decision

[fletch70]

Sorry to ask again but is the the possibility of a costs award against the losing side or is it similar to the small claims track where costs are rarely awarded.

 

Ben , just tell us if your towel is still clean and dry

[bhall]

Sorry to ask again but is the the possibility of a costs award against the losing side or is it similar to the small claims track where costs are rarely awarded.

 

Ben , just tell us if your towel is still clean and dry

 

Costs can be ordered - however in terms of mortgages there is also usually a term stating the borrower is liable for the lenders costs in protecting the security - so even if an order isn't made, I would not be surprised as UNRAM has been informed that costs have been added to peoples mortgages

 

As for the towel - I will have to let you know in about 10-15 days

 

This applies to courts

 

 

Halsbury's Laws of England/mortgage (VOLUME 77 (2010) 5TH EDITION)/13. COSTS, CHARGES AND EXPENSES/(1) IN GENERAL/741. Assessment of costs.

 

741. Assessment of costs.

 

The mortgagee does not need to apply for an order for those costs that he has a contractual right to recover out of the mortgage funds, and nor do those costs have to be assessed1. The mortgagor may make an application for the court to direct that an account of the mortgagee's costs be taken, and may then dispute an amount in the mortgagee's account on the basis that it has been unreasonably incurred or is unreasonable in amount2. Where a mortgagor disputes an amount, the court may make an order that the disputed costs be assessed3; and where the court assesses costs payable under the terms of the mortgage, the costs payable are, unless the contract expressly provides otherwise, to be presumed to be costs which have been reasonably incurred, and are reasonable in amount, and the court will assess them accordingly4. The court may make an order that all or part of the costs payable under the contract be disallowed if it is satisfied by the paying party that costs have been unreasonably incurred or are unreasonable in amount5.

A mortgagor is also entitled to apply for an assessment of a bill of costs rendered to the mortgagee by his solicitor if the mortgagor is liable to pay it6.

 

 

1 See Practice Direction about Costs PD 43-48 para 50.2(1), (2); and PARA 755. As to the assessment of costs payable pursuant to a contract see Civil Procedure vol 12 (2009) PARA 1806.

 

2 See Practice Direction about Costs PD 43-48 para 50.4(2); and PARA 755.

 

3 Practice Direction about Costs PD 43-48 para 50.4(3).

 

4 See CPR 48.3(1); and CIVIL PROCEDURE vol 12 (2009) PARA 1806. CPR 48.3 gives effect to the principles cited at PARA 740.

 

5 Practice Direction about Costs PD 43-48 para 50.1.

 

6 See the Solicitors Act 1974 ss 70, 71(1); and LEGAL PROFESSIONS vol 66 (2009) PARA 969 et seq. See further Re Griffith, Jones & Co (1883) 50 LT 434, CA; Re Longbotham & Sons [1904] 2 Ch 152, CA; Re Paice and Cross (1914) 58 Sol Jo 593. If such an application is made after 12 months from the delivery of the bill, or after judgment for recovery of the costs has been obtained or after it is paid, no order can be made except in special circumstances (see the Solicitors Act 1974 s 70(3); and LEGAL PROFESSIONS vol 66 (2009) PARA 974 et seq), including those which affect the mortgagor but not the mortgagee (see s 71(2); and LEGAL PROFESSIONS vol 66 (2009) PARA 973). Such an assessment is on the indemnity basis: see CPR 48.8; and CIVIL PROCEDURE vol 12 (2009) PARA 1812.

[Peterbard]

This has been previously posted (indicates desired outcome maybe)

 

 

 

However, the interpretation based upon a partial extract (found via a law commission's report, which in turn quotes an older edition of Halsbury's) from Halsbury's is incorrect.

 

what Halsbury's actually says is

 

 

Halsbury's Laws of England/DEEDS AND OTHER INSTRUMENTS (VOLUME 13 (2007 REISSUE))/1. DEEDS/(4) EFFECT OF A DEED/64. Accepting benefit without execution.

