Property Law The Rights Of The Mortgagee, Unconscionable Bargain, Penalty Clauses Notes

THE RIGHTS OF THE MORTGAGEE •Possession Physical control of land Most complicated What does it mean? We will remove the mortgagor from physical possession, and it will be grated to the mortgagee. This is the process of say taking someone's house off them. Usually preliminary to the process of selling the land Bank usually wants the mortgagor to leave, so it can then sell the land. But not the only option, perfectly possible to exercise the power of sell WITHOUT having first taken possession Commercial decision depending on facts of situation. No one wants to move into a house possessed by another person. - you get a better price if you have possession It varies depending on the kind of land - registered or unregisterd Depends on date of creation of the mortgage. If it is pre December 09, it depends on the type of mortgage (cause the others are all the same as they are made by charge via the 2009 act) There's also been statutory interference n some contexts, with right to possession Some of this has been very badly drafted There has had to be some amendments to clean it up. UNREGISTERED LAND PRE-LCLRA. • By conveyance of the legal fee simple.- The mortgagee had right to possession from the moment the ink was dry. Regardless of whether or not the mortgagor is paying So, strictly the mortgagee can come and kick me out even though that's not what was agreed or intended In practice, didn't really happen Default position - the legal mortgagee was the owner of the fee simple in the land Follows from the nature of a legal fee simple - who is the person with the best right of possession? the conveyance gave the mortgagee fee simple ownership, and along with it, fee simple in possession. In practice, it amounted to a self-help remedy for mortgagees of this kind. If the mortgagee can peaceably secure possession, there is no need for them to go to court. This doesn't mean the bank can come in and throw me out - must be peaceable Peaceably unlikely though - obviously likely to refuse or resist If you want to forcibly get them to leave, you have to get permission from the authorities Must be without any prospect of using force. There were reports of people during the crash sending keys in envelopes to the bank - example of peaceable gaining of possession The old law said you did not need a court order - inherent right to take possession of your legal fee simple by peaceable means. Where the premises is commercial/ anything other than a house - the right to possession works precisely the same way. Dimanchi Concerned execution of search warrants. There was legislation that said a Gardai cannot sign a search warrant himself. It has to be an independent judge. Not infront of your pet peace commissioner.Not only is it illegal to break in and enter the dwelling house The state needs special reasons And there need be due process Irish life v Duff Hogan JSuggested that this is NOT the case where the property concerned is a dwelling house. The constitution commits the state to ensure that a dwelling is inviolable, and this is no exception. Makes a suggestion similar to Dimanche with regards to due process: - For a dwelling house, even though the bank will be the owner of a fee simple, they still require a court order to enter a dwelling house EQUITABLE MORTGAGES.- The mortgagee does not hold the fee simple in the land They hold some other equitable interest Exact details of what are immaterial to us If I create one by deposit, all that happens is the borrow takes them and hands them to the lender. You cannot convey a legal fee simple to do this - you need a deed under seal, so this amounts to them having only an equitbael fee simple This means they have no automatic right of possession Requires a court of equity to recognise their right, and enforce it by court order. Equitable remedies however, are discretionary in nature - it depends on how the courts view the situation in terms of unconciosnability Therefore, equitable mortgage carries a REMEDY of possession rather than a right to possession. Irish permanent v Ryan Ordinarily, without exceptional circumstances,Equity will be granted where possession is being sought as a preliminary to sale of land. REGISETERED LAND PRE 2009 •Local..act Regulation for statutory charges on registered land The holder of a statutory charge - a mortgagee for this purpose, is NOT registered as an owner of absolute title concerned. Mortgagor's name remain as owner in the registry Mortgagee inserted - so there will be two names Therefore, the mortgagee has no right to possession of the mortgage land. The 1891 act made absolutely no provision for putting the registered owner into possession of registered land They could stil enforce the mortgage, because the problem only revolved around possession This meant, a mortgagors could refuse to leave the registered land. If they did this, the mortgagee would have no option but to sell the land w/ the mortgagor still there Thus, the successor left to get them out - bt the price would be severely cut Further, the mortgagor would have to pay the balance that it missing by the cut due to their possession Not very rational - but the mortgagors did it anyway, even though essentially they were just injuring themselves. This was a gap in the law and was replaced by registration of title act 1984 S2ss7 of this act, created a mechanism by which possession could be obtained by a bank, holding a registered charge, over registered land. The remedy? Clearly discretionary, and the effect of the section was to align it with that of an equitable mortgagee - you COULD take possession, you need a court order, and that order is discretionary The nature of the discretion BOI v Smyth 1993The courts don't enjoy a general 'untrammelled' discretion. We can't refuse it because we sympathise with the plight of the mortgagor Not subjective in this way,It is mere equitable discretion, to be exercised only on equitable grounds. ➢ You'd think this would have highlighted the difficulties and dangers of fucking up right to possession in this area, and that it would have been drafted with great care given the commercial importance of possessive ability. Not true. : LCLRA 2009 • • • • •Makes changes to modern law, prospective only. The general tenure of the act makes it perfectly clear that what was intended that the old law continues to apply to mortgages prior to 2009. Wanted part 10 to apply going forward and the rest to apply to the past. How? You must repeal the old law of mortgages to do this, including 2.62(7) You don't want it to apply post-2009, so you repeal it. However you don't want the repeal to be absolute - semi-repeal. How? You put in 'transitional provisions' into legislation. The boring bits of legislation no one reads. Drafters of 2009 act decided they would not bother, and straight up repealed s.62(7)

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