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Review Your SQE 1 Practice Records

Examination Timing: 00H00M34S

ZenithBank has taken possession of James and Rebecca's property and sold it using its power of sale. There is a shortfall of £20,000 remaining owing to ZenithBank. You have been asked to advise ZenithBank and upon reading the mortgage deed, you see that it includes no express personal repayment covenant. 


How would you advise ZenithBank?

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James and Rebecca remain liable for the shortfall under the mortgage deed and ZenithBank can pursue them under the deed for the debt. Even in the absence of an express personal repayment covenant in the mortgage deed, common law implies an obligation to repay all capital and interest into the mortgage deed. Since ZenithBank has not foreclosed on its mortgage but merely exercised its power of sale, the mortgage deed continues to have effect. Therefore, ZenithBank can pursue James and Rebecca for the £20,000 shortfall. Key Point: In the absence of an express repayment covenant, common law implies an obligation to repay all capital and interest into the mortgage deed. This allows the mortgagee to pursue the mortgagor for any shortfall following the exercise of the power of sale, provided the mortgage has not been foreclosed.

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