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Legal Terms - consumer goods
items that are often provided for personal use or consumption. According to the Consumer Rights Act of 2015, no guarantee under which the goods are supplied may limit or exclude a manufacturer's or distributor's *business liability if consumer goods turn out to be defective due to their carelessness. Suppliers of all consumer goods are required by the Consumer Protection Act of 1987 to guarantee that the goods meet the *general safety criteria. They commit a crime if they don't.
items that are often provided for personal use or consumption. According to the Consumer Rights Act of 2015, no guarantee under which the goods are supplied may limit or exclude a manufacturer's or distributor's *business liability if consumer goods turn out to be defective due to their carelessness. Suppliers of all consumer goods are required by the Consumer Protection Act of 1987 to guarantee that the goods meet the *general safety criteria. They commit a crime if they don't.
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Legal Terms - consumer-hire agreement
An arrangement for the *bailment of goods to an individual, partnership, or other unincorporated body (the hirer); it cannot be a *hire-purchase agreement and must be able to last longer than three months. Established by an individual. Thus, hiring someone for a job is not included in the notion. Consumer Credit Act of 1974 governs consumer-hire agreements, unless they are excluded.
An arrangement for the *bailment of goods to an individual, partnership, or other unincorporated body (the hirer); it cannot be a *hire-purchase agreement and must be able to last longer than three months. Established by an individual. Thus, hiring someone for a job is not included in the notion. Consumer Credit Act of 1974 governs consumer-hire agreements, unless they are excluded.
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Legal Terms -consumer-hire business
Any enterprise involving or associated with the bailment of products pursuant to *consumer-hire agreements subject to Consumer Credit Act 1974 regulations. Except in specific cases, such as local governments, operating a consumer-hire business necessitates a license.
Any enterprise involving or associated with the bailment of products pursuant to *consumer-hire agreements subject to Consumer Credit Act 1974 regulations. Except in specific cases, such as local governments, operating a consumer-hire business necessitates a license.
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Legal Terms -consumer protection
the safeguarding of consumers, particularly by legal means (those who enter into contracts other than those used in the course of business to purchase products or services from suppliers used in the course of business). The goal of the law as it stands now is to shield customers from unfair contract provisions. They are specifically shielded from clauses that try to limit or exclude the seller's implied promises that he is authorized to sell the goods, that they match the description or sample, and that they are of appropriate quality and appropriate for their intended use. According to the Consumer Rights Act of 2015 (formerly known as the Unfair Terms in Consumer Contracts Regulation of 1999), terms in consumer contracts must be reasonable and reasonable (i.e., the parties shall not significantly differ in their rights from one another). This field is regulated by the Competition and Markets Authority. Additionally, it gives businesses specific advice on unfair terms in specific industries. The Consumer Protection from Unfair Trading Regulations of 2008 additionally include a clause prohibiting unfair *consumer trade practices. The Consumer Credit Act of 1974 protects consumers, including individual business owners, while the Consumer Protection Act of 1987 and the General Product Safety Regulations of 2005 provide provisions for the enforcement of safety requirements on goods. In addition, there are a lot of laws that are specialized to a certain product, like those that govern toy safety. According to the Consumer Rights Act of 2015, digital downloads and services have to meet certain requirements.
the safeguarding of consumers, particularly by legal means (those who enter into contracts other than those used in the course of business to purchase products or services from suppliers used in the course of business). The goal of the law as it stands now is to shield customers from unfair contract provisions. They are specifically shielded from clauses that try to limit or exclude the seller's implied promises that he is authorized to sell the goods, that they match the description or sample, and that they are of appropriate quality and appropriate for their intended use. According to the Consumer Rights Act of 2015 (formerly known as the Unfair Terms in Consumer Contracts Regulation of 1999), terms in consumer contracts must be reasonable and reasonable (i.e., the parties shall not significantly differ in their rights from one another). This field is regulated by the Competition and Markets Authority. Additionally, it gives businesses specific advice on unfair terms in specific industries. The Consumer Protection from Unfair Trading Regulations of 2008 additionally include a clause prohibiting unfair *consumer trade practices. The Consumer Credit Act of 1974 protects consumers, including individual business owners, while the Consumer Protection Act of 1987 and the General Product Safety Regulations of 2005 provide provisions for the enforcement of safety requirements on goods. In addition, there are a lot of laws that are specialized to a certain product, like those that govern toy safety. According to the Consumer Rights Act of 2015, digital downloads and services have to meet certain requirements.
