Usually, s.91 of the LPA 1925. The mortgagee

Usually, a
mortgagee would not want to possess a mortgaged property in their favour but
they may want to obtain possession so that they can maintain the value of the
asset. A mortgagor can apply to the High Court to have possession postponed for
up to 28 days if he can show that his debt can be paid off in that time,
however in this case Brian is unlikely to be able to pay off his mortgage
before HJK Bank takes possession. The courts would deem that the simplest
solution would be for HJK bank to exercise their discretion and make an order
for sale under s.91 of the LPA 1925. The mortgagee has the power and right of
sale outlined under s.103 of the LPA where it is clearly outlined that where
there has been a default in the payment of the mortgage money for 3 months
after service and some interest under the mortgage is in arrear and unpaid for
2 months after becoming due. Brian not paying the mortgage for three months
would be counted as a default and a breach giving HJK bank possession and the
power of sale. HJK
Bank owes a duty of care to Brian regarding the sale of his house, they have to
exercise care and gain a fair and proper price for Brian’s home. This can be
seen in Cuckmere Brick Ltd v Mutual Finance Ltd where the mortgagee was
accountable and had to take reasonable care to obtain the true market value of
the land and this case failed to make reference to how valuable the land was. HJK as the mortgagee having the power
of sale, they should act in good faith and take reasonable care to obtain the
best market value, so as they can recover their capital and give Brian an
amount.

 

For HJK Bank to choose to exercise their power of sale they would need
to take possession of Brian’s home. A court order is usually procured in
situations where the mortgagor is still in possession in order to avoid a
criminal offence under section 6 of the Criminal Law act 1977, Brian would have
to vacate his property. Section 36 of the AJA 1970 is crucial when regarding
the claim for possession of a mortgaged property, it allows the court the
discretion to postpone any order for sale if Brian feels like he is able to pay
his debt in a reasonable time. In the case of Cheltenham and Gloucester plc v Norgan,
Lord Justice Waite said that under s.36 of the AJA the court could adjourn
possession proceedings or stay, suspend or postpone any possession order
granted to a mortgagee, this gives the mortgagor a reasonable period to pay any
sums due under the mortgage or to remedy the default1. Once
the previously mortgaged property is sold under s.105 LPA 1925 it instructs a
mortgagor how to proceed with the sale money received. The mortgagee is only a
trustee for the money, they are able to only take what they are owed and in
this case the £200,000 plus the interest incurred and the the remaining amount
goes to the homeowner that being Brian. If the

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1 http://www.independent.co.uk/news/people/law-report-arrears-can-be-paid-over-full-mortgage-term-1525672.html