 

64. Accepting benefit without execution.

 

Where a person named in some deed, whether as a party to it or not, has, without executing the deed, ac-cepted some benefit thereby assured to him, he is obliged to give effect to all the conditions on which the benefit was therein expressed to be conferred; and he must, therefore, perform or observe all covenants or stipulations on his part which are contained in the deed, and on the performance or observance of which the benefit conferred was meant to be conditional1. For example, a mortgagee who has made a loan on mort-gage, but has not executed the mortgage deed (which has been executed by the mortgagor only), is bound to give effect to a proviso contained in the deed for reduction of the rate of interest on punctual payment, or for allowing the loan to remain on the mortgage for a certain term2. If a person enters into land under an assurance made to him by deed (which he has not executed) for a term of years, for his life or in tail, and it subsequently appears that the grantor who made the assurance had no rightful title to the land, the person who has so entered is estopped from asserting, against the remainderman under the deed, a possessory title to the land as derived from his own wrongful entry and the effect of the Limitation Act 19803, even though he may be able to set up such a title against the original rightful owner4. Where a company takes the benefit of an apprenticeship agreement which it has not executed, it will be taken to have adopted it and will be bound by it5.

 

 

1 YB 38 Edw 3, 8a; YB 45 Edw 3, 11, (pl 7); YB 8 Edw 4, 8b; Littleton's Tenures s 374; Bro Abr, Dette (38, 80), Obligation (13, 14, 27); 1 Dyer 13b, pl 65; Co Litt 230b and n (1); Brett v Cumberland (1619) 2 Roll Rep 63; R v Houghton-le-Spring (1819) 2 B & Ald 375; Webb v Spicer (1849) 13 QB 886 at 893 (on appeal sub nom Salmon v Webb and Franklin (1852) 3 HL Cas 510); Linwood v Squire (1850) 5 Exch 234 at 236; Macdonald v Law Union Insurance Co (1874) LR 9 QB 328 at 330 and 332; Aspden v Seddon (1876) 1 Ex D 496 at 503, CA; Westhoughton UDC v Wigan Coal and Iron Co Ltd [1919] 1 Ch 159 at 174, CA; Halsall v Brizell [1957] Ch 169, [1957] 1 All ER 371. Before 1926, a grantee of land, subject to the reservation of an easement thereover, was bound, if he accepted the grant, to give effect to the reservation, though he did not execute the conveyance (May v Belleville [1905] 2 Ch 605); but now the reservation operates to create the legal estate reserved without execution of the conveyance by the grantee (see the Law of Property Act 1925 s 65(1); and PARA 239 post).

 

2 See note 1 supra; and Morgan v Pike (1854) 14 CB 473 at 483-486.

 

3 See the Limitation Act 1980 ss 15, 17 (as amended), Sch 1 (as amended); and LIMITATION PERIODS.

 

4 Dalton v Fitzgerald [1897] 2 Ch 86, CA; cf the Limitation Act 1980 Sch 1 (as amended) (see LIMITATION PERIODS); and see Littleton's Tenures s 374.

 

5 McDonald v John Twiname Ltd [1953] 2 QB 304, [1953] 2 All ER 589, CA.

 

 

 

Nothing about indemnity - rather it says - "For example, a mortgagee who has made a loan on mort-gage, but has not executed the mortgage deed (which has been executed by the mortgagor only), is bound to give effect to a proviso contained in the deed for reduction of the rate of interest on punctual payment, or for allowing the loan to remain on the mortgage for a certain term" it would appear to suggest the loan would continue on the agreed term

 

Yes Ben the way i see it is this doesn't give the defaulting borrower any extra rights irrespective to the validity of the deed.

This is a measure where the borrower is protected from any sanction due to the deed being void, in that the lender is still bound by any terms of that lease. He is estopped from reneging any terms which the borrower had come to depend on as being his rights.

[IS IT ME?]

Yes Ben the way i see it is this doesn't give the defaulting borrower any extra rights irrespective to the validity of the deed.

This is a measure where the borrower is protected from any sanction due to the deed being void, in that the lender is still bound by any terms of that lease. He is estopped from reneging any terms which the borrower had come to depend on as being his rights.

