Rights of the mortgagee

Rights to title deeds or charge certificate

Under the pre-1926 type of mortgage the mortgagee necessarily had a right to hold the title deeds to the property, since the grant of the mortgage conveyed the legal estate to the mortgage. Under the modern system however, the mortgagee at most has only a lease or sublease and it is not normal for a tenant to hold his landlord’s deeds. It is nonetheless desirable for the mortgagee to take the deeds, since this will usually prevent the creation by the mortgagor of the later interests in the property without the knowledge of the mortgagee. Accordingly, ss. 85(1) and 86(1) specifically provide that a first mortgagee has the right to take the title deeds from the mortgagor. A mortgagee under a charge by way of legal mortgage is expressly given similar rights (s. 87(1)). In practice all banks and building societies, and any private mortgagee who takes proper advice, will insist on exercising this right. Of course, the mortgagor may well need upon occasion to see the deeds: he may, for example, need to check them to settle a dispute about the boundary line of the property. Accordingly LPA 1925, s. 96(1), gives the mortgagor the right to inspect the deeds and make copies, as long as this is done at a reasonable time and any costs incurred by the mortgagee are paid. The equitable mortgagee has a similar equitable right to the deeds but, since the most common form of equitable mortgage was that which involved deposit of the deeds, this was rarely a problem.

In the case of registered land a legal charge is created only when the charge is substantively registered. Section 27(2)(f), LRA 2002, provides that the grant of a legal charge is a disposition that is required to be completed by registration. On the application being made, the registrar will enter the charge in the register as the proprietor of the charge. Before the 2002 Act, such a registration would then have led the registrar to issue a new certificate in relation to the charged estate: a Charge Certificate. This was held by the charge (rather like holding the title deeds of unregistered land). Now, however, such certificates are no longer issued, though you may still encounter old ones. All that matters is the content of the register itself. 

Right to possession of the land

Since a legal mortgagee has a lease or sublease (or is treated as though he had) he has a right to possession of the land from the moment that the mortgage is created.

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For more information on:

  • Insuring at the mortgagor’s expense
  • Right to lease