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Mortgage money has to be due and that can be an issue unless of course the deed itself or the instrument itself simply gives a more wide power to excise power cells without the need for money to be due. It’s. Also in section 103 there are further issues which are raised. You need to give a notice requiring payment if mortgage or stone and default or some payments 3 months later. Or it could be some other breach off a mortgage or could be at least two months in the years of interest under the mortgage. Just like to note that section 105 contains a payment waterfall provision. First of all, process for sale. Simply going through that list gives an idea. But of course, even if the equity redemption is valuable to a certain amount, it still might not be enough to allow for the entire loan amount, the entire amount of money secured under the mortgage to be discharged. Bring us back to the importance Advantage of a power sale is that you can sell without a court order and indeed without taking possession, and there can be a great deal of value in going down such a procedure.

For example, the premises might indeed be tenanted and could be more valuable rather than less valuable if they are sold with a tenant still in possession rather than having a void period. However, for sale is if there is limited equity in the mortgage property. As we’ve just discussed, the mortgages own interests in respect of the loan secured come quite some way down. The waterfall in section 105. Also note limits on sale about possession in the residential context, and certainly there are certain limitations if the poor mortgagee attempting to sell a more normal kind of residential mortgage. So possession is typically the one that we talk about, especially in the context of residential premises and fundamental historically to the nature of a mortgage.  We see indeed comments such as the fact that a mortgagee may go into possession before the ink is dry on the mortgage. But of course there has been a legislative intervention and procedural intervention into that. So it’s often worth checking to see if, for example, the relevant protection protocol applies. If corpus is issued, it’s residential mortgage rate might very well be applied.

What are some of the disadvantages?

One of the main disadvantages of possession is it places certain obligations on the mortgagee in possession. They can indeed be onerous to discharge in either commercial or in residential properties. It’s also noteworthy that there’s been a moratorium on such possession claims as well, and you’ll see on the slide a new CPR Rule 55, point 29 posing a furthest day until later on in August. And of course the Court has white powers to adjourn proceedings or to suspend a possession order. So particularly right now, speaking in the end of June 2020, some of the advantages of obtaining position pursuance to a mortgage have fallen away and the mortgage you might be concerned that they will be kept out for money for even longer than they might otherwise be if there were not emergency legislation or procedures in place due to COVID-19, which is why parties are now considering more and more the appointment of an LPA receiver. Effectively, the  LPA receiver stands in between the mortgagee and the mortgage, and they are appointed under the mortgage instruments to manage the mortgage property, to collect rents or profits from a mortgage land, a purpose preserving the asset over which a lender has security, and they will owe a duty both towards the mortgage and towards the mortgagee. And it does allow the mortgagee to be insulated somewhat from any concerns of mortgage has overview management of property often hear terms such as fixed charge receivers and LPA receivers, and the term LPA receiver is often used even if the receiver has been appointed under the mortgage instruments. So I would hesitate to call it colloquialism to LPA receivers. That’s generally what they are called and the power to appoint an LPA receiver arises and becomes exercised at the same time as the statutory power sale rises and becomes exercisable under section 101. When it comes to the appointment of the LPA receiver, it’s actually often surprisingly straightforward and simple. And typically a LPA receiver, as we’ll go on to discuss, will rely on the mortgagee solicitor. They will have their standard forms of agreement and an experienced receiver will generally know process. Once a process relatively quickly and often the threat of the appointment of the receiver is sufficient to put pressure on the defaulting. Mortgage in my day will have consequences for any other loans a mortgage or might have respect of the duties, however owed by a receiver, as already noted, with the agent or the mortgage, and therefore they will have somewhat limited duties towards them. But as confirmed in Southern Properties, these are duties owed in equity, duties owed in either contract or in tort, and we’ll go on to consider later on in webinar issues as such as conflict of interest when a receiver is appointed. But the longer or short of it, is a receiver in a somewhat better position than you might otherwise expect? Given their unique position, the receiver has a number of advantages which are summarized on this slide, and in particular because of the way they stand in between the mortgagee and the mortgage. As we can see, receiver can also bring possession proceedings in their own name against a mortgage or occupying a property.