MORTGAGE ESSAY FINAL PROPERTY HASBA

How far do you agree with the view expressed by Lord Phillips MR in Jones v Morgan
(2001) that the doctrine of a clog on the equity of redemption is an ‘appendix to
our law which no longer serves a useful purpose and would be better excised’?

The current debate calls for an analytical strategy regarding the subject of
mortgages, which describes the particular conditions of the mortgage linked to it,
including those that have reasonable examination, as well as the different
regulations that must be observed in this respect. in order to achieve the claim
mentioned previously The first priority necessitates that we concentrate on the
concept of the entitlement to redemption to equitable ownership and the right of
the person who mortgaged the property to pay off the mortgage, which is also an
essential legal right and is also referred to as "No clog or fetter." Whenever the
lender declines to make use of their right to return the mortgage on the asset,
this obstacle to payback occurs. Hence, since the traditional mortgage with the
repaying equity rule and the related rights have basically been substituted by the
mortgage legal burden regulation, we shall now thoroughly examine this significant
idea as well as in particular its ongoing relevance in the prevailing law.

The definition of the term mortgage and its applications as examples of this same
idea will serve as the introduction to our discussion. Ben McFarlane, Nicholas
Hopkins, and Sarah Nield's book Land Law, which is most known for its definition of
mortgage, was published. A mortgage passes the borrower's interest in the asset to
the lender, resulting in the lender's responsibility to give back that interest to
the borrower soon after the loan has been paid off and a legal duty that grants the
borrower a "Right to redeem," according to the terms in the mortgage.

A burden that grants rights to an asset in the form of an assurance is what the
mortgage is referred to as in the Property Law under Section 205 (1) (xvi) of the
Property Law of 1925. Because of the strict conditions of the common law
transferring mortgage, the chancery courts invented the term of the
mortgage amortising as an equitable remedy. This privilege that is now referred to
as the "Equitable right to redeem"—will only be withdrawn if the courts are
persuaded that there is little or no probability that the borrower will ever be
capable to make good on their obligations. A written notice of repossession would
be sent to the lender in this scenario. The introduction of the "no clogs and
fetters" guideline on the proportion of equity of redemption helped achieve such an
objective. Equity has eliminated the restrictions that prevent or restrict the
borrower's equitable right to redeem it while keeping the mortgage running smoothly
using the clogs and fetters theory. To safeguard the mortgagor's equity of
redemption, the equity has therefore consistently created principles (Fairclough v.
Swan Brewery). However, it was determined in Knightsbridge v. Byrne that the court
declared the condition acceptable on the grounds that each of the parties had the
advice of qualified professionals at the time when the mortgage agreement had been
executed.

A 2006 law identified as the Consumer Credit Act places prohibitions on trade
relations. The right to redeem a mortgage is granted by common law and has a six-
month deadline, while equity allows for the right to be established at a much later
time if the mortgagee has limited rights to do so. The courts will thus see this as
a proposal to change the mortgage's fundamental terms, removing a clause that
permits the mortgagee to buy the mortgaged property. Nevertheless, the House of
Lords applied the same strategy in the (Samuel v. Jarrah Timber & Wood Paving Co.
Ltd) decision, however with regard to a business dealing on "someone else's terms."
"Once a mortgage will always be considered as a mortgage," Lord Linley once said in
this context. According to this concept, any agreement among the lender of the
mortgage and a mortgagee created at the moment when the mortgage was issued and in
the course of carrying on business as a mortgage cannot be upheld if it hinders the
person who originated the mortgage from recovering the assets he owns by satisfying
his financial debts, and any such agreement is null and void as well as
inappropriate with a legitimate mortgage. Until the possibility has been laid out
for a period of time shortly after the mortgage has been exercised in order to
provide the mortgagor an opportunity to acquire an unfair offer to reject after
getting the loan, allowing the option in two distinct documents could potentially
refrain from the rule but might still not be beneficial to the mortgagee. In the
event of Reeve V. Lisle [1902], the option continued to exist. Issues regarding
whether or not an additional dealing could possibly be appropriate were more
closely illustrated by Jones v. Morgan. The circumstances demonstrated that,
nevertheless, the subsequent interactions had been considered as a barrier to the
redemption concept and was deemed insufficient since it represented the complete
repayment of the debt contracts, not a separate transaction, and it took a position
three years shortly after the mortgage was initially issued. The Court of Appeals
determined that it was void in light of Lord Parker's second motivation
(Kreglinger), that it obstructed the equity of redemption, and concluded that it
was in conflict with the law.

Additionally, Chadwick LJ recognised the beliefs from previous instances. The

explanation for this regulation is that such conditions are in contradiction to the
contract for mortgage of which they are a part. Additionally, these clauses may not
be in accordance with the legal requirement for redemption or the equitable right
to reimbursement. In the beginning a sale agreement cannot be considered a mortgage
or comprise an option to purchase, by a part or interest on the property that has
been mortgaged. At last, it is important to determine if the purchase is really a
mortgage in each circumstance. " The concept of a clog on the equity of
redemption sounds, an appendix to our legal system that simply no longer provides a
beneficial function and would be better excised," Lord Phillips MR stated in this
respect. An approach was noted in the Warnborough v. Garmite case. The court system
later clarified that in order for the courts to fully comprehend the nature of the
discussions among the parties, it is necessary for them to take into account that
both parties had the chance to purchase the property at the exact same time
when the mortgage was approved. This fact was referred to as a "clog" by the legal
system.

The "clogs and fetters" theory states that the circumstances hindering or
prohibiting the borrower's reasonable right to make a redemption have been
eliminated. The court of appeals determined that the term (the time period) was
considered as an insurance benefit and does not belong to the property that is
exchanged at a distance among business organizations and that will remain in effect
throughout the term associated with the mortgage in the case of G&K Kreglinger v.
New Patagonia Meat and Cold Storage Co Ltd, which gave rise to this authorities.