Q&As

Is it possible for a mortgagee to create a sub-charge over its security and have the same registered at the Land Registry without notice to the mortgagor registered proprietor of the property?

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Published on LexisPSL on 22/12/2020

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

  • Is it possible for a mortgagee to create a sub-charge over its security and have the same registered at the Land Registry without notice to the mortgagor registered proprietor of the property?

A sub-charge is a registerable disposition under section 27(3)(b) of the Land Registration Act 2002 (LRA 2002). See also LRA 2002, s 53.

LRA 2002, s 23(2) provides that the owner of a registered charge who is the registered proprietor (or person entitled to be registered as the proprietor) has the power to charge at law, with the payment of money, the indebtedness secured by the charge. Other kinds of legal sub-mortgage are not permitted.

However, it is advisable to check the primary finance documents to ensure that there is no contractual restriction on the chargee granting a sub-charge (though in practice this sort of restriction is rare).

An example of a sub-charge or 'sub-mortgage' may be where a mortgagee borrows a sum from a sub-chargee and grants secur

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