Q&As

What are a mortgagee’s options, in the context of multiple breaches of the mortgage conditions, where the registered proprietor of a private charge has taken possession (following possession proceedings) of the security/property, but has not proceeded to then sell the property?

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Produced in partnership with Chris Snell of No 5 Chambers
Published on LexisPSL on 19/06/2018

The following Property Q&A Produced in partnership with Chris Snell of No 5 Chambers provides comprehensive and up to date legal information covering:

  • What are a mortgagee’s options, in the context of multiple breaches of the mortgage conditions, where the registered proprietor of a private charge has taken possession (following possession proceedings) of the security/property, but has not proceeded to then sell the property?
  • Introductory principles
  • Duties of mortgagee/charge holder in possession
  • Conclusion

Introductory principles

A lender holding a legal mortgage has an immediate right to possession of the property: see Four Maids Ltd v Dudley Marshall (Properties) Ltd.

Section 95(4) of the Law of Property Act 1925 reaffirms that right:

‘(4) Nothing in this Act affects prejudicially the right of a mortgagee of land whether or not his charge is secured by a legal term of years absolute to take possession of the land, but the taking of possession by the mortgagee does not convert any legal estate of the mortgagor into an equitable interest.’

Where a first mortgagee takes action following a borrower’s default, obtains possession and subsequently sells, the transfer to

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