A mortgagee by deed may either sell the property or appoint a receiver (see RE CEIVER) ; or enter into possession (see MORT GAGEE IN POSSESSION), but he cannot fore close without an order of the Court. He can also sue the mortgagor on the covenant to repay contained in the mortgage deed, within twelve years from the last payment of interest by the mortgagor or acknowledge ment of the debt. A mortgagee cannot sell the property to himself, or to his own agent.
By Section 25 of the Conveyancing and Law of Property Act, 1881 : " (I) Any person entitled to redeem mort gaged property may have a judg ment or order for sale instead of for redemption in an action brought by him either for redemption alone, or for sale alone, or for sale or redemp tion in the alternative.
" (2) In any action, whether for fore closure, or for redemption, or for sale, or for the raising and payment in any manner of mortgage money, the Court, on the request of the mortgagee, or of any person inter ested either in the mortgage money or in the right of redemption, and, notwithstanding the dissent of any other person, and notwithstanding that the mortgagee, or any person so interested does not appear in the action, and without allowing any time for redemption or for payment of any mortgage money, may, if it thinks fit, direct a sale of the mort gaged property, on such terms as it thinks fit, including, if it thinks fit, the deposit in Court of a reasonable sum fixed by the Court, to meet the expenses of sale and to secure per formance of the terms." Where a sale has been effected under a mortgage. Section 21, s.s. 3, provides that : " The money which is received by the mort gagee, arising from the sale, after discharge of prior incumbrances to which the sale is not made subject, if any, or after payment into Court under this Act of a sum to meet any prior incumbrance, shall be held by him in trust to be applied by him, first, in payment of all costs, charges and expenses, properly incurred by him, as incident to the sale or any attempted sale, or otherwise ; and secondly, in discharge of the mortgage money, interest, and costs, and other money, if any, due under the mortgage ; and the residue of the money so received shall be paid to the person entitled to the mortgaged property, or authorised to give receipts for the proceeds of the sale thereof." If there are subsequent mortgages, any surplus there may be from a sale of the property belongs to them, but if the vendor has no notice of any subsequent charges he is not liable if he pays the surplus to the mortgagor.
If the proceeds of a sale by a mortgagee are insufficient to discharge the mortgage debt, the mortgagee may claim upon the mort gagor for the deficiency. If, however, instead of selling, the mortgagee forecloses, he has no further claim upon the mortgagor.
Where a banker takes a mortgage for a fixed amount, the loan should be upon a separate account. A mortgage for a fixed
amount is not a security to cover a working account, as each payment to credit is in effect so much deducted from the amount of the mortgage, and any future advances would not be covered by it. Further, where the mortgage to the banker is for a fixed sum, simple interest only, in the absence of any agreement to the contrary, can be charged.
By Section 40 of the Property Tax Act, 1853, a mortgagor may deduct income tax from the amount of interest payable on his mortgage. (See INCOME TAx.) John Brown can deposit as security for his working account a mortgage to himself from, say, John Jones, and the property, to the extent of the mortgage, will form a con tinuous security. Where a deposit of a mortgage deed is taken, the banker should give notice to the mortgagor, in the above supposed case to John Jones, that the deed has been lodged with him as security. Unless such notice is given, the banker might find ultimately that John Jones had been gradually repaying the debt to John Brown, and that John Brown had not given the bank the benefit of the payments.
In an ordinary mortgage, after the date of repayment has gone past, the mortgagee is entitled to six months' notice from the mortgagor of his intention to repay.
For stamp duties see MokroAGE.
The following points, amongst others, are found in a good " banker's mortgage " .
The mortgagor, in consideration of the bank allowing him to keep an account, con veys unto the bank the lands and heredita ments, as described in the Schedule, subject to the proviso for redemption that, if he pays on demand all sums owing by him to the bank on any account or for any amount for which he may be liable as surety, with interest and other charges, the hank shall re-convey the premises to him. 1 t forms a continuing security to cover any sum which shall for the time being constitute the balance due to the bank from the mortgagor. The mortgagor covenants therein to pay on de mand all sums owing, and to keep the pre mises insured against fire, and declares that, after the money has become due and is not paid, say, within a month, the bank shall be entitled to exercise the power of sale con ferred on mortgagees by statute. It is also stipulated in the mortgage that the security shall not be affected by any other security held or that may hereafter be held by the bank, and that the bank shall have power to give time for payment to any other person liable for the moneys secured by the mortgage.
When the security is no longer required the property is reconveyed by the bank, by an indorsement upon the mortgage deed to the effect that the bank conveys unto the mortgagor all the premises which are vested in the bank, subject to redemption, by virtue of the within written indenture, to hold the same unto the mortgagor freed and dis charged from all moneys secured by the within written indenture. (See MORTGAGE, TITLE DEEDS.)