How is a freehold land mortgaged?
Before 1925 it was by conveyance in the fee simple. If the date fixed for repayment was met successfully then the conveyance would cease. If not either one of the two agreed eventualities would happen. Either the mortgagee (as entitled) would enter possession and collect rent and profits in discharge of principal and rent or either he would collect rent and profits only to discharge the interest.
Since LPA 1925 Act.
Now however since the enactment of the LPA 1925and the Land Registration Act 2002 there are two methods by which a mortgage of freehold property for unregistered land and registered freeholds before 13 October 2003. Notably, as far as registered land is concerned since the passing of the Land Registration Act 2002 land the sole manner in which legal mortgages of freehold land are created are by way of a charge.
1) The mortgagor will demise a term of years absolute.
2) The mortgagor creates a charge by deed. (s 85, 87 LPA 1925)
How is a leasehold/estate mortgage created?
Before the LPA 1925 Act, the mortgagor could sublease his interest to the mortgage for a shorter period than the remainder. The subleasing method was preferred over the other method which was by assignment. The reason for this was that by assignment there was going t be privity of estate between the sublessee mortgagee and the landlord and the former wanted to avoid that.
Since LPA 1925 Act for unregistered land and registered land before 13 October 2003 there are two methods. They are as follows:
1) A sublease (as the mortgagor is already a leaseholder) which must be shorter than the lease of the mortgagor. (This is because the mortgagor cannot grant a greater term than they have already). The leasehold mortgagor may go on and sublease the lease burdening it with further mortgages which must be longer than the term granted to the first leasehold-mortgagee (because they are separate legal estates) but shorter than the mortgagor’s lease (sine he is a lessee and he is subject to a certain term of years which was granted to him by the original lessor).
2) The charge under section 87of the LPA 1925. (s 85, LPA 1925)
How are legal mortages created over freehold land since the passing of the Land Registration Act 2002?
Legal mortgages created since the passing of the LRA 2002, over registered freehold or leasehold land are only created by charge.
Can a legal lease be granted out of an equitable freehold? (don’t confuse the equity of redemption)
Pre 1925 it would have been possible to grant a legal lease by the mortgagor in possession of the equity of redemption (which was left to him after he granted a legal mortgage to his land). That would be possible if the Landlord had either parted negligently or fraudulently with his possession of the titles deeds that he would be stopped from later claiming that his legal interest ranked first and second it could happen with his consent, however this would mean that he would be left with an equitable title since he
No an owner of land can only convey the title which he owns.
Can a mortgagor create other legal interests/estates/mortgages after the first legal mortgage?
Before the introduction of the LPA 1925 when the mortgagor mortgaged his land to the mortgagee he would convey his legal title to him and the latter would be the legal owner of the property free to deal in any way he wished with it. The mortgagor was left with the equity of redemption (as he could not convey the legal title since it was held by the mortgagee). Since the equity of redemption was an equitable interest he could only create a second equitable mortgage or interest or estate on his land. The Conveyancing Act 1881 granted statutory powers to mortgagors in possession of granting leases which afforded a legal term.
Since the introduction of the LPA 1925 the mortgagor does not convey the legal title to the land as security for loan but a lease since the mortgage is recognized only for what it really is, security for money. Thus, he can create as much legal interests/estates as he wants on the land. Therefore he is no more left with the equity of redemption and he thus the protection and priority of estates depends on the whether an interest provided that it is registrable is registered or not. The law provides for different systems of registration between registered and unregistered land.
