The following Restructuring & Insolvency guidance note Produced in partnership with Steve Innes of 4 New Square provides comprehensive and up to date legal information covering:
The duty owed by a receiver to a mortgagor when selling a property is the same as that owed by the mortgagee to a mortgagor:
in exercising his power of sale over mortgaged property a mortgagee is under a general duty to take reasonable care to obtain the true market value of the mortgaged property at the time he chooses to sell it
'True market value' is synonymous with 'the best price reasonably obtainable' and 'a proper price'
a receiver is under the same duty
this duty to take reasonable steps to obtain the best price reasonably available is an equitable duty, not a duty in negligence
Please note that this Practice Note is not concerned with duties which may be owed by receivers other than in the sale of the secured property. For further information on a receiver’s duties generally, see Practice Note: Roles, powers, functions and duties of an LPA or fixed charge receiver.
A duty is owed to the mortgagor. In fact this is really a shorthand—the duty is to all those interested in the equity of redemption.
The mortgagor’s action is for an order that the receivers account to the persons interested in the equity of redemption, for the price the receiver should have realised
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