CASE LAW

Case Law

Case Law

As there is injustice for Boland in the scenario of Horsham properties Group LTD v Paul James case. The defendants had fallen into mortgage arrears and their mortgagee appointed receivers over the property who contracted to sell it at auction, pursuant to the mortgage deed and the Law of Property Act 1925 s.101(1)(iii). On sale, the property was transferred to the claimant company, who became the registered proprietor. The defendants remained in possession of the property and the company claimed possession. The issue for determination was whether s.101 of the Act, by permitting mortgagees to overreach their rights in relation to the mortgaged property by selling it out of court without first obtaining a court order for possession or sale, infringed the rights of mortgagors under the European Convention on Human Rights. The defendants submitted that the statutory power under the Act would only be compatible with the Convention rights of residential mortgagors if it was construed as requiring a mortgagee first to obtain a court order for possession or to make an application for an order permitting sale.

The decision in Horsham will be seen by many as unfortunate timing, coming weeks before the new Pre-Action Protocol for Mortgage Possession Cases takes effect on 19 November 2008. However, the ruling simply reaffirms the power of mortgagees to sell property when mortgage money becomes due within the meaning of s.101 of the LPA without first seeking a court order. This has been the position for the last 200 years. The power is hardly ever used by mainstream mortgage lenders, as generally it makes very little business sense. The concern is that rogue lenders will threaten the use of the power, which is why the Ministry of Justice is investigating whether further action needs to be taken to protect homeowners. 

Under the Land Registration Act 1925, legal estates in land are the only interests in respect of which a proprietor can be registered. Other interests take effect in equity as “minor interests,” which are overridden by a registered transfer. But the Act recognizes also an intermediate, or hybrid, class of what are called “overriding interests”: though these are not registered, legal dispositions take effect subject to them. The list of overriding interests is contained in section 70 and it includes such matters as easements, liabilities having their origin in tenure, land tax and title rentcharge, seignorial and manorial rights, leases for terms not exceeding 21 years, and finally, the relevant paragraph being section 70 (1) (g): “The rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where enquiry is made of such person and the rights are not disclosed;...”

The first question is whether the wife is a “person in actual occupation” and if so, whether her right as a tenant in common in equity is a right protected by this provision . . . The second question is whether the wife's equitable interest under the trust for sale, if she is in occupation of the land, is capable of being an ...