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Legal Terms -Consumer
A private person conducting business in a different capacity than usual. When engaging into contracts, consumers are frequently granted more legal protection, such as the ability to cancel the agreement or avoid certain unfavorable provisions. "Consumer" is defined in a number of regulations in specific ways.
A private person conducting business in a different capacity than usual. When engaging into contracts, consumers are frequently granted more legal protection, such as the ability to cancel the agreement or avoid certain unfavorable provisions. "Consumer" is defined in a number of regulations in specific ways.
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Legal Terms - Customer-credit arrangement
a *personal credit arrangement wherein credit is extended to a single person (the debtor). Consumer Credit Act 1974, as amended by the Consumer Credit Act 2006, governs consumer credit agreements unless they are exempt. It contains provisions about business pursuits, agreement entry, issues that arise during the term of the agreement, default and termination, security, and judicial control. a loan given for business purposes to a single businessman
may be a credit agreement for consumers. The protection was no longer applicable above a certain maximum financial threshold, as it was previously.
a *personal credit arrangement wherein credit is extended to a single person (the debtor). Consumer Credit Act 1974, as amended by the Consumer Credit Act 2006, governs consumer credit agreements unless they are exempt. It contains provisions about business pursuits, agreement entry, issues that arise during the term of the agreement, default and termination, security, and judicial control. a loan given for business purposes to a single businessman
may be a credit agreement for consumers. The protection was no longer applicable above a certain maximum financial threshold, as it was previously.
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Legal Terms - consumer-credit business
Any enterprise that includes or is associated with the lending of money under *consumer-credit agreements that are subject to Consumer Credit Act 1974 regulations. Except in rare cases, such as local governments, operating a consumer credit firm requires a license.
Any enterprise that includes or is associated with the lending of money under *consumer-credit agreements that are subject to Consumer Credit Act 1974 regulations. Except in rare cases, such as local governments, operating a consumer credit firm requires a license.
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Land Law – Mortgage – The right of Possession
The right to possession
Similar to the right to payment, the right to possession typically occurs when the mortgagor defaults on the mortgage.
payments.
To make sure the property is empty before it is sold, the mortgagee might want to request possession before requesting an order of sale. In order to manage the property and bring in money to pay off the mortgagor's debts, they might also try to take ownership of it. In residential real estate, the latter is improbable because the mortgagee typically has no desire to own the property.
The mortgagee is subject to several significant obligations or restrictions if they want to pursue possession. These include:
adhering to section 6(1) of the Criminal Law Act of 1977, which states that land possession cannot be started without a court's permission and the limitations of section 36 of the Administration of Justice Act of 1970; this could offer the mortgagor a lifeline if they can convince the judge that they have a reasonable chance of repaying the debts. If so, the court can postpone the possession procedures for a fair amount of time (see Practice example). 8.6. The court's inherent authority to defer possession; although Section 36 AJA permits courts to do so, they also possess the broad equitable jurisdiction to provide a mortgagor who is behind on payments with temporary relief. However, this would typically only last for a few weeks at most. If the property is in negative equity, this inherent authority to postpone would not be applicable.
restrictions of the Family Law Act of 1996 in protecting spousal rights; once more, this gives the court the authority to delay possession if a related party ought to be included in the proceedings. This is more likely to occur in situations where one partner has registered their occupational rights under the Matrimonial Homes Act 1983 or where a cohabitee has made mortgage contributions. By doing this, the linked party will be able to participate more actively in the proceedings and, if they can show they have the financial means to pay the bills, perhaps convince the court to delay taking control.
