Chapter 13 Example of a real-life mortgage agreement

Questions for students to consider

1. Why does the mortgage deed include the phrase ‘Mortgage Conditions form part of this mortgage’? What do you think these Mortgage Conditions might involve?
2. Looking at the Mortgage Deed, can you locate all the requirements of a deed as required under s1 LP(MP)A 1989?
3. What is the significance of the section of the deed headed ‘Occupier(s) Consent to Mortgage'?

Suggested Answers

1. The Mortgage Conditions contain all the essential terms governing the mortgage. These include vital matters such as what the borrower has to pay, fees, charges, when and how interest on the mortgage is charged; the rights and obligations of the borrower; what happens in the event that the borrower defaults on the mortgage and much more. Why not search online to take a look at some examples of high-street banks’ standard mortgage conditions.
2. S1 of the LPA(MP)A 1989 provides that for a document to amount to a deed, the document must (1) be in writing; (2) make clear on its face that it is intended to be a deed; (3) be validly executed as a deed, signed and witnessed. Looking at out Mortgage Deed, we can see that it is clearly in writing; described on its face (at the top) as a deed (and throughout) and, finally, it is signed and witnessed as a deed.
3. If there is an adult who is not an owner of the property but is living in (occupying) the property charged under the mortgage, the lender will only agree to advance the loan monies if this occupier signs an ‘occupier consent’ form which has the effect of ensuring any rights that the occupier may have now or in the future are postponed to that of the lender i.e. the lender’s rights will prevail. Imagine the borrower defaults on the mortgage, if an occupier has rights that are binding on the lender, the lender may be prevented from securing possession of the land and from selling it to realise its debt.

Final thought: Did anything in the mortgage deed surprise you? Did you expect to see this ‘Occupier Consent Form’? How does this deed align or diverge from what you already knew about mortgages?