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Legal Mortgage

property, deed, mortgagee, money, power, mortgagor and demand

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LEGAL MORTGAGE. Where a borrower conveys, by deed, the legal estate in his pro perty to a lender, subject to his right to have the property re-conveyed upon repayment of the principal and interest, it is a legal mortgage.

A mortgage deed conveys to the mort gagee not only the land, but any houses or other buildings there may be upon the land, and all fixtures thereon. (See FIXTURES.) Although the borrower parts with the legal estate, yet so long as he retains the equity of redemption (that is, the right to redeem the property by discharging the mortgage debt) he is the real owner of the property. If the difference between the amount of the mortgage and the value of the property is considerable, he may, if he wish, borrow further sums upon a second or a third mortgage, but each mortgage subse quent to the first is merely an equitable mortgage, because the legal estate is already vested in the first mortgagee, and the mort gagor can only convey what he has left—that is, an equitable estate in the property. If the mortgagor sells the equity of redemption, his interest in the property is altogether ex tinguished. (See EQUITY OF REDEMPTION.) The date for repayment of a mortgage is usually six months, but the period inserted in mortgages to bankers is often a shorter time, and frequently the money is made repayable on demand. If the borrower does not repay the money at the end of the prescribed time, or after demand, the mort gagee becomes, by law, the full owner of the property. But, although legally he has become the owner, the mortgagor still retains his equity of redemption and can demand a re-conveyance to himself or a transfer of the mortgage to some other party, on payment of the amount owing with interest and certain charges which may have been incurred by the mortgagee in keeping up the property.

Unless a contrary intention is expressed in the mortgage deed, a mortgagee, where the mortgage is made by deed, shall, by virtue of the Conveyancing and Law of Property Act, 1SSI, Section 19, have the following powers, to the like extent as if they had been in terms conferred by the mortgage deed, but not further, namely : — (a) A power, when the mortgage money has become due, to sell, or to concur with any other person in selling, the mortgaged property, or any part thereof, either subject to prior charges, or not, and either together or in lots, by public auction or by private contract, subject to such conditions respecting title, or evi dence of title, or other matter, as he (the mortgagee) thinks fit, with power to vary any contract for sale, and to buy in at an auction, or to rescind any contract for sale, and to re-sell, without being answerable for any loss occasioned thereby ; (b) A power, at any time after the date of the mortgage deed, to insure and keep insured against loss or damage by fire any building or property of an insurable nature. (By Section 23,

unless an amount is fixed in the mortgage deed the insurance shall not exceed two-third parts of the amount that would be required, in case of total destruction, to restore the property.) (c) A power, when the mortgage money has become due, to appoint a receiver of the income of the mortgaged property or any part thereof ; (d) A power while the mortgagee is in possession to cut and sell timber. By Section 20 of the same Act : " A mortgagee shall not exercise the power of sale conferred by this Act unless and until :— "( 1) Notice requiring repayment of the mortgage money has been served on the mortgagor, or one of several mortgagors, and default has been made in payment of the mortgage money, or of part thereof, for three months after such service ; or " (2) Some interest under the mortgage is in arrear and unpaid for two months after becoming due ; or " (3) There has been a breach of some pro vision contained in the mortgage deed or in this Act, and on the part of the mortgagor, or of some person concurring in making the mortgage, to be observed or performed, other than and besides a covenant for payment of the mortgage money or interest thereon." In a banker's mortgage, however, it is generally expressly stipulated that his right to sell the property shall arise immediately default is made after demand, or on default at the end of, say, a period of one month after demand. Notice of the intention to exercise a power of sale should be given to a second mortgagee, if there is one, as well as to the mortgagor.

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