The person a mortgage is granted to.

Property Disputes analysis: The High Court has clarified when a mortgagee becomes a landlord under the Renting Homes (Wales) Act 2016 (RH(W)A 2016) and the Housing (Wales) Act 2014 (H(W)A 2014). A lender does not become a mortgage in possession merely by obtaining a possession order against the mortgagor or purporting to serve a section 173 notice; it must assume control and management of the tenancy, ordinarily by demanding or receiving rent. Once in possession, the mortgagee becomes the immediate landlord under both statutory regimes and must satisfy the Rent Smart Wales registration and licensing requirements before serving a valid notice under RH(W)A 2016, s 173. The decision establishes a practical compliance sequence for lenders and rejects any A1P1 objection to that regulatory burden. Produced in partnership with Catrin Gregory-Wallace of Civitas Chambers.

Lenders will often take security as support for a borrower's obligations under a loan. Taking security means that they will have certain rights over the secured assets in the event that the borrower fails to repay the loan. A mortgage is one of the four types of security recognised under English law; for more information on these, see Practice Note: Types of security. This Practice Note explains: • what a mortgage is • the difference between a mortgage and a charge • the differences between a legal mortgage and an equitable mortgage • the types of assets that can be secured by way of mortgage, and • how assignments by way of security fit in with mortgages Practice Note: Introductory guide to security in a lending transaction provides more general information on security in loan transactions. It covers what security is and why lenders take security, who can provide security and over what types of assets, the types of security that can be given under English law, why and how security is perfected and the steps

Introduction This Practice Note provides an introduction to mortgages over land. It looks at when mortgages are required, the distinction between legal and equitable mortgages and the distinction between mortgages and charges. For guidance other types of security over property, see Practice Note: Types of security. For guidance in relation to entering into a new mortgage over land, see Practice Note: Mortgages and land—entering into new mortgages and legal charges of land. When is a mortgage needed? A buyer of land or property will most likely fund their acquisition by borrowing the purchase price (or the majority of it). Alternatively, an existing owner of land or property may wish to raise funds for some other purpose without selling their land or property outright. A lender may agree to lend and simply rely on the borrower’s obligation to repay the loan (this is known as ‘unsecured lending’). It the borrower defaults in repaying the loan, the lender may be able to obtain a judgment for the outstanding debt but this does

This Practice Note looks at dealing with land which is subject to a mortgage. It considers the extent of the mortgagor’s power to deal with the land, the position of a tenant where the reversion is subject to a mortgage and the need to obtain a mortgagee’s consent to dealings with the land. For content on discharging a mortgage over land, see Practice Notes: Land registration—legal and equitable charges and HM Land Registry and Commercial property—dealing with undertakings and release of security. Mortgagor’s power to deal with land Statutory powers The Law of Property Act 1925 (LPA 1925) gives a mortgagor limited statutory powers to grant leases and accept surrenders of leases. These powers may be excluded or modified except in relation to certain agricultural tenancies and business tenancies made in accordance with a court order under the Landlord and Tenant Act 1954. Mortgage covenants and conditions A mortgagor’s statutory powers apply ‘if and so far as a contrary intention is not expressed by the mortgagor and mortgagee

This Practice Note looks at the options available to a lender who wishes to take action when a borrower has failed to meet their obligations under a mortgage. It considers the following: • mortgagee’s right to possession • mortgagee’s power of sale • appointment of an LPA receiver • foreclosure • enforcement For further guidance, see also Practice Note: Enforcement—security over land. Mortgagee in possession General A legal mortgagee has the right to possession of the mortgaged property regardless of whether or not there has been any default on the part of the mortgagor. This right is set out in section 95 of the Law of Property Act 1925 (LPA 1925) but may be limited by agreement between the parties or by statute. A mortgagee’s right to possession arises as soon as the mortgage is executed and can be exercised without notice or demand and (subject to any statutory restriction) without a court order (although this is rare). Where a court order is not required, possession: • must be taken peaceably • does

This Practice Note looks at the process of entering into a new mortgage over land and property. It assumes that the property being mortgaged is a registered freehold or leasehold. It is primarily aimed at property practitioners who are acting for either a borrower or a lender or both in the context of a simple property acquisition or financing where the lender is a UK-based institutional lender. For introductory content on mortgages and legal charges, see Practice Note: Mortgages and land—an introduction to mortgages and legal charges over land. This Practice Note contains the following key sections which cover the different stages of a typical mortgage transaction. Each section links to other Lexis+®UK materials which provide more comprehensive information on the topics covered. • Legal mortgages—the loan agreement • Mortgage instructions • Acting in connection with a mortgage—preliminary matters • Complying with the mortgage conditions—pre-completion • Complying with the mortgage conditions—in readiness for completion • Completing the mortgage • Complying with the mortgage conditions—post completion For more complex property

A pool of mortgage-backed debt.

In this Practice Note, ‘borrower’ and ‘mortgagor’ are used interchangeably, as are ‘lender’ and ‘mortgagee’. This Practice Note also applies to fixed charges (although does not deal with the marginal practical distinction between a fixed charge and a mortgage—for further reading, see Practice Note: Mortgages. Priority of mortgages over registered land Where a number of loans have been secured over the same property by different mortgages, each mortgagee is entitled to be paid from the proceeds of sale according to the order of priority of the mortgages. The basic rule is that any two charges rank in the order of their creation (Millet J in Macmillan Inc v Bishopsgate Investment Trust plc (No 3)). However: • section 51 of the Land Registration Act 2002 (LRA 2002) requires a mortgage over registered land to be registered to take effect as a legal mortgage • LRA 2002, s 48 provides that mortgages rank in accordance with their order of registration—this means the order shown in the charges register for the property and

If a charity is proposing to: • mortgage (or re-mortgage on different terms) property that it owns • acquire property with mortgage finance, or • enter into a charge to secure other obligations there are a number of issues that the charity trustees must consider. There are also various additional steps that must be taken. In this context, ‘charity trustees’ means the persons having the general control and management of the administration of a charity (and so, eg will include the directors of a charitable company or the officers of a charitable unincorporated association). Power to borrow and power to mortgage The charity must have power to borrow and to mortgage its property as security for that borrowing. The power may be expressly set out in the charity’s governing document. If not, a sufficient power may arise: • under Trusts of Land and Appointment of Trustees Act 1996, s 6(8), which gives trustees of land ‘all the powers of an absolute owner’ (this includes the power to borrow money and to secure repayment of it on the

If a charity is proposing to: • mortgage property that it owns, or • acquire property with mortgage finance there are a number of issues that a prospective mortgagee needs to consider. Identifying charity land Charity land can be held by any person or group of persons. It is the nature of the purpose for which the land is held which determines whether or not it is charity land. In many instances, the land will be held by a registered charity. However, it is feasible that a company (whether limited by shares or guarantee, or incorporated under Royal Charter), a local authority, a body of trustees, an unincorporated association, a corporation sole (eg the bishop of a diocese) or a corporation aggregate (eg the master and fellows of a university) might be holding land on the terms of a charitable trust without necessarily even being aware that this is the case. For further guidance, see Practice Notes: Title to charity land, How unincorporated associations hold property and Charities—governing documents. It should be noted that for the purpose

An individual or organisation (eg a company or partnership) that borrows money from a lender (eg a bank) to finance the purchase of a property - eg an individual buying a house using a mortgage is a mortgagor. The legal or equitable title to the property (depending on the specific asset) is transferred to the lender as collateral for the loan (or mortgage).