Q&As

A mortgagee in possession has sold a property at auction. The mortgagee's charge is dated 20 February 2008. There is an equitable charge created by an interim charging order in favour of a second lender, registered on the 25th October 2010. Will the sale by the mortgagee in possession overreach the subsequent equitable charge and if so, will the equitable charge simply fall away or should the purchaser take any further steps to remove it from the register?

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Published on LexisPSL on 27/04/2020

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • A mortgagee in possession has sold a property at auction. The mortgagee's charge is dated 20 February 2008. There is an equitable charge created by an interim charging order in favour of a second lender, registered on the 25th October 2010. Will the sale by the mortgagee in possession overreach the subsequent equitable charge and if so, will the equitable charge simply fall away or should the purchaser take any further steps to remove it from the register?

By section 104 of the Law of Property Act 1925 (LPA 1925), a mortgagee exercising a power of sale may convey the property sold free from all estate, interests and rights to which the mortgage has priority, but subject to all estates, interests and rights which have priority to the mortgage. By LPA 1925, s 105 the proceeds of sale (after the costs of meeting any prior incumbrance, the costs of sale and discharge of the

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