Key term: connected person
A related person is defined as a spouse, former spouse, civil partner, former civil partner, cohabitant, or former cohabitant under S. 54(5) of the Family Law Act of 1996. By doing this, such people would be able to join the proceedings as parties and request a postponement.
Example
Bob’s monthly installments to the Tyne and Wear Building Society have become overdue. The mortgagee has filed a lawsuit to obtain a power of sale and to begin possession proceedings. Bob argues this by saying he can pay back the debt in full within a fair amount of time. He presents documentation to support his claim that he was not eligible for assistance since he is self-employed and that his job injury prevented him from working, hence he accumulated the arrears. He resumed making payments on the arrears when he just went back to work. In six months, he hopes to have all arrears settled.
Will the courts likely postpone possession using their authority under s. 36 AJA?
Based on the facts of the case of Cheltenham & Gloucester Building Society v. Norgan [1996], the court made certain recommendations that should be taken into account while deciding whether to exercise discretion to postpone proceedings. These include the amount that the mortgagor can afford to repay, the timeliness with which any short-term challenges with repayment will be remedied, the causes behind the arrears, and the pertinent conditions of the contract.
The right to possession
Similar to the right to payment, the right to possession typically occurs when the mortgagor defaults on the mortgage.
payments.
To make sure the property is empty before it is sold, the mortgagee might want to request possession before requesting an order of sale. In order to manage the property and bring in money to pay off the mortgagor's debts, they might also try to take ownership of it. In residential real estate, the latter is improbable because the mortgagee typically has no desire to own the property.
The mortgagee is subject to several significant obligations or restrictions if they want to pursue possession. These include:
adhering to section 6(1) of the Criminal Law Act of 1977, which states that land possession cannot be started without a court's permission and the limitations of section 36 of the Administration of Justice Act of 1970; this could offer the mortgagor a lifeline if they can convince the judge that they have a reasonable chance of repaying the debts. If so, the court can postpone the possession procedures for a fair amount of time (see Practice example). 8.6. The court's inherent authority to defer possession; although Section 36 AJA permits courts to do so, they also possess the broad equitable jurisdiction to provide a mortgagor who is behind on payments with temporary relief. However, this would typically only last for a few weeks at most. If the property is in negative equity, this inherent authority to postpone would not be applicable.
restrictions of the Family Law Act of 1996 in protecting spousal rights; once more, this gives the court the authority to delay possession if a related party ought to be included in the proceedings. This is more likely to occur in situations where one partner has registered their occupational rights under the Matrimonial Homes Act 1983 or where a cohabitee has made mortgage contributions. By doing this, the linked party will be able to participate more actively in the proceedings and, if they can show they have the financial means to pay the bills, perhaps convince the court to delay taking control.
Key term: connected person
A related person is defined as a spouse, former spouse, civil partner, former civil partner, cohabitant, or former cohabitant under S. 54(5) of the Family Law Act of 1996. By doing this, such people would be able to join the proceedings as parties and request a postponement.
Example
Bob’s monthly installments to the Tyne and Wear Building Society have become overdue. The mortgagee has filed a lawsuit to obtain a power of sale and to begin possession proceedings. Bob argues this by saying he can pay back the debt in full within a fair amount of time. He presents documentation to support his claim that he was not eligible for assistance since he is self-employed and that his job injury prevented him from working, hence he accumulated the arrears. He resumed making payments on the arrears when he just went back to work. In six months, he hopes to have all arrears settled.
Will the courts likely postpone possession using their authority under s. 36 AJA?
