LAW 703 Lecture Notes - Lecture 9: Easement, Unsecured Creditor, Floating Charge

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29 Jun 2018
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LAW703 – Lecture 9: Ch16 Mortgages and Ch17 Mortgage Remedies
Chapter 16: Mortgages
Disguised Mortgage – Substance not form of the transaction that’s key. Must look into whether
the sale of property is potentially a mortgage for example.
Equitable Mortgage – does not transfer the legal estate in property to the mortgagee, but
creates in equity a charge on the property.
Second lender receives the borrower’s right to redeem the first mortgage as security for
its loan.
Equity also permits mortgaging of intangibles or future interests.
Equitable Mortgages also include situations of unexecuted security agreements, or
where the security was improperly executed or registered.
Floating Charge – does not crystallize into a charge on the property until default/some
other time.
oFloating charge creditor has priority over general creditor
Reverse Mortgage – essentially a deferred payment loan.
Allows homeowners to access their home equity to generate income stream
Loan is not required to be repaid until sale or death.
Chapter 17: Mortgage Remedies
Mortgage – Promise to pay a debt
- Security in land for repayment of that debt
Remedies:
1. Contractual Power of Sale – On default, Lender becomes owner and can sell the
secured property. Mortgage MUST CONTAIN a contractual power of sale.
a. S. 31(1) and 38 of the Mortgages Act – provide a code the lender must abide by
[see page 968]
b. Failure to give notice tenders power of sale void or voidable
c. Until lender signs an APS – borrower has equity of redemption available
2. Foreclosure – Court Proceeding
a. Ontario Rules of Civil Procedure – Rule 64 – rules for foreclosure proceedings
“Mortgage Actions”
b. Court Makes judgement on foreclosure, lender becomes owner, borrower loses
equitable right to redeem.
c. Judgement makes absolute conveyance of legal title, borrower has opportunity
to redeem within certain court defined time – failure to redeem means equity of
redemption is lost.
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Document Summary

Disguised mortgage substance not form of the transaction that"s key. Must look into whether the sale of property is potentially a mortgage for example. Equitable mortgage does not transfer the legal estate in property to the mortgagee, but creates in equity a charge on the property. Second lender receives the borrower"s right to redeem the first mortgage as security for its loan. Equity also permits mortgaging of intangibles or future interests. Equitable mortgages also include situations of unexecuted security agreements, or where the security was improperly executed or registered. Floating charge does not crystallize into a charge on the property until default/some other time: floating charge creditor has priority over general creditor. Reverse mortgage essentially a deferred payment loan. Allows homeowners to access their home equity to generate income stream. Loan is not required to be repaid until sale or death. Security in land for repayment of that debt.

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