However, it is important to note that the borrower must give genuine

prospect of both repaying the debt and continuing to make their usual
contractual mortgage payments for the court to suspend or stay the
possession under section 36.

Other limitation on the right to possession

QUENNELL v MALTBY, Denning suggested that court of equity could
restrain a mortgagee from taking possession whenever there was no
justifiable reason for the possession. His view was that possession could
be sought only for a bona fide realisation of the mortgagee's security.
This directly contradicts a mortgagee's pure right of possession as a
holder of estate in that land.
Besides, Albany Home Loans v Massey establishes that a mortgagee
cannot be granted possession of land mortgaged by joint mortgagors
where, in fact, mortgage turns out to be binding only one of them. Here,
the mortgage of house had been executed by the man and woman jointly
and they were in default. Yet, mortgage was held void as against the
woman on the grounds of undue influence. In consequence, possession of
the land could not be ordered, even though the man remain living on the
land with his partner.
However, the mortgagee may still apply for a forced sale of the land
under s14 TOLATA 1996, if successful, will result in the land being sold
and the innocent mortgagor receiving their equity as a first call on the
proceeds of sale.
First National Bank v Achampong
Although there is an undue influence to the wife, the bank were entitled
to have the property sold by order under s 14 of the Trusts of Land and
Appointment of Trustees Act 1996.
Right to sale:
In order to sell the property to repay the debt owing by the borrower, the
power of sale must have both arisen and become exercisable. If the power
has arisen, but is not exercisable, the mortgagor will have a damages
claim against the mortgagee.
According to s101 LPA1925, power to sell is only available for legal
mortgages (Mortgage make by deed) and arises only after the date of
redemption.
 The power to sell becomes exercisable when at least 1 of the three
conditions in s 103 LPA 1925 is satisfied:
A mortgage loan instalment was missed, and 3 months has passed
since the mortgagee notified the mortgagor of this failure to pay
Interest has been in arrears for at least 2 months
Borrower is in breach of some other provision of the mortgage
It is incumbent upon the lender as the seller of the property to obtain a
proper price for it. In Cuckmere Brick Co v Mutual Finance, mortgagee
sold the land with reference of one planning permission which in fact has
two. The mortgagee was held liable as he had breach the duty to obtain
the true market value of land.
Thus, proper price can be equals to the lender taking reasonable steps to
ensure that they achieve the best price the can for the property. This is
affirm in Newport Farm Ltd v Damesh, which the lender was held to be
under a duty to take in reasonable steps to obtain the best price for the
property.
However, this duty does not extend to the lender having to expend time or
money seeking to increase the purchase price the property will achieve,
though. This is illustrated in Silven Properties Ltd v Royal Bank of
Scotland plc. A mortgagee sold land after taking possession without
awaiting the outcome of a planning permission application. It was held
that the lender was under no duty to invest in a property mortgaged to it
before selling it.
In contrast, an order for the sale of property was granted to a borrower,
despite the wishes of lender to delay the sale in order to wait for the rise
of property price. In Palk v Mortgage Services Funding plc, the house in
problem was in negative equity, there being more owing on it than the
house worth. Lender had taken possession of the house and intended to
let it whilst they waited for the property prices to rise. Yet, the amount of
rent was far less than the arrears payable and the action inevitably lead to
spiralling mortgage debts on the part of borrower. The court therefore
order the property to be sold to enable the borrower to cut their losses. Of
course, this did not prevent the lender from then seeking the balance
monies owing from the borrowers at common law.
Once sold, s 105 LPA 1925 instructs a mortgagor how to act with sale
money. The mortgagee acts only as a trustee for the money received.
Interests with priority over the mortgagee must firstly be settled (if not
overreached). Sale costs must then be paid. Finally, the mortgagee may
take what is left to discharge the mortgage loan amount owed to itself. If
this residual amount does not cover the amount owed, the mortgagee is
 left with a personal claim only against the mortgagor. If there is any
excess money, it must be returned to the mortgagor.
Power to appoint a receiver
It is possible in extreme circumstances that foreclosure will be granted to
a mortgagee, entitling it to immediate possession and not discharging any
excess loan amount owed by the mortgagor. However, it is used so
infrequently that the Law Commission have proposed its abolition.
Power to appoint a receiver
There are some situation in which it will be benefit the lender to
repossess the mortgaged property not to sell it but instead use to provide
an income for example to rent it out. This is particularly the case with
commercial properties and is govern by s101 LPA1925.
Sale by mortgagor
It is possible that a mortgagor may wish to sell his land whilst still subject
to a mortgage. This usually poses no difficulty if the sale price will cover
the outstanding mortgage loan value the mortgage will simply be
redeemed. However, in some circumstances, where a mortgagee does not
consent to this redemption, a court may intervene.
During postponement of possession proceedings, a court may postpone
possession to allow a mortgagor to sell. The mortgagor must show that he
will be able to pay off the outstanding loan amount from the sale. In
Target Home Loans v Clothier, mortgagee wished to take possession and
the mortgagor wished to sell it to repay the debt. But, mortgagor is allow
to have possession postponed for 3 months under section 36 of the AJA
1970 to allow the sale to complete as the prospects of an early sale were
best served by postponing possession.
A contrasting case in National & Provincial Building Society v Lloyd,
where the mortgagor are not allowed to postpone the possession to sell
the property as there was no reason why possession could not be
postponed for up to a year if it was clear that a sale would occur within
this period, and that sale would pay off the mortgage loan.
 Equitable mortgages
In Walsh v Lonsdale, a contract for land can create an equitable interest
in that land, provided it complies with section 2 LPMPA 1989 which
stated that a valid contract in land will be treated if it is in writing,
contains all terms agreed btw parties and is signed by both parties to the
agreement. Thus, an equitable mortgage can be created if there is a
contract for mortgage which is complies with s2 LPMPA.
Mortgage of equitable interest
Any mortgage deal entered into by the developer of their equitable
interest in the land can only equitable in character.
*equitable interest is like when the developer will not want to purchase
the building land until they have planning permission for development,
they will either entered into an option to purchase the land with the seller
or exchanged contract for the sale of the land, conditional upon planning
permission being granted.

As the lender under an equitable mortgage only has an equiatble, not a

legal interest in land, the only remedies that are available to it are
equitable and therefore discretionary in nature. Equally, borrowers right
will also be governed by equity, therefore, the equity of redemption will
apply, subject to the usual equitable maxims.
Besides, s101 LPA1925 will not apply under an equitable mortgage.
Therefore, there is no power of sale implied into the mortgage agreement
under it. In Re White Rose Cottage, it was held that it does not change the
basic legal position in terms of possession, but the result being change
that a lender will not be able to physically re-enter mortgaged property in
order to sell it. They will need first to obtain an order of the court for
possession.
Registered Land
Under s27(2)(f) of LRA 2002, legal mortgages are registrable disposition,
meaning that it compulsory to register them. Not only will the non-
registrable of legal mortgage render it unprotected against a third party
purchaser, but also that the mortgage cannot actually take place at law
until registration has been completed. In other words, mortgage can only
exist in equity until this time.
In accordance with s48 LRA 2002, legal mortgages in registered land are
prioritised in accordance with the date on which they are registered
 regardless of the order of their creation. Whichever mortgage is registered
first take the priority over subsequently registered mortgaged. Equitable
mortgages in registered land are also protected in date order, under s34 to
36 2002 act.
Unregistered land
For a lender taking an unregistered land mortgage, the position
straightforward that the lender will simply take custody of title deed as a
security and prevent the owner from selling to anyone else without their
consent.