Based on the facts of the case of Cheltenham & Gloucester Building Society v. Norgan [1996], the court made certain recommendations that should be taken into account while deciding whether to exercise discretion to postpone proceedings. These include the amount that the mortgagor can afford to repay, the timeliness with which any short-term challenges with repayment will be remedied, the causes behind the arrears, and the pertinent conditions of the contract.
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Land Law – Mortgage - Power of sale
Since it is typically simpler for a mortgagee to sell a property while it is vacant, this remedy is nearly generally employed in connection with the right to possession. The majority of mortgage deeds will now always include an express power of sale to the mortgagee. If no express clause is written, the mortgagee may nonetheless use this remedy in accordance with the statutory rights provided by LPA 1925. There are two tests in this. The power of sale must first "arise," which occurs when the following circumstances are satisfied:
The mortgage is made by a deed; there is no clause specifically excluding the power of sale; the legal date of redemption has passed, which will be indicated in the mortgage conditions but is typically six months from the date the mortgage was created.
After the power of sale has arisen, the mortgagee may enforce it if the following circumstances are satisfied: the mortgagor has received notice of any default and three months have passed without the debt being fully paid; some mortgage interest is overdue and has not been paid for two months; or there has been a violation of any other provision of the mortgage.
You will therefore see that the power of sale arises when only one of these requirements is satisfied. Take a look at Practice example 8.7 for additional details on this clause.
Example
It had been two years since David bought his land. He recently missed three payments on his Tyne and Wear Building Society mortgage. They write him a letter requesting prompt payment of all outstanding balances. He has only paid back a portion of the outstanding debt after three months. Is the mortgagee now able to use its sale power?
In other words, unless otherwise stated, we can presume that the mortgage is made by deed and does not preclude the power of sale. Based on the facts, we can see that the power of sale has arisen as the legal date of redemption has passed. Three months have gone after David was notified that he had defaulted, and he has not
Important word: lawful redemption date
This phrase indicates a potential repayment date for the mortgagor, not that they are required to do so.
paid out the whole amount, allowing the mortgagee to lawfully sell David's house and exercising the power of sale.
Although the mortgagee would often apply for the right to possession as explained earlier in the chapter, it is important to note that they are not required to get a court order for sale in this manner.
Due to growing concerns about the mortgagee's potential for abuse of power, mortgagees in this situation are subject to a number of duties that have been established by case law. These duties include the need to act in good faith, which entails making an honest sale to a stranger. They are not allowed to sell the property to nominees in trust or to themselves in order to profit from the genuine market worth. To make sure their loan is settled, a mortgagee cannot merely sell the property for any price they like or for less than what it is worth. It is their responsibility to ascertain the property's actual market value. For an example of this, see Practice example 8.8.
timing and sales channel. The mortgagee still has an obligation to secure a fair price for the land, but it can typically use its discretion to decide when to sell the property and is not required to wait for the market to improve. In addition, they can decide how to sell—through a public auction or on the open market—but they have to make sure that any potential buyers are given access to all relevant information about the property.
The mortgagor may request a court order to set aside the sale or to make the mortgagee reimburse any difference between the sale price and the amount that could have been paid for the land if the mortgagee neglects to fulfill these responsibilities.
Exercise
A power of sale has emerged and is currently exercisable as a result of the events in this example
Tom notifies the bank that the property is approved for a rear extension, loft conversion, and two-story addition, all of which would raise the land's worth to
about £130,000. The mortgagee chooses to sell the house at auction, mentioning just the one-story back addition. The house sells for £120,000. Did the mortgagee have an obligation to make sure the right details were released in conjunction with the sale?
Indeed. This is based on the facts of Cuckmere Brick Co. v. Mutual Finance (1971), where the site sold for £31,000 less than its true value because it was not fully disclosed that it had planning authority to be developed into 100 apartments. Mutual Finance had disregarded its obligations to conduct the sale with reasonable care, operate in good faith, and secure a reasonable price for the land. The mortgagee was obligated to reimburse the mortgagor for the deficiency.
