Part 4Mortgages

Part 4—Mortgages 43—Realisation of equitable charges by the court Where an order for sale is made by the court in reference to an equitable mortgage on land the court may, in favour of a purchaser, make a vesting order conveying the land or may appoint a person to convey the land, or may create and vest in the mortgagee a legal estate in the land to enable him to carry out the sale as the case requires, in like manner as if the mortgage had been made by way of legal mortgage, but without prejudice to any incumbrance having priority to the equitable mortgage unless the incumbrancer consents to the sale. 44—Sale of mortgaged property in action for redemption or foreclosure (1) Any person entitled to redeem mortgaged property may have a judgment or order for sale instead of for redemption in an action brought by him either for redemption alone, or for sale alone, or for sale or redemption in the alternative. (2) In any action, whether for foreclosure, or for redemption, or for sale, or for the raising and payment in any manner of mortgage money, the court, on the request of the mortgagee, or of any person interested either in the mortgage money or in the right of redemption, and, notwithstanding that— (a) any other person dissents; or (b) the mortgagee or any person so interested does not appear in the action, and without allowing any time for redemption or for payment of any mortgage money, may, if it thinks fit, direct a sale of the mortgaged property, on such terms as it thinks fit, including the deposit in court of a reasonable sum fixed by the court to meet the expenses of sale and to secure performance of the terms. (3) But, in an action brought by a person interested in the right of redemption and seeking a sale, the court may, on the application of any defendant, direct the plaintiff to give such security for costs as the court thinks fit, and may give the conduct of the sale to any defendant, and may give such directions as it thinks fit respecting the costs of the defendants or any of them. (4) In any case within this section the court may, if it thinks fit, direct a sale without previously determining the priorities of incumbrancers. (5) In this section— mortgaged property shall include the estate or interest which a mortgagee would have had power to convey if the statutory power of sale were applicable. (6) For the purposes of this section the court may, in favour of a purchaser, make a vesting order conveying the mortgaged property, or appoint a person to do so, subject or not to any incumbrance, as the court thinks fit; or, in the case of an equitable mortgage, may create and vest in the mortgagee a legal estate to enable him to carry out the sale in like manner as if the mortgage had been made by way of legal mortgage. 45—Obligation to transfer instead of reconveying (1) Where a mortgagor is entitled to redeem, then subject to compliance with the terms on compliance with which he would be entitled to require a reconveyance or surrender, or in the case of registered land a transfer of the mortgage, he shall be entitled to require the mortgagee, instead of reconveying or surrendering, to assign the mortgage debt and convey the mortgaged property, or in the case of registered land to transfer the mortgage, to any third person, as the mortgagor directs; and the mortgagee shall be bound to assign, convey, or transfer accordingly. (2) The rights conferred by this section shall belong to and shall be capable of being enforced by each incumbrancer, or by the mortgagor, notwithstanding any intermediate incumbrance; but a requisition of an incumbrancer shall prevail over a requisition of the mortgagor, and, as between incumbrancers, a requisition of a prior incumbrancer shall prevail over a requisition of a subsequent incumbrancer. (3) This section shall take effect notwithstanding any stipulation to the contrary. (4) The foregoing provisions of this section do not apply in the case of a mortgagee being or having been in possession. 46—Vesting order in place of conveyance by devisee of mortgagee Where a mortgagee of land has died without having entered into possession or into the receipt of the rents and profits thereof, and the money due in respect of the mortgage has been paid to a person entitled to receive the same, or such person consents to an order for the reconveyance of the land, the court may make an order vesting the land in such person or persons in such manner and for such estate as the court may direct in any of the following cases, namely: (a) Where the representative or devisee of the mortgagee is out of the jurisdiction of the court, or cannot be found: and (b) Where the representative or devisee of the mortgagee, on demand made by or on behalf of a person entitled to require a conveyance of the land, has stated in writing that he will not convey the same, or does not convey the same for twenty-eight days next after a proper instrument conveying the land has been tendered to him by or on behalf of the person so entitled: and (c) Where it is uncertain which of several devisees of the mortgagee, was the survivor: and (d) Where it is uncertain as to the survivor of several devisees of the mortgagee, or as to the representative of the mortgagee, whether he is living or dead: and (e) Where there is no representative of a mortgagee who has died intestate as to the land, or where the mortgagee has died and it is uncertain who is his representative or devisee. 