 

Thank god none of you are d/j or there would be none left in homes

We will wait and see what the chamber has to say, then Ben and all his followers who by the way for some reason never had any thing to say until Ben needed help!

[Peterbard]

From apples post above

 

 

 

15 Halsburys Law cited above is in accord with the Torts (interference with Goods) Act 1977 section 3 (2) to find that the applicant is entitled to indemnity against the Respondent due to all benefit it derived as more fully set out in the application at para ‘4’.

 

http://www.legislation.gov.uk/ukpga/1977/32

 

(2)The relief is—

(a)an order for delivery of the goods, and for payment of any consequential damages, or

(b)an order for delivery of the goods, but giving the defendant the alternative of paying damages by reference to the value of the goods, together in either alternative with payment of any consequential damages, or

©damages.

 

???

[Peterbard]

Thank god none of you are d/j or there would be none left in homes

We will wait and see what the chamber has to say, then Ben and all his followers who by the way for some reason never had any thing to say until Ben needed help!

 

LOL

 

I Don't think Ben ever needed any help on here from anyone.

[sequenci]

Hey DB: Quick question. What are your views on equitable mortgages? My understanding is that, even if a legal mortgage was not possible for a paperowkr issue, the courts will just allow the mortgage to be created as an equitable instrument instead. Thoughts?

[Peterbard]

Hey DB: Quick question. What are your views on equitable mortgages? My understanding is that, even if a legal mortgage was not possible for a paperowkr issue, the courts will just allow the mortgage to be created as an equitable instrument instead. Thoughts?[/QUOT]

 

No expert on mortgages Seq.

 

I have heard of thees though, but i thought that they were no longer legall as the LRA 2002 states that all mortgages must now be registered and by way of a charge. (could be wrong in this though)

[sequenci]

I have heard of thees though, but i thought that they were no longer legall as the LRA 2002 states that all mortgages must now be registered and by way of a charge. (could be wrong in this though)

 

They're still valid The actual 'mortgage' and the actual 'charge' = two different things, no?

[Peterbard]

 

They're still valid

 

Hmm I will do some research

[Peterbard]

The actual 'mortgage' and the actual 'charge' = two different things, no?

 

Yes definitely, you can have a charge of course without there being mortgage, as per a second charge or a charging order.

 

The mortgage is about the transfer of the property rights as security.

[steampowered]

Mortgages over land are not mortgages in the technical sense of the word. They are charges, since they confer the right to sell the asset if the debt is not repaid rather than transferring ownership of the asset until the debt is repaid. It is historic legal terminology that has stuck since way back.

[bhall]

Mortgages over land are not mortgages in the technical sense of the word. They are charges, since they confer the right to sell the asset if the debt is not repaid rather than transferring ownership of the asset until the debt is repaid. It is historic legal terminology that has stuck since way back.

 

I think this explains what you are saying quite well

 

 

"Since 1925 a new form of mortgage came into being - the mortgage by legal charge. This would eventually replace the dead pledge, or mortgage by demise, as it was also known. Remember, with the standard dead pledge, the lender retains title to the land or property. But with the mortgage by legal charge, the borrower gets title to the property. At the same time, the lender has some rights over the property which ensures that the loan is repaid. In the modern mortgage, lenders have a charge over your property. This gives them the right to get paid if there is a problem with your mortgage payments. Your lender has first charge over your property"

 

This link provides some historical information (17th century) about a mortgage by demise - which of course as a result of the LRA 2002 in terms of registered land is abolished

 

https://www.nottingham.ac.uk/manuscriptsandspecialcollections/researchguidance/deedsindepth/mortgaged/demise.aspx

[Peterbard]

I found this quite instructive also

 

http://www.practicalconveyancing.co.uk/content/view/11667/1125/

 

Charge and mortgages

 

What constitutes an equitable charge? Print

 

 

Background:

 

S.2 Law of Property (Miscellaneous Provisions) Act 1989 ("LP(MP)A")

 

S.2 LP(MP)A sets out the requirements for the creation of contracts for the sale or other disposition of an interest in land. Broadly speaking, in order to be valid and enforceable, they must be in writing, contain all the terms the parties have agreed in one document (or, where contracts are exchanged, in each document) or by reference to other documents and be signed by or on behalf of all the parties to the contract.

