Examination Timing: 00H00M49S
John and Jane are the legal and equitable owners of an unregistered leasehold property. The property is mortgaged to BankCo, which holds the title deeds as security for its loan. John and Jane wish to install a new kitchen and bathroom in their property, which they will fund using a second mortgage advance from Happy Mortgages. This must be secured by way of a second legal mortgage over the property. Which of the following statements best describes the legal position?
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John and Jane are able to grant a second legal mortgage over their property but must register it as a Class C(i) Land Charge. A first legal mortgagee secures their loan by taking possession of the title deeds and not releasing them until their loan is repaid. However, it is possible for subsequent legal mortgages ("puisne mortgages") to be granted, which still take effect in law provided that they are registered as Class C(i) Land Charges to ensure that they are detectable. Local Land Charges generally pertain to encumbrances arising from regulatory matters with the local authority. Class C(iii) Land Charges are for equitable mortgages rather than legal ones.
Key Point: Subsequent legal mortgages on unregistered land must be protected by registration as Class C(i) Land Charges to ensure they are enforceable and detectable. The possession of title deeds by the first mortgagee does not preclude the granting of subsequent mortgages.
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