London Regional Revision 2020:

Mortgages

VIDEO TRANSCRIPT
Final session then, we're going to be looking at mortgages. Particularly what we're going to be
looking at here is the position of the mortgagor, because when it comes to mortgages you can
look at it from the mortgagee’s perspective and the mortgagor’s perspective. That in itself is a
big topic if you like to look at it. What we're looking at particularly here is the position of the
mortgagor.
What we're going to be looking at is the mortgagor’s rights including defending a mortgagee’s
right to possession claim. Before we even get into that, I'm going to explain some terminology to
you. We're going to have a little chat about mortgages generally. Some of it will be revision
points from looking at states and interests. We're just going to recap that from what we were
looking at this morning.
Maybe you're very, very familiar by the way with mortgages. Mortgages may be one of those
things that you have or you've come across and you know exactly what they are and how they
operate, so in that sense it may be a bit easier. In terms of mortgages, firstly, what is a mortgage?
How would you describe a mortgage to somebody? A loan is taken out, secured over land. A
loan that somebody takes out and is secured over land.
In your property guide that you've got, you'll see a mortgage has a little bit more description, so
conveyance of an interest in property as security for payment of a debt or the discharge of some
obligation. In a nutshell, it's a loan secured over land. Now before we get into terminology and
what rights people have and that kind of thing, just to briefly explain why people have
mortgages and you may well know this.
Most common scenario is that people take out a mortgage to finance buying a property. There
are a few lucky people out there who have potentially got enough cash sitting in their bank
account to go out and buy a property and depending where you come from and how much
people earn, etc. Certainly, property prices in England and Wales are pretty extortionate
particularly if you're looking around London down here.
Many people will go to bank building society and borrow money in order to fund that purchase.
The lender, the bank, the building society, they take a charge over that property’s title as security
for the loan. If the payments are not made, if there is a breach of the mortgage terms, the lender
can enforce their security and basically take the property and sell it to pay the loan back. That's
the way that it will work.
The way these loans work generally, they're paid back in monthly installments over a number of
years. Often 15 years to 30 years until the loan has been fully repaid. How long you get the
mortgage for is a matter of negotiation between you and the bank, and the building society.
They base it on age and all sorts of things. That is what a mortgage is all about. Some people
then will take out second mortgages.

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Over the same property, you can have more than one mortgage on the property. It's not
necessarily that common, but you can do it so long as you have enough cash and the property
and the bank is happy to loan. Why you might take a later loan to do an extension on the
property. Something like that, increase your borrowing. That kind of thing. They all say it's all a
point of negotiation really. Technical names then, because it's all about understanding the
terminology. What is the technical name for the borrower? Mortgagor. The way again some
members borrower mortgagor, not quite the same but near enough. If you're trying to
remember which is which.
The lender? The mortgagee. Yes, absolutely. How does a legal mortgage have to be created and
protected in unregistered and in registered title? For a legal mortgage, this is recapping stuff
we've done before. To be a legal mortgage, how must it be created?
By deed. Good. Section 52, the Law of Property Act. It's a charge by way of legal mortgage. It has
to be created by deed. Just to recap on previous topic, your deed is a document that's clear it's a
deed. It's signed and witnessed under Section 1 of the Law of Property Miscellaneous Provisions
Act 1989, so exactly what we were talking about earlier. To be a legal mortgage, what there
needs to happen with that mortgage at the land registry? Registration. It has to be substantially
registered under Section 27 of the Land Registration Act 2002. Just to explain as we did earlier.
What will then happen is the land registry puts a charge on the title of that property in the
Charger’s register. Likely, what's the other form of protection that they will also add to the title?
A restriction. Exactly, right, under Sections 40, 41 and 43. If it's unregistered title, then in terms of
a legal mortgage, what's our rule as to whether that legal mortgage is binding? How is it
protected? What's the rule? Unregistered title, legal rights bind the world. Absolutely. Just so you
know, in terms of practically speaking, quite often the lender will take the title deeds to the
property as security, because the property itself cannot be sold or dealt with without the title
deeds. The lender actually takes physical security, takes those away. That way nothing can
happen. Post anointing 25, a second legal mortgage.