47—Powers incident to estate or interest of mortgagee (1) A mortgagee, where the mortgage is made by deed, shall, by virtue of this Act, and in the case of registered land by virtue of the Real Property Act 1886 and of this Act, have the following powers, to the like extent as if they had been in terms conferred by the mortgage deed, but not further, namely: (a) A power, when the mortgage money has become due, to sell, or to concur with any other person in selling, the mortgaged property, or any part thereof, either subject to prior charges or not, and either together or in lots, by public auction or by private contract, and for a sum payable either in one sum or by instalments, subject to such conditions respecting title, or evidence of title, or other matter, as he, the mortgagee, thinks fit, with power to vary any contract for sale, and to buy in at an auction, or to rescind any contract for sale, and to re-sell, without being answerable for any loss occasioned thereby, with power to make such roads, streets, and passages and grant such easements of right of way or drainage over the same as the circumstances may require and he thinks fit; and (b) A power, at any time after the date of the mortgage deed, to insure and keep insured against loss or damage by fire any building, or any effects or property of an insurable nature, whether affixed to the freehold or not, being or forming part of the property which or an estate or interest wherein is mortgaged, and the premiums paid for any such insurance shall be a charge on the mortgaged property or estate or interest, in addition to the mortgage money, and with the same priority, and with interest at the same rate, as the mortgage money; and (c) A power, when the mortgage money has become due, to appoint a receiver of the income of the mortgaged property, or any part thereof; or, if the mortgaged property consists of an interest in income, or of a rent charge or an annual or other periodical sum, a receiver of that property or any part thereof. (2) The power of sale aforesaid shall include the following powers is incident thereto, namely: (a) A power to impose or reserve or make binding, as far as the law permits, by covenant, condition, or otherwise, on the unsold part of the mortgaged property or any part thereof, or on the purchaser and any property sold, any restriction or reservation with respect to building on or other user of land, or with respect to mines and minerals, or for the purpose of the more beneficial working thereof, or with respect to any other thing: (b) A power to sell the mortgaged property, or any part thereof, or all or any mines and minerals apart from the surface— (i) With or without a grant or reservation of rights of way, rights of water, easements, rights and privileges for or connected with building or other purposes in relation to the property remaining unsold or any part thereof, or to any property sold; and (ii) With or without an exception or reservation of all or any of the mines and minerals in or under the mortgaged property, and with or without a grant or reservation of powers of working, wayleaves, or rights-of-way, rights of water, and drainage and other powers, easements, rights and privileges for or connected with mining purposes in relation to the property remaining unsold or any part thereof, or to any property sold; and (iii) With or without covenants by the purchaser to expend money on the land sold. (3) The provisions of this Act relating to the foregoing powers, comprised either in this section, or in any other section regulating the exercise of those powers, may be varied or extended by the mortgage deed, and, as so varied or extended, shall, as far as may be, operate in the like manner and with all the like incidents, effects, and consequences as if such variations or extensions were contained in this Act. (4) This section shall apply only if and as far as a contrary intention is not expressed in the mortgage deed, and shall have effect subject to the terms of the mortgage deed and to the provisions therein contained. 48—Regulation of exercise of power of sale A mortgagee shall not exercise the power of sale conferred by this Act unless and until— (a) notice requiring payment of the mortgage money has been served on the mortgagor or one of two or more mortgagors, and default has been made in payment of the mortgage money, or of part thereof, for one month or any less time provided by the mortgage after such service; or (b) some interest under the mortgage is in arrear and unpaid for one month after becoming due; or (c) there has been a breach of some provision contained in the mortgage deed or in this Act, and on the part of the mortgagor, or of some person concurring in making the mortgage, to be observed or performed, other than and besides a covenant for payment of the mortgage money or interest thereon. 