It is worth noting that there is no need for the mortgagee to obtain a court order for sale in this way, but they would usually apply for the right to possession as detailed earlier in the chapter.
Concerns around abuse of power of the mortgagee have arisen over the years and so certain obligations are placed on mortgagees in this position, which have been developed by case law. These obligations are:
duty to act in good faith, which means they must conduct an honest sale to an unconnected person. They cannot sell the property to themselves or to nominees in trust for themselves obtaining the true market value. A mortgagee cannot simply sell the property at any price it wants to, or at an undervalue just to ensure their debt is paid off. They have a duty to obtain the true market value of the property. See Practice example 8.8 for an illustration of this.
timing and mode of sale. The mortgagee is generally able to exercise its discretion as to when it sells the property and does not have to wait until market conditions improve, but it still maintains that duty to obtain a proper price for the land. They can also choose how to sell, whether by public auction or by selling on the open market but must ensure the full information about the property is made available to prospective purchasers.
If a mortgagee fails to comply with these obligations then the mortgagor could seek a court order for the sale to be set aside or that the mortgagee pay for any shortfall in the sale price and the price that could have been obtained for the land.
7, a power of sale has arisen and is now exercisable. Tom informs the bank that the property has planning permission granted for a two-storey extension, loft conversion and rear extension, all of which would increase the value of the land to
around £130,000. The mortgagee decides to sell the property at auction but only the single storey rear extension is mentioned and the property sells for £120,000. Did the mortgagee have a duty to ensure the correct information was published in connection with the sale?
Yes. This is based on the facts of Cuckmere Brick Co. v Mutual Finance (1971) where failure to fully publicise that the land had planning permission to build 100 flats meant the land sold for £31,000 less than it was valued at. Mutual Finance had breached its duty to act in good faith, to take reasonable care in conducting the sale and to obtain a fair and proper price for the land. The mortgagee was required to compensate the mortgagor for the shortfall.
It is worth noting that there is no need for the mortgagee to obtain a court order for sale in this way, but they would usually apply for the right to possession.
Concerns around abuse of power of the mortgagee have arisen over the years and so certain obligations are placed on mortgagees in this position, which have been developed by case law. These obligations are:
duty to act in good faith, which means they must conduct an honest sale to an unconnected person. They cannot sell the property to themselves or to nominees in trust for themselves obtaining the true market value. A mortgagee cannot simply sell the property at any price it wants to, or at an undervalue just to ensure their debt is paid off. They have a duty to obtain the true market value of the property. See Practice example 8.8 for an illustration of this.
timing and mode of sale. The mortgagee is generally able to exercise its discretion as to when it sells the property and does not have to wait until market conditions improve, but it still maintains that duty to obtain a proper price for the land. They can also choose how to sell, whether by public auction or by selling on the open market but must ensure the full information about the property is made available to prospective purchasers.
If a mortgagee fails to comply with these obligations then the mortgagor could seek a court order for the sale to be set aside or that the mortgagee pay for any shortfall in the sale price and the price that could have been obtained for the land a power of sale has arisen and is now exercisable. David informs the bank that the property has planning permission granted for a two-storey extension, loft conversion and rear extension, all of which would increase the value of the land to
around £130,000. The mortgagee decides to sell the property at auction but only the single storey rear extension is mentioned and the property sells for £120,000. Did the mortgagee have a duty to ensure the correct information was published in connection with the sale?
Yes. This is based on the facts of Cuckmere Brick Co. v Mutual Finance (1971) where failure to fully publicise that the land had planning permission to build 100 flats meant the land sold for £31,000 less than it was valued at. Mutual Finance had breached its duty to act in good faith, to take reasonable care in conducting the sale and to obtain a fair and proper price for the land. The mortgagee was required to compensate the mortgagor for the It is worth noting that there is no need for the mortgagee to obtain a court order for sale in this way, but they would usually apply for the right to possession as detailed earlier in the chapter.
