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Chapter 23

MGMT 3100 Chapter Notes - Chapter 23: Accrued Interest, Secured Creditor, Eviction

Course Code
MGMT 3100
Peter Mac Donald

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Chapter 23 Notes
The Essence of Mortgage Law
The Mortgage as a Contract
-Mortgage = a loan contract that gives the lender an interest in the borrower’s land as
security for a debt
-Mortgagor = a borrower who gives his lender an interest in his land as security for
repayment of a debt
-mortgagee = a lender who accepts an interest in land as security for a loan
-maturity date = the end of the term when debt must be repaid
-calculation period = stages at which accrued interest is added to principal
-amortization period = length of time it should take to repay an entire debt with the
specified payment schedule
-term the time period during which an interest rate is fixed and principal lent
-mortgage commitment = document in which parties to a mortgage initially agree to
borrow and lend
-Mortgage Acceleration Clause = states that upon default of any installment, the whole
of the principal sum of the mortgage and accrued interest immediately falls due. Default
accelerates the maturity date (basically the maturity date is now over looked and you
must pay right away)
-^ At that point the mortgagee may pursue all its remedies
- Most important promises of the mortgagee are:
o(a) to execute necessary discharge of the mortgage upon repayment in full and
o(b) to leave the mortgagor in possession and not interfere with his use and
enjoyment of the mortgaged premises so long as the mortgagor observes all his
- Mortgagor signs the documents and the mortgagee just accepts doesn’t need to sign it
- Acceptance of the document binds them to the mortgage terms
The Mortgage as an Interest in Land
- This is a concept of mortgage as an interest in land – was developed through case law
(now its summarized in provincial legislation)
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- Originally, mortgage was an conveyance of the legal title = an interest in land
recognized by the common law
- Transfer of title had two conditions: (1) Mortgagor could remain in possession of the
land as long as payments were up to date (2) Mortgagor was entitled to have the legal
title returned to him upon full payment of the debt
- But if debt was repaid/conditions not met then the mortgagee (lender) owned the
interest absolutely
The Mortgagor’s Right to Redeem
- HOWEVER, unfair to allow a mortgagee (lender) to keep title to land in cases where only
a small amount of the debt remained unpaid
- So courts of equity created a remedy for these cases
- IF the mortgagor pleaded hardship and tendered (offered) payment of the debt in full
the court would acknowledge his interest in the land permit him to redeem it
-Redeem = have the land reconveyed to the mortgagor (title belongs to the mortgagor)
- This is known as equity of redemption = the right of the mortgagor to redeem
mortgaged land on payment of the debt in full
The Mortgagee’s Right to Foreclose
- After a reasonable period of time had passed, the right to redeem the property should
expire and the mortgagee could then safely treat the land as his own
- Foreclosure Period = six months from the date of the hearing in the case
-Foreclosure = an order by a court ending the mortgagor’s right to redeem within a fixed
- Possession in practice doesn’t happen first, foreclosure does
- There are 3 reasons why we don’t do possession first:
o(1) A mortgagee generally wants its money rather than the property
o(2) Possession is uncertain since mortgagor might (a) offer payment, (b) redeem
his interest or (c) demand possession AKA Equity redemption
o(3) Theres no material advantage gained from a possession
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find more resources at oneclass.com
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