49—Conveyance on sale (1) A mortgagee exercising the power of sale conferred by this Act shall have power to convey or to transfer, as the case may be, the property sold, for such estate and interest therein as he is by this Act authorised to sell or convey, or as may be the subject of the mortgage, freed from all estates, interests, and rights to which the mortgage has priority, but subject to all estates, interests, and rights which have priority to the mortgage. (2) Where a conveyance or transfer is made in exercise of the power of sale conferred by this Act, the title of the purchaser shall not be impeachable on the ground— (a) that no case had arisen to authorise the sale; or (b) that due notice was not given; or (c) that permission of the court, when so required, was not obtained; or (d) that the power was otherwise improperly or irregularly exercised; and a purchaser shall not, either before or on conveyance or transfer, be concerned to see or inquire whether a case has arisen to authorise the sale, or due notice has been given, or the power is otherwise properly and regularly exercised; but any person damnified by an unauthorised, or improper, or irregular exercise of the power shall have his remedy in damages against the person exercising the power. (3) A conveyance or transfer on sale by a mortgagee shall be deemed to have been made in exercise of the power of sale conferred by this Act or by the Real Property Act 1886 unless a contrary intention appears. 50—Application of proceeds of sale The money which is in fact received by the mortgagee, arising from the sale, after discharge of prior incumbrances to which the sale is not made subject (if any) or after payment into court under this Act of a sum to meet any prior incumbrance, shall be held by him in trust to be applied by him, first, in payment of all costs, charges, and expenses properly incurred by him as incident to the sale or any attempted sale, or otherwise; and secondly, in discharge of the mortgage money, interest, and costs, and other money (if any) due under the mortgage; and the residue of the money so received shall be paid to the person entitled to the mortgaged property, or authorised to give receipts for the proceeds of the sale thereof. 51—Provisions as to exercise of power of sale (1) The power of sale conferred by this Act may be exercised by any person for the time being entitled to receive and give a discharge for the mortgage money. (2) The power of sale conferred by this Act shall not affect the right of foreclosure. (3) The mortgagee shall not be answerable for any involuntary loss happening in or about the exercise or execution of the power of sale conferred by this Act, or of any trust connected therewith, or of any power or provision contained in the mortgage deed. (4) At any time after the power of sale conferred by this Act has become exercisable, the person entitled to exercise the power may demand and recover from any person, other than a person having in the mortgaged property an estate, interest or right in priority to the mortgage, all the deeds and documents relating to the property, or to the title thereto, which a purchaser under the power of sale would be entitled to demand and recover from him. 52—Mortgagee's receipts, discharges etc (1) The receipt in writing of a mortgagee shall be a sufficient discharge for any money arising under the power of sale conferred by this Act, or for any money or securities comprised in his mortgage, or arising thereunder; and a person paying or transferring the same to the mortgagee shall not be concerned to inquire whether any money remains due under the mortgage or as to the application of the money or securities so paid or transferred. (2) Money received by a mortgagee under his mortgage or from the proceeds of securities comprised in his mortgage shall be applied in like manner as in this Act directed respecting money received by him arising from a sale under the power of sale conferred by this Act, but with this variation, that the costs, charges, and expenses payable shall include the costs, charges, and expenses properly incurred of recovering and receiving the money or securities, and of conversion of securities into money, instead of those incident to sale. 53—Appointment, powers, remuneration and duties of receiver (1) A mortgagee entitled to appoint a receiver under the power in that behalf conferred by this Act shall not appoint a receiver until he has become entitled to exercise the power of sale conferred by this Part, or by the Real Property Act 1886 or by the mortgage, but may then, by writing under his hand, appoint a receiver. (2) A receiver appointed under the powers conferred by this Act shall be deemed to be the agent of the mortgagor; and the mortgagor shall be solely responsible for the receiver's acts or defaults unless the mortgage deed otherwise provides. (3) The