 

Equitable charges

 

An equitable charge is created when property is expressly or constructively made liable, or specially appropriated to the discharge of a debt without there being any intention to transfer ownership of the property. In the event of non-payment of the debt, the creditor’s right of realisation is by judicial process i.e. by the appointment of a receiver or an order for sale.

 

S.53 Law of Property Act 1925

 

An equitable charge may be in writing (s.53(1)© Law of Property Act 1925) ("LPA") but is usually created by deed. Section 53(1) LPA requires a disposition of an equitable interest or trust subsisting at the time of the disposition to be in writing signed by the person making the disposition or by his agent or by will. An equitable charge can be created by express intention and terms.

 

Equitable mortgages

 

By contrast, 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 (for example it has not been created by deed or a charge in registered land has not been registered). An equitable mortgage is a contract that operates as a security and is enforceable under the equitable jurisdiction of the court. A proprietary interest in the debtor’s property is conferred, or undertaken in a binding manner to be conferred, by the debtor on the creditor.

 

Distinction between equitable mortgages and equitable Charges

 

There is a fundamental difference in the nature of an equitable charge and an equitable mortgage. The remedies available to the equitable mortgagee are more extensive than those available to the equitable chargee; in particular, an equitable chargee does not have the remedy of foreclosure. Older cases blurred the distinction between the two, but recent cases (for example, Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584) have tended to reinforce their differences. That case said that an equitable mortgage is created when the legal owner of the property constituting the security enters into some instrument or does some act which, though insufficient to confer legal title in the property upon a mortgagee, nevertheless demonstrates a binding intention to create a security in favour of the mortgagee. By contrast, an equitable charge which is not an equitable mortgage is created when property is appropriated to the discharge of a debt and confers on the chargee a right of realisation by judicial process (see above).

 

The conceptual difference between a charge and a mortgage is that, with a charge, although the land is appropriated as security for a debt, there is no conveyance to the lender. However, since 1925, it has not been possible to create a legal mortgage by means of a conveyance. Before the introduction of the Land Registration Act 2002 (the "LRA 2002"), a legal mortgage could be created by a demise (or sub-demise in the case of leasehold land) for a term of years, subject to a provision for cesser on redemption, or by a charge expressed to be by way of legal mortgage. Since the implementation of the LRA 2002 on 13th October, 2003, it has only been possible to create a legal mortgage using the second method. Unlike in the case of equitable mortgages and charges, the terms "mortgage" and "charge" in relation to legal mortgages of land have largely become interchangeable.

 

The case of Kinane v Mackie-Conteh [2004] EWHC 998 (Ch) has considered the relationship between s.53 LPA and s.2 LP(MP)A. Was the creation of an equitable charge a disposition which complied with s.53 LPA enforceable notwithstanding that it fell foul of s.2 LP(MP)A? The case concerned an equitable charge, not an equitable mortgage.

 

Facts:

 

Mr Kinane lent money to Mr Mackie-Conteh for a trading venture. Mr Kinane alleged that Mr Mackie-Conteh entered into an agreement whereby he agreed to provide security for the loan by way of a legal charge over his home. The facts surrounding this alleged agreement were in dispute, but it was accepted that the agreement did not comply with s.2 LP(MP)A. Mr Kinane tried to enforce his security to recover the debt. He claimed that the agreement created an equitable charge over the property which was enforceable because it complied with s.53 (1)© LPA. As the equitable charge conferred no ownership or interest in kind but merely gave him certain rights over the house as security for the loan, it was enforceable. Mr Mackie-Conteh claimed that the agreement did not comply with s.53(1)©; s.53(l)© presupposed there to be an existing equitable interest in place capable of being disposed of, which there was not in this case.