Concerns around abuse of power of the mortgagee have arisen over the years and so certain obligations are placed on mortgagees in this position, which have been developed by case law. These obligations are:
duty to act in good faith, which means they must conduct an honest sale to an unconnected person. They cannot sell the property to themselves or to nominees in trust for themselves obtaining the true market value. A mortgagee cannot simply sell the property at any price it wants to, or at an undervalue just to ensure their debt is paid off. They have a duty to obtain the true market value of the property.
timing and mode of sale. The mortgagee is generally able to exercise its discretion as to when it sells the property and does not have to wait until market conditions improve, but it still maintains that duty to obtain a proper price for the land. They can also choose how to sell, whether by public auction or by selling on the open market but must ensure the full information about the property is made available to prospective purchasers.
If a mortgagee fails to comply with these obligations then the mortgagor could seek a court order for the sale to be set aside or that the mortgagee pay for any shortfall in the sale price and the price that could have been obtained for the land.
a power of sale has arisen and is now exercisable. David informs the bank that the property has planning permission granted for a two-storey extension, loft conversion and rear extension, all of which would increase the value of the land to
around £130,000. The mortgagee decides to sell the property at auction but only the single storey rear extension is mentioned and the property sells for £120,000. Did the mortgagee have a duty to ensure the correct information was published in connection with the sale?
Yes. This is based on the facts of Cuckmere Brick Co. v Mutual Finance (1971) where failure to fully publicise that the land had planning permission to build 100 flats meant the land sold for £31,000 less than it was valued at. Mutual Finance had breached its duty to act in good faith, to take reasonable care in conducting the sale and to obtain a fair and proper price for the land. The mortgagee was required to compensate the mortgagor for the shortfall.
Since it is typically simpler for a mortgagee to sell a property while it is vacant, this remedy is nearly generally employed in connection with the right to possession. The majority of mortgage deeds will now always include an express power of sale to the mortgagee. If no express clause is written, the mortgagee may nonetheless use this remedy in accordance with the statutory rights provided by LPA 1925. There are two tests in this. The power of sale must first "arise," which occurs when the following circumstances are satisfied:
The mortgage is made by a deed; there is no clause specifically excluding the power of sale; the legal date of redemption has passed, which will be indicated in the mortgage conditions but is typically six months from the date the mortgage was created.
After the power of sale has arisen, the mortgagee may enforce it if the following circumstances are satisfied: the mortgagor has received notice of any default and three months have passed without the debt being fully paid; some mortgage interest is overdue and has not been paid for two months; or there has been a violation of any other provision of the mortgage.
You will therefore see that the power of sale arises when only one of these requirements is satisfied. Take a look at Practice example 8.7 for additional details on this clause.
Example
It had been two years since David bought his land. He recently missed three payments on his Tyne and Wear Building Society mortgage. They write him a letter requesting prompt payment of all outstanding balances. He has only paid back a portion of the outstanding debt after three months. Is the mortgagee now able to use its sale power?
In other words, unless otherwise stated, we can presume that the mortgage is made by deed and does not preclude the power of sale. Based on the facts, we can see that the power of sale has arisen as the legal date of redemption has passed. Three months have gone after David was notified that he had defaulted, and he has not
Important word: lawful redemption date
This phrase indicates a potential repayment date for the mortgagor, not that they are required to do so.
paid out the whole amount, allowing the mortgagee to lawfully sell David's house and exercising the power of sale.
Although the mortgagee would often apply for the right to possession as explained earlier in the chapter, it is important to note that they are not required to get a court order for sale in this manner.