If you took out another one, that would have to be protected by a land charge. C1, so CI land
charge. The reason being, there's only one set of title deeds. If the first lender has got the title
deeds, the second lender can't take them because they're not there. Instead, they can put the
land charge on. That second legal charge, that's what we called a puny mortgage or something
that I mentioned to you earlier.
That's just a reminder about legal mortgages creation and protection in registered and
unregistered title. In terms of an equitable mortgage, how would we create that? What
document do we have to create, an equitable one, not a deed? A contract yes, so a contract
under Section 2, the Law of Property Miscellaneous Provisions Act. In writing, contain the terms
and be signed. In terms of registered title, what's the way that we can protect an equitable
mortgage? What do we put on the property’s title? I'll give you a clue. It's not a restriction. A
notice. A notice under Sections 32, 34 the Land Registration Act. If it's unregistered title pre 1925,
what's our doctrine as to whether that equitable mortgage would be binding? Doctrine of
notice, good. Equity's Darling. Post-1925, what has to be registered? A land charge, yes and it'd
C3, which is a general equitable charge, so C and then III. That's just a bit of a recap really in
terms of creation and protection and mortgages. It gives you an idea of what they are in the first
place. What we're going to be looking at first of all is the mortgagor’s rights under the mortgage.
In other words, the borrower's rights, what they have under the mortgage.
Then we're going to look at how they can defend a claim for possession. If the lender comes in
and wants to take the property, what they can do. We’re very much now looking at this from the
borrower's perspective. The thing with a mortgagor or a borrower. An element of taking out a

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mortgage is very much the freedom to be able to pay that loan back and release the property
from the mortgage.
That is a really fundamental thing about a mortgage. When you take out this loan, you must
have the ability to pay it back and get rid of the charge basically from that property and free it
up. We have a number of principles in place that stop lenders from not allowing borrowers to do
this or prevent them from harsh terms in the mortgage when they take it out. Generically, we
call these "clogs and fetters."
When you see that phrase, we're looking at the fact that there can be no clogs or fetters in the
mortgage. What we mean by that is there cannot be any harsh terms in the mortgage that stops
the borrower from paying it back, from getting themselves out of the mortgage and the terms
that they've signed up to. That's what we're going to be looking at now.
The first thing to understand is what is the equity of redemption? Basically, the equity of
redemption is the rights that a mortgagor has under their mortgage. It's a bundle of rights
basically, under their mortgage. One of the key rights that they have is ownership in relation to
the estates in that land, so ownership of the freehold, for example. It's a key right that they must
have. In other words, they should have a right to that property, free of the mortgage, once the
mortgage has been paid back, or if they sell the property to somebody else and pay it back in
that way they get the equity, they get the cash if you like, within that and they get that. The
equity of redemption is that idea of these rights and particularly that ownership right.
As part of that you've got then got to consider, well what is the right to redeem? The right to
redeem is one of the rights under the equity of redemption. It is one of those bundles of rights.
Effectively, the right to redeem the mortgage is simply to write, to pay it back. A borrower
should have the right to pay back the mortgage. The loan, interest, costs, et cetera, and free the
land up from the charge and get rid of it, because once the mortgage has been paid back, there
is no reason for the lender to have that charge, have that land, the security. There is no debt
anymore. That is their right to redeem in that way.
What would be considered then a clog or a fetter? Well, as a starting point, we would very much
consider it to be a clog or a fetter if there is a term in the mortgage that makes it impossible for
the mortgage to be redeemed. In other words, it makes it impossible for the mortgage to be
paid back. We would consider that a clog or fetter on the borrower's equity of redemption.
Likewise, if an owner lost their property, immediately wants their legal right to redeem had
expired, and they immediately lost it, that's expired, it's gone, you lose your property. We would
very much consider that to be a clog or a fetter because they're losing their property. Likewise, if
their right to redeem, their right to pay this back is delayed unduly delayed. That again could be
considered a clog or a fetter.
You're not making it impossible, but you're delaying it in a long way. Now, I've mentioned this
idea of right to redeem and legal right for redemption. It's important to understand when is the
right to redeem a common-law and when is the right to redeem an equity. They are two
different things. At common law, the right to redeem the mortgage is normally a date within
about the first three to six months of the mortgage term.
it's a term in the contract, in the mortgage between the lender and the borrower. It's what we
call the legal date for redemption. This data, common law is in theory at common law, the
money becomes due, the loan. As I say, it's normally within about the first six months, three to
six months at the mortgage term. That's your legal date for redemption. We also have an
equitable right to redeem the mortgage. This was introduced, the idea of the equitable rights
and redeem was introduced so that borrowers didn't lose their property the second that the
legal date for redemption had passed.
