The latest lecture on remedies in relation to mortgages is now available and can be viewed below alongside a full description.

The remedies in relation to mortgages are mainly available to mortgagees who are trying to get a return on their investment. The main remedies areas follows:
1) Action on the mortgagor’s personal covenant to pay
2) Appointment of a receiver
3) Assertion of the mortgagee’s right to possession
4) Exercise of the mortgagee’s power of sale
5) Foreclosure

1) Even if the bank takes over a property there is still an obligation to repay the debt as per Rudge v Richens [1873].

2) A receiver can be appointed when the money is due and they try to bring about a situation whereby the debt can be paid. The receiver is an agent of the mortgagor (White v Metcalf [1903]) but can be controlled by the mortgagee and owes the mortgagee a fiduciary duty (Medforth v Blake [2000]; Silven Properties v RBS [2004]).

3) Possession is a prelude to sale of the property. The courts can postpone this but only where the mortgagee has brought an action (Ropaigealach v Barclays Bank plc [2000]) though this raises serious human rights questions. This ability under s. 36 of the Administration of Justice Act 1970 is subject to a number of qualifications that have developed over the years.

4) A distinction is made between when the power of sale arises and when it is exercisable and these are set out in ss. 101 & 103 of the Law of Property Act 1925. When the property is eventually sold the money is distributed in a particular order.
The mortgagee has an objective duty of care and a subjective duty of good faith when selling the property. The subjective duty is about not acting in a reckless fashion (Kennedy v De Trafford [1897]) and ensuring there is no conflict of interest (Martinson v Clowes [1882]). The objective duty requires the property to be sold in a timely fashion (FCA Handbook, MCOB 13.6.1R(1)) and as if it were sold freely on the open market (Schedule 17, paragraph 3(2) of the Housing Act 1985).
If the sale is not carried out correctly it can be set aside (Tse Kwong Lam v Wong Chit Sen [1983]) but the more common remedy is to settle the accounts (Artistic Builders v Elliot & Tuthill [2002].

5) Foreclosure is unusual nowadays because it removes the important equity of redemption. It begins with a decree by the High Court of foreclosure nisi and this is later followed by a decree of foreclosure absolute. However some options do remain open to the mortgagor during this time.