Due to growing concerns about the mortgagee's potential for abuse of power, mortgagees in this situation are subject to a number of duties that have been established by case law. These duties include the need to act in good faith, which entails making an honest sale to a stranger. They are not allowed to sell the property to nominees in trust or to themselves in order to profit from the genuine market worth. To make sure their loan is settled, a mortgagee cannot merely sell the property for any price they like or for less than what it is worth. It is their responsibility to ascertain the property's actual market value. For an example of this, see Practice example 8.8.
timing and sales channel. The mortgagee still has an obligation to secure a fair price for the land, but it can typically use its discretion to decide when to sell the property and is not required to wait for the market to improve. In addition, they can decide how to sell—through a public auction or on the open market—but they have to make sure that any potential buyers are given access to all relevant information about the property.
The mortgagor may request a court order to set aside the sale or to make the mortgagee reimburse any difference between the sale price and the amount that could have been paid for the land if the mortgagee neglects to fulfill these responsibilities.
Exercise
A power of sale has emerged and is currently exercisable as a result of the events in this example
Tom notifies the bank that the property is approved for a rear extension, loft conversion, and two-story addition, all of which would raise the land's worth to
about £130,000. The mortgagee chooses to sell the house at auction, mentioning just the one-story back addition. The house sells for £120,000. Did the mortgagee have an obligation to make sure the right details were released in conjunction with the sale?
Indeed. This is based on the facts of Cuckmere Brick Co. v. Mutual Finance (1971), where the site sold for £31,000 less than its true value because it was not fully disclosed that it had planning authority to be developed into 100 apartments. Mutual Finance had disregarded its obligations to conduct the sale with reasonable care, operate in good faith, and secure a reasonable price for the land. The mortgagee was obligated to reimburse the mortgagor for the deficiency.
It is worth noting that there is no need for the mortgagee to obtain a court order for sale in this way, but they would usually apply for the right to possession as detailed earlier in the chapter.
Concerns around abuse of power of the mortgagee have arisen over the years and so certain obligations are placed on mortgagees in this position, which have been developed by case law. These obligations are:
duty to act in good faith, which means they must conduct an honest sale to an unconnected person. They cannot sell the property to themselves or to nominees in trust for themselves obtaining the true market value. A mortgagee cannot simply sell the property at any price it wants to, or at an undervalue just to ensure their debt is paid off. They have a duty to obtain the true market value of the property. See Practice example 8.8 for an illustration of this.
timing and mode of sale. The mortgagee is generally able to exercise its discretion as to when it sells the property and does not have to wait until market conditions improve, but it still maintains that duty to obtain a proper price for the land. They can also choose how to sell, whether by public auction or by selling on the open market but must ensure the full information about the property is made available to prospective purchasers.
If a mortgagee fails to comply with these obligations then the mortgagor could seek a court order for the sale to be set aside or that the mortgagee pay for any shortfall in the sale price and the price that could have been obtained for the land.
7, a power of sale has arisen and is now exercisable. Tom informs the bank that the property has planning permission granted for a two-storey extension, loft conversion and rear extension, all of which would increase the value of the land to
around £130,000. The mortgagee decides to sell the property at auction but only the single storey rear extension is mentioned and the property sells for £120,000. Did the mortgagee have a duty to ensure the correct information was published in connection with the sale?
Yes. This is based on the facts of Cuckmere Brick Co. v Mutual Finance (1971) where failure to fully publicise that the land had planning permission to build 100 flats meant the land sold for £31,000 less than it was valued at. Mutual Finance had breached its duty to act in good faith, to take reasonable care in conducting the sale and to obtain a fair and proper price for the land. The mortgagee was required to compensate the mortgagor for the shortfall.
It is worth noting that there is no need for the mortgagee to obtain a court order for sale in this way, but they would usually apply for the right to possession.