 

Decision:

 

The court held that the document was sufficient to create an equitable charge and was enforceable because it complied with s.53 LPA. As Fisher and Lightwood, the text book, says "An equitable charge on land or an interest in land must be in writing signed by the chargor or his agent. An instrument which creates an equitable charge and contains an agreement to create a legal mortgage, but fails to comply with the formalities for an equitable mortgage on land, will still create a valid equitable charge."

 

The court referred to the previous case of Murray v Guinness [1998]. In that case, the chargor executed a memorandum, not under seal, charging land with the repayment of a loan and undertaking to execute a legal mortgage in future. It was held that in so far as the document purported to create an equitable charge, it was valid; for the purposes of s.53(1)© LPA, the disposition was signed by the chargor and did not need to be signed by the chargee. However, in relation to that part of the agreement where the defendant agreed to enter into a legal mortgage, the agreement was a contractual obligation and accordingly should have been signed by both parties to be valid under s.2 LP(MP)A. The invalidity with regards to s.2 LP(MP)A did not strike down the whole document which was effective to create the equitable charge but not to impose the future obligation to create the legal mortgage. Furthermore, in that case, the document in question was creating an equitable charge which did not pre-exist. In Kinane, the court rejected the chargor’s claim that, for s.53 LPA to apply, there must be a pre-existing equitable interest for there to be a disposal protected by the LPA.

 

The court said that the definition of "Disposition" in s.205(1)(ii) LPA includes a conveyance and "conveyance" includes a mortgage or charge. Section 53 LPA relates to the requirements for the disposition of equitable interests and a disposition itself (rather than a contract for the disposition of an interest in land) does not need to comply with s.2. Accordingly, the agreement constituted an equitable charge, rather than an agreement to create an equitable charge, and needed to comply with s.53 LPA, not s.2 LP(MP)A. This part of the agreement was severable from the part which contained the obligation to create a legal mortgage. This obligation was void because it fell foul of s.2 LP(MP)A. Accordingly, no equitable mortgage had come into being.

 

It was clear that Mr Mackie-Conteh had consented to the charge on his property in favour of Mr Kinane to secure the loan and therefore the document was sufficient to create an equitable charge which was enforceable because it complied with s.53(1)© LPA.

 

Comment:

 

From these cases, it appears that where a person signs an agreement with the intention of granting a charge over a property in future as security for a loan, the document may be construed as an equitable charge. If it is in writing and signed, it will be enforceable even though it would not be if treated as an agreement to grant a charge because of s.2 LP(MP)A.

 

As mentioned above, one of the ways an equitable mortgage can arise is where there is an agreement to create a legal mortgage. Such an agreement must comply with s.2 LP(MP)A. Before the LP(MP)A came into force (on 27th September, 1989), an equitable mortgage could be created where the debtor merely deposited the title deeds with the lender. Sometimes, a memorandum was signed recording the deposit and the terms agreed between the lender and borrower. Since the LP(MP)A came into force, 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 agreement must comply with s.2 LP(MP)A. In other words there must be some formal contract in writing which complies with s.2 in addition to the deposit of title deeds.

 

The case of De Serville v Argee Ltd [2001] also considered the interaction between s.2 LP(MP)A and s.53 LPA. In that case, a chargor deposited title deeds with a chargee. There was an exchange of letters but these were not sufficient to comply with s.2 LP(MP)A. Accordingly, there was no valid agreement to create a legal mortgage. However, the court said that the existence of one or more documents which govern the position between the parties (e.g. the letter in this case), could constitute an immediately effective disposition of property which complied with s.53(i)LPA, as opposed to an agreement to create security. The letters might be sufficient to create the charge, and not the act of deposit of title deeds itself. There was no need for the document to use the word "charge"; any form of words, which was apt to create an immediate security, would suffice. © Allen & Overy

[sequenci]

So then squire, what do you make of it?

 

I personally feel that a lender not signing it means very little.

[bigphil61]

Hi Apple, Just a quick question if I may, did you not mention, something in regards to a deed being a speciality contract, would that be covered by section 2? BP

[Peterbard]

So then squire, what do you make of it?

 

I personally feel that a lender not signing it means very little.