receiver shall have power to demand and recover all the income of which he is appointed receiver, by action, distress, or otherwise, in the name either of the mortgagor or of the mortgagee, to the full extent of the estate or interest which the mortgagor could dispose of, and to give effectual receipts accordingly for the same, and to exercise any powers which may have been delegated to him by the mortgagee pursuant to this Act. (4) A person paying money to the receiver shall not be concerned to inquire whether any case has happened to authorise the receiver to act. (5) The receiver may be removed, and a new receiver may be appointed, from time to time by the mortgagee by writing under his hand. (6) The receiver shall for his remuneration, and in satisfaction of all costs, charges, and expenses incurred by him as receiver, be entitled to retain out of any money received by him, a commission at such rate, not exceeding five per centum on the gross amount of all money received, as is specified in his appointment, and if no rate is so specified, then at the rate of five per centum on that gross amount, or at such higher rate as the court thinks fit to allow, on application made by him for that purpose. (7) The receiver shall, if so directed in writing by the mortgagee, insure to the extent (if any) to which the mortgagee might have insured and keep insured against loss or damage by fire, out of the money received by him, any building, effects or property comprised in the mortgage, whether affixed to the freehold or not, being of an insurable nature. (8) Subject to the provisions of this Act as to the application of insurance money, the receiver shall apply all money received by him as follows, namely: (a) In discharge of all rents, taxes, rates, and outgoings whatever affecting the mortgaged property; and (b) In keeping down all annual sums or other payments, and the interest on all principal sums, having priority to the mortgage in right whereof he is receiver; and (c) In payment of his commission, and of the premiums on fire, life, or other insurances (if any) properly payable under the mortgage deed or under this Act, and the cost of executing necessary or proper repairs directed in writing by the mortgagee; and (d) In payment of the interest accruing due in respect of any principal sum due under the mortgage; and (e) In or towards discharge of the principal money if so directed in writing by the mortgagee; and shall pay the residue (if any) of the money received by him to the person who, but for the possession of the receiver, would have been entitled to receive the income of which he is appointed receiver, or who is otherwise entitled to the mortgaged property. 54—Effect of advance on joint account (1) Where— (a) in a mortgage, or an obligation for payment of money, or a transfer of a mortgage or of such an obligation, the sum, or any part of the sum, advanced or owing is expressed to be advanced by or owing to more persons than one out of money, or as money, belonging to them on a joint account; or (b) a mortgage, or such an obligation, or such a transfer is made to more persons than one, jointly and not in shares, the mortgage money, or other money or money's worth, for the time being due to those persons on the mortgage or obligation, shall, as between them and the mortgagor or obligor, be deemed to be and remain money or money's worth belonging to those persons on a joint account; and the receipt in writing of the survivors or last survivor of them, or of the personal representative of the last survivor shall be a complete discharge for all money or money's worth for the time being due, notwithstanding any notice to the payer of a severance of the joint account. (2) This section shall apply if and so far as a contrary intention is not expressed in the mortgage, obligation or transfer, and shall have effect subject to the terms of the mortgage, obligation, or transfer, and to the provisions therein contained. 55—Notice of trusts affecting mortgage debts (1) A person dealing in good faith with a mortgagee, or with the mortgagor if the mortgage has been discharged, released, or postponed as to the whole or any part of the mortgaged property, shall not be concerned with any trust at any time affecting the mortgage money or the income thereof, whether or not he has notice of the trust, and may assume unless the contrary is expressly stated in the instruments relating to the mortgage— (a) that the mortgagees (if more than one) are or were entitled to the mortgage money on a joint account; and (b) that the mortgagee has or had power to give valid receipts for the purchase-money or mortgage-money and the income thereof (including any arrears of interest) and to release or postpone the priority of the mortgage debt or any part thereof or to deal with the same or the mortgaged property or any part thereof, without investigating the equitable title to the mortgage debt or the appointment or discharge of trustees in reference thereto. (2) This section shall not affect the liability of any person in whom the mortgage debt is vested for the purposes of any trust to give effect to that trust. 