Court saves bank from accidental mortgage discharge—NRAM v Evans

Court saves bank from accidental mortgage discharge—NRAM v Evans

Property analysis: When will the court order rectification of an accidental mortgage discharge?

Original news

NRAM v Evans [2015] EWHC 1543 (Ch)

The dispute related to whether a loan advanced by a bank, to Mr and Mrs Evans, was secured on their property.

The bank argued that it was secured by virtue of a mortgage deed entered into in 2004 (the charge). It acknowledged that it had cancelled the registered charge in respect of the deed, by way of an e-DS1, but that this was done as a result of a mistake by the bank.

Mr and Mr Evans argued that the deed only applied to the initial loan advanced in 2004, which had been redeemed, and not to further advances - so the e-DS1 was correct.

The High Court agreed with the bank.

What were the facts of the case?

Original loan

The charge was executed by Mr and Mr Evans to secure a loan to purchase their property. A further, smaller, loan was made as an unsecured loan under the Consumer Credit Act 1974. It was unsecured as there was insufficient equity in the property to secure the entire loan. The entire loan (the 2004 loan) was, however, given one mortgage account number.

The charge provided that it secured further advances and that it would not be released until the debt was paid in full.

2005 loan - consolidation

In 2005, Mr and Mrs Evans consolidated the 2004 loan and various other borrowings with the bank by obtaining a new loan (the 2005 loan), from which the 2004 loan was redeemed. The 2005 loan was given a new account number. No further entry was made at the Land Registry.

Mr Evans accepted that he understood at the time of the 2005 loan that it was intended to be secured on the property.

Insolvency

Both Mr and

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