Concerns around abuse of power of the mortgagee have arisen over the years and so certain obligations are placed on mortgagees in this position, which have been developed by case law. These obligations are:
duty to act in good faith, which means they must conduct an honest sale to an unconnected person. They cannot sell the property to themselves or to nominees in trust for themselves obtaining the true market value. A mortgagee cannot simply sell the property at any price it wants to, or at an undervalue just to ensure their debt is paid off. They have a duty to obtain the true market value of the property. See Practice example 8.8 for an illustration of this.
timing and mode of sale. The mortgagee is generally able to exercise its discretion as to when it sells the property and does not have to wait until market conditions improve, but it still maintains that duty to obtain a proper price for the land. They can also choose how to sell, whether by public auction or by selling on the open market but must ensure the full information about the property is made available to prospective purchasers.
If a mortgagee fails to comply with these obligations then the mortgagor could seek a court order for the sale to be set aside or that the mortgagee pay for any shortfall in the sale price and the price that could have been obtained for the land a power of sale has arisen and is now exercisable. David informs the bank that the property has planning permission granted for a two-storey extension, loft conversion and rear extension, all of which would increase the value of the land to
around £130,000. The mortgagee decides to sell the property at auction but only the single storey rear extension is mentioned and the property sells for £120,000. Did the mortgagee have a duty to ensure the correct information was published in connection with the sale?
Yes. This is based on the facts of Cuckmere Brick Co. v Mutual Finance (1971) where failure to fully publicise that the land had planning permission to build 100 flats meant the land sold for £31,000 less than it was valued at. Mutual Finance had breached its duty to act in good faith, to take reasonable care in conducting the sale and to obtain a fair and proper price for the land. The mortgagee was required to compensate the mortgagor for the It is worth noting that there is no need for the mortgagee to obtain a court order for sale in this way, but they would usually apply for the right to possession as detailed earlier in the chapter.
Concerns around abuse of power of the mortgagee have arisen over the years and so certain obligations are placed on mortgagees in this position, which have been developed by case law. These obligations are:
duty to act in good faith, which means they must conduct an honest sale to an unconnected person. They cannot sell the property to themselves or to nominees in trust for themselves obtaining the true market value. A mortgagee cannot simply sell the property at any price it wants to, or at an undervalue just to ensure their debt is paid off. They have a duty to obtain the true market value of the property.
timing and mode of sale. The mortgagee is generally able to exercise its discretion as to when it sells the property and does not have to wait until market conditions improve, but it still maintains that duty to obtain a proper price for the land. They can also choose how to sell, whether by public auction or by selling on the open market but must ensure the full information about the property is made available to prospective purchasers.
If a mortgagee fails to comply with these obligations then the mortgagor could seek a court order for the sale to be set aside or that the mortgagee pay for any shortfall in the sale price and the price that could have been obtained for the land.
a power of sale has arisen and is now exercisable. David informs the bank that the property has planning permission granted for a two-storey extension, loft conversion and rear extension, all of which would increase the value of the land to
around £130,000. The mortgagee decides to sell the property at auction but only the single storey rear extension is mentioned and the property sells for £120,000. Did the mortgagee have a duty to ensure the correct information was published in connection with the sale?
Yes. This is based on the facts of Cuckmere Brick Co. v Mutual Finance (1971) where failure to fully publicise that the land had planning permission to build 100 flats meant the land sold for £31,000 less than it was valued at. Mutual Finance had breached its duty to act in good faith, to take reasonable care in conducting the sale and to obtain a fair and proper price for the land. The mortgagee was required to compensate the mortgagor for the shortfall.
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Land Law - Mortgage - Appointing a receiver
A mortgagee would usually look to this remedy in commercial premises. The receiver would be appointed to take over the management of the property or premises, so receiving the rental income, paying any associated expenses and paying any surplus back to the mortgagee. These are seldom used in residential transactions due to the possible costs involved in managing the property, such as paying any expenses which are unlikely to be recoverable.
A mortgagee would usually look to this remedy in commercial premises. The receiver would be appointed to take over the management of the property or premises, so receiving the rental income, paying any associated expenses and paying any surplus back to the mortgagee. These are seldom used in residential transactions due to the possible costs involved in managing the property, such as paying any expenses which are unlikely to be recoverable.