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The reason being, if that legal date of redemption had passed within the first three to six months
and they didn't immediately pay the loan back, they would lose their property. Borrowers are
very unlikely to once we actually pay the loan back after only six months. That is not the point of
a mortgage. The point of the mortgage is they want to make installments over a long period of
time, many years. We don't like this idea that the second, the legal date for redemption passes,
that's it. It's all over, you lose your property. We also had this equitable right to redeem the
mortgage as well.
The equitable right is the right to pay the mortgage back. The loan, the interest or the costs
associated with it at any time after the legal date for redemption has passed. In other words, if
you've agreed that that loan is going to be taken out over 30 years, then that's fine. Even off to
the legal date for redemption has passed in the first six months, you don't lose your property,
you can redeem any time thereafter.
We have these two rights of redemption. The question is then, can you postpone them, can you
delay these rights to redeem? Well, under Jones and Morgan, any unfair postponements or strict
limits on redeeming the mortgage will be void. Any unfair postponement or strict limit will be
void under Jones and Morgan. That does not mean to say postponement is not possible at all.
It is, so long as the rest of the mortgage terms are fair. In other words, not unconscionable. We've
talked about the idea of general unconscionability. Now, postponements are quite common, not
necessarily for a long period of time, but they're actually quite necessary for mortgages to work,
because the whole reason that banks and building societies will give people a mortgage is they
charge them interest on that. That's how they make their money.
If you loan somebody some money and then allow them to immediately pay it back fairly
quickly, the lender is not going to make any money on that loan. They need a period of time to
pass before they can actually really get any interest on it. Postponing redemption or allowing a
delay can happen and you can attach fees to it. If any of you have looked at mortgages or got
mortgages in this way, you may see a term in a mortgage that says, for example, if you pay the
loan back within the first two years, there's an early redemption fee or a penalty, if you like, for
that.
That is not unusual. It's not considered unfair, in a 25-year mortgage by saying, "We'll give you a
cheap interest rate for the first couple of years, but while you're on the cheap interest rate, if you
pay it back, you're going to have a fee attached to it." They do that because, otherwise, they're
not going to make any money. That's the way that they do it. When you're looking at this, it
would very much depend upon the terms of what you're looking at.
As I say, an unfair postponement or a strict limit could be declared as void. Overall, what you've
got to look at is the term cannot be so unfair that redemption would be impossible. That's what
you're looking for. That comes from a case called Fairclough against Swan Brewery Company
Limited. Have a look, see what if there was a delay and what's attached to it. Ultimately a
redemption cannot be impossible.
You've then got general what we'd call oppressive and unconscionable terms. That's what we're
going to look at now and see what would we consider to be an oppressive or unconscionable
terms. The first one that we're going to look at is a collateral advantage and whether they're
permitted. Generally speaking, when you've got a mortgage, it shouldn't really have too many
conditions attached to it and nothing if you'd like to do with the mortgage to do with the land.
The purpose of a mortgage, it's security for the loan. That's it. To be attaching loads of extra stuff
on it, you shouldn't really have those conditions and things there. A collateral advantage would
be one of those extra conditions, if you like, those extra obligations in relation to the mortgage

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or the redemption. What is a collateral advantage? When does this occur? Does anybody know?
Is it anything to do with the loan itself? Not written. It's not.
Would you get it like in a residential type scenario where somebody's, would you expect to say a
collateral advantage between a bank and an individual? No. It's more of a commercial kind of
context. A collateral advantage is where the lender has attached this conditional obligation to
the mortgage or the redemption. It's actually nothing to do per se with the loan itself. The best
way to describe it is to give you an example.
It arises very often in a commercial context where the lender is not a bank or a building society.
That's not the nature of their business, if you like. They have an entirely different business and
the borrower is getting a loan from them. You have a mortgage relationship. Because the lender
is a separate business, they attach another little condition in respect to this mortgage.