 

Certainly the lender not signing the deed is not going to be an issue, there is nothing in the statute that says he should, and most deeds I have seen don't even have a space for a lenders signature. There was an issue regarding proving delivery of the document, but case law and statute say that the delivery is considered to be made when the deed is signed by the borrower, unless contrary intent can be proven I believe, so that is a dead end.

 

The only issue I can see is the agreement which may or may not be necessary to complete a legal mortgage/charge, under section 2 of the 1989 act, this does have to be signed by both parties. As I understand it though this is a requirement only for the disposition of interests in property, and would not stop the transfer of rights to the property which is enabled by the deed or the intent to transfer title .

 

If I have anything wrong here I am sure Ben will correct me, this is a new area for me and has been a steep learning curve, although V interesting.

[applecart]

Hi Apple, Just a quick question if I may, did you not mention, something in regards to a deed being a speciality contract, would that be covered by section 2? BP

 

Hi BP

 

Yes, I did.....

 

In fact it probably best to look at the 'lamb' case on the section 2 issue - I believe she may have had the chance to expand her contention - over and above the findings in 'Helden' - I suspect that she failed to distinguish the difference between the Lenders statutory duty to execute the deed under the Companies Act 2006 s.46(1)(a)(b)... this act tells any Ltd Company that if they intend to enter into an agreement by 'deed' then they need to understand that if they do not comply with s46 - it will not be a deed in their favor:

 

46Execution of deeds

 

(1)A document is validly executed by a company as a deed for the purposes of section 1(2)(b) of the Law of Property (Miscellaneous Provisions) Act 1989 (c. 34) and for the purposes of the law of Northern Ireland if, and only if—

(a)it is duly executed by the company, and

(b)it is delivered as a deed.

(2)For the purposes of subsection (1)(b) a document is presumed to be delivered upon its being executed, unless a contrary intention is proved.

 

I think that because the deed related to property - it was important for her to make reference to the LPMPA 1989 as she did - but - she should have looked to make sure to mention the fact that the 'deed' is a 'speciality contract'....just like we did in the application for Is It Me's friend.

 

Once she did that - she would then have been better placed to rely on s.2 - because then - she is drawing the Judges attention away from the 'Deed' being a 'Deed'.....and focusing on it as a 'speciality contract'.

 

At that point - she would then have to establish that the LPMPA 1989 superceded s.40 under the LPA 1925...

 

I don't know if I've said before - but s.40 was repealed - if you look at s.2 (8) LPMPA '89 - you will see it there.

 

But it is significant to know what s.40 of the LPA was all about - under that statute - the 'speciality contract' (the deed) only had to be signed by the Borrower for its legal effect - and of course - in that regard - when posters have referred to the deed as a 'unilateral' deed - and relied that on that basis - that section 53 (1) LPA 1925 applies - then this is possibly why they say so...

 

However.....if Lenders have been bld enough to rely that s.40 (albeit it is repealed) applied to the deed so that s.53 (1) applied - then it makes sense that ...... they now take on board that s.40 was repealed and new s.2 superceded it.........to the effect that when they could once rely on the borrowers signature alone......they now have to understand that as a speciality contract the deed must comply with s.2

 

I suppose you could say unilateral deeds as a speciality contract died a death with the repeal of s.40.

 

Whether the courts would accept the argument in light of 'Helden' etc is yet to be challenged...... and I haven't really analysed 'helden' other than I think I spotted in either 'helden' or 'eagle star' - could have been both - that the estate was un-registered - and in that regard the 'form of deed is immaterial' to a dealing in an un-registered estate......

 

Obviously I do not lose sight of the lenders duty to execute the deed - so that the deed on its face meets s.1(2) in regard to Lenders execution being necessary of course....

 

Or the fact that the Lender should not be seen to have a mortgage over the borrowers registered estate.

 

Apple

[Peterbard]

But Apple section 53 does apply, this is industry wide excepted practice and all the authority says it does, why would a court believe that a deed came under the auspices of section 40 ?