55A—Enforcement of rights against mortgagor (1) A right of sale or foreclosure in respect of mortgaged land, a right to enter into possession of mortgaged land or a right to appoint a receiver in respect of mortgaged land shall not be enforceable by the mortgagee under a mortgage to which this section applies against the mortgagor by action or otherwise unless— (a) the mortgagee has served upon the mortgagor a notice in writing— (i) alleging a breach of a covenant or condition of the mortgage by the mortgagor; and (ii) if the breach is capable of remedy, requiring the mortgagor within one month after service of the notice, or such longer period as may be stipulated in the notice, to remedy the breach; and (iii) if the mortgagee seeks compensation for the breach, requiring the mortgagor within one month after service of the notice or such longer period as may be stipulated in the notice, to pay to the mortgagee the amount of the cost and expenses, stipulated in the notice, that the mortgagee has reasonably incurred in consequence of the breach; and (b) where requirements are made of the mortgagor in the notice, he has failed to comply with those requirements. (2) Where a mortgage to which this section applies contains a provision by virtue of which a liability to repay moneys under the mortgage falls due in the event of a breach of a covenant or condition of the mortgage at an earlier date than if there were no such breach, that provision shall be inoperative unless a notice has been served upon the mortgagor in conformity with the provisions of subsection (1) of this section and where requirements are made of the mortgagor in the notice, he has failed to comply with those requirements. (2a) Upon the application of a mortgagee, a court may dispense, upon such terms and conditions as it thinks fit, with the requirement of notice under this section. (2b) Where such a dispensation has been granted, the provisions of subsection (1) and subsection (2) of this section shall not apply in respect of the mortgage. (3) In any proceedings brought by a mortgagee for the recovery of a mortgage debt or for the enforcement of a mortgage, or in proceedings instituted by a mortgagor within twenty-one days after service of a notice under this section, a court may, upon such fair and equitable terms as it may determine, grant relief to a mortgagor against the enforcement of rights of a kind referred to in subsection (1) of this section, and may reinstate the position of the mortgagor in all respects as if no breach of a covenant or condition of the mortgage had occurred. (5) This section applies to a mortgage of land (whether or not the land has been brought under the provisions of the Real Property Act where— (a) the mortgagor is a natural person; and (b) the land is appropriated for domestic or agricultural use. (6) For the purposes of this section— (a) land shall be deemed to be appropriated for domestic or agricultural use unless the mortgagor has made a statutory declaration that during the currency of the mortgage— (i) no part of the land is to be used as a place of dwelling for the mortgagor's own personal occupation; and (ii) in the case of land exceeding two hectares in area, no part of the land is to be used by the mortgagor for the business of primary production; and (b) where such a declaration has been made it shall be conclusively presumed that the land is not appropriated for domestic or agricultural use. (7) In this section— business of primary production means the business of agriculture, pasturage, horticulture, viticulture, apiculture, poultry farming, dairy farming, forestry, or any other business consisting of the cultivation of the soil, the gathering in of crops, or the rearing of livestock. (8) This section shall not apply to any mortgage granted before the commencement of the Law of Property Act Amendment Act (No. 2) 1972. 55B—Collateral covenants (1) Notwithstanding any covenant to the contrary, a mortgagee shall be deemed to have covenanted with the mortgagor that where the mortgagee makes demand of any amount in pursuance of the mortgage, he will at the request of the mortgagor, supply him with reasonable particulars of how the amount of the demand is arrived at. (2) Where a mortgage is entered into after the commencement of the Law of Property Act Amendment Act 1972 and a covenant collateral to the mortgage is made between the mortgagor and mortgagee, the collateral covenant shall have no further force or effect upon extinguishment of the mortgage debt. (3) Any covenant by which a mortgagee might enforce a personal right to the repayment of a debt secured by a mortgage after and without re-opening the foreclosure of the mortgage is invalid. 56—Application to registered land The provisions of this Part so far as the same apply to registered land shall apply subject to compliance with the provisions of the Real Property Act 1886 relating to the registration of instruments and the priority conferred by registration.