[applecart]

Certainly the lender not signing the deed is not going to be an issue, there is nothing in the statute that says he should, and most deeds I have seen don't even have a space for a lenders signature. There was an issue regarding proving delivery of the document, but case law and statute say that the delivery is considered to be made when the deed is signed by the borrower, unless contrary intent can be proven I believe, so that is a dead end.

 

The only issue I can see is the agreement which may or may not be necessary to complete a legal mortgage/charge, under section 2 of the 1989 act, this does have to be signed by both parties. As I understand it though this is a requirement only for the disposition of interests in property, and would not stop the transfer of rights to the property which is enabled by the deed or the intent to transfer title .

 

If I have anything wrong here I am sure Ben will correct me, this is a new area for me and has been a steep learning curve, although V interesting.

 

I wonder how you came to your conclusion that there is no issue with the lenders duty to sign the deed.

 

This thread with over 4,000 posts says there is definitely an issue ; )

 

I think you will find that the 'contrary intent' - is that the LAW says he must sign it. s.40 of the LPMPA 1989 was repealed - see LPMPA 1989 s.2 (8) for confirmation.

 

I think I understand where you are coming from though - it does take time to get up to speed

 

Apple

[bigphil61]

Hi BP

 

Yes, I did.....

 

In fact it probably best to look at the 'lamb' case on the section 2 issue - I believe she may have had the chance to expand her contention - over and above the findings in 'Helden' - I suspect that she failed to distinguish the difference between the Lenders statutory duty to execute the deed under the Companies Act 2006 s.46(1)(a)(b)... this act tells any Ltd Company that if they intend to enter into an agreement by 'deed' then they need to understand that if they do not comply with s46 - it will not be a deed in their favor:

 

46Execution of deeds

 

(1)A document is validly executed by a company as a deed for the purposes of section 1(2)(b) of the Law of Property (Miscellaneous Provisions) Act 1989 (c. 34) and for the purposes of the law of Northern Ireland if, and only if—

(a)it is duly executed by the company, and

(b)it is delivered as a deed.

(2)For the purposes of subsection (1)(b) a document is presumed to be delivered upon its being executed, unless a contrary intention is proved.

 

I think that because the deed related to property - it was important for her to make reference to the LPMPA 1989 as she did - but - she should have looked to make sure to mention the fact that the 'deed' is a 'speciality contract'....just like we did in the application for Is It Me's friend.

 

Once she did that - she would then have been better placed to rely on s.2 - because then - she is drawing the Judges attention away from the 'Deed' being a 'Deed'.....and focusing on it as a 'speciality contract'.

 

At that point - she would then have to establish that the LPMPA 1989 superceded s.40 under the LPA 1925...

 

I don't know if I've said before - but s.40 was repealed - if you look at s.2 (8) LPMPA '89 - you will see it there.

 

But it is significant to know what s.40 of the LPA was all about - under that statute - the 'speciality contract' (the deed) only had to be signed by the Borrower for its legal effect - and of course - in that regard - when posters have referred to the deed as a 'unilateral' deed - and relied that on that basis - that section 53 (1) LPA 1925 applies - then this is possibly why they say so...

 

However.....if Lenders have been bld enough to rely that s.40 (albeit it is repealed) applied to the deed so that s.53 (1) applied - then it makes sense that ...... they now take on board that s.40 was repealed and new s.2 superceded it.........to the effect that when they could once rely on the borrowers signature alone......they now have to understand that as a speciality contract the deed must comply with s.2

 

I suppose you could say unilateral deeds as a speciality contract died a death with the repeal of s.40.

 

Whether the courts would accept the argument in light of 'Helden' etc is yet to be challenged...... and I haven't really analysed 'helden' other than I think I spotted in either 'helden' or 'eagle star' - could have been both - that the estate was un-registered - and in that regard the 'form of deed is immaterial' to a dealing in an un-registered estate......

 

Obviously I do not lose sight of the lenders duty to execute the deed - so that the deed on its face meets s.1(2) in regard to Lenders execution being necessary of course....

 

Or the fact that the Lender should not be seen to have a mortgage over the borrowers registered estate.

 

Apple

 

Hi Apple, Thanks for that, very much appreciated...BP