A good example of a collateral advantage is the fact that the borrower has to buy their supplies
from the lender. The lender is in the nature of a business where they supply certain things and as
a mortgage condition, they stick in that the borrower has to buy their supplies from the lender. A
classic example of this is breweries and pubs. The lender might be the brewery. They loan
somebody the money to buy the pub. As a condition they say, you have to buy beer from us, or
you have to buy your tonic water from us if that's what their company, whatever their suppliers
is. It's a classic example. That's a collateral advantage. Buying your beer has got nothing to do
with the mortgage itself, nothing to do with the loan. It is just simply giving the lender an added
value, an added bonus from this. Are they allowed. Do we allow collateral advantages like this?
Yes, we can. Do once upon a time, no. We didn't like them at all. They were considered a clog or
a fetter on the equity of redemption.
Clogging up the idea of the borrower’s rights. Now, we will allow them, they are permitted, but
on certain terms. Collateral advantage is fine so long as, generally speaking, the advantage
comes to an end once the mortgage has been redeemed. Once it's been paid back, that's it. The
advantage is over. Secondly, that the terms of the collateral advantage are not unfair.
In other words, not unconscionable.
Thirdly, that it's not in restraint of trade. I'll talk to you about that in a second. Generally
speaking, if it's going to come to an end when the mortgage is paid back, it's not unfair and it's
not in restraint of trade, we will allow it. Kreglinger and New Patagonia Meat and Cold Storage
Company Limited has actually taken that a bit further and suggested that a collateral advantage
that would continue even after the mortgage has been paid back, even after it's been redeemed,
may actually be acceptable.
So long as the property has been returned to the borrower, in other words, the mortgage itself
has been released. The collateral advantage can continue. Now, we've said that you'll only see
these in commercial-type mortgages because that's the whole point is between businesses. The
reason that they may also be seen as acceptable is because it's a commercial arrangement.
Post-redemption. This advantage has got nothing anymore to do with the mortgage or the loan.
It's just a commercial agreement in the same way that you are free to contract and do things in
commercial agreements. Have a look at the advantage and see what's going on. What about a
term in restraint of trade? I just said about if it's in restraint of trade, a term in restraint of trade is
also known as a soulless agreement. You might see that written.
Restraint of trade, a soulless agreement is where there is a condition within the mortgage or an
obligation tying the borrower to the lender or even another company. It is tying them in the
sense of them being something like their only supplier. You could have it in the brewery
scenario I just gave you. Another example case-wise is case called Esso Petroleum against

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Harper's Garage. It's another good example of these kinds of things where an oil company tied a
garage to them as their only supplier. That's why it's in restraint of trade.
It's not just saying, "You have to buy oil from us." It's saying, "You can only buy oil from us." You
are restraining them from trading with anybody else. Are they allowed? It depends on what's
going on really. They have been viewed as against public policy or competition law as well.
Particularly in the context of mortgages. It's a public policy point really. What I would say to you
is the court may well adopt the same view on these as they do collateral advantages generally.
They are commercial arrangements, they are contractual provisions within it. Therefore, it can be
seen like any other commercial arrangement.
Can a lender have the right to purchase the mortgage property? Does anybody know what this
is known as? If you have a right to do this, it's an option. It'd be an option agreement or an
option to purchase. This is where the lender as part of this loan potentially is saying, "I have a
right to buy the property. If that's what I want to do. An option to purchase. Starting point, an
option to purchase within a mortgage would be void. That's your general starting point, with it
being in there.
Samuel and Jarrah Timber. That case has said you don't even need to show that the term is
unfair, that the term is unconscionable. If you've got an option to purchase within a mortgage,
it's a no-no. That clause can be declared void. If, however, the option to purchase is separate to
the mortgage, and by that I mean really separate, not part of the same transaction, completely
different agreement, that kind of thing, seen as two entirely separate things, then it could be
valid. That's the case of Reeve. It's possible.
Jones and Morgan, case I mentioned before. There the court viewed that it wasn't separate to
the mortgage. The actual option agreement was entered into quite a long time after the
mortgage itself. They weren't done at the same time. It wasn't the same document. The court,
there viewed that it wasn't separate. It was still part of the agreement. If there's going to be an
option to purchase, it would seem to be that it has to be truly separate from the actual mortgage
itself or its terms.
There have been, as there often are contrast in cases that will say something different
Warnborough and Garmite, you can contrast that to Jones. An option there was entered into at
the same time as the mortgage. They said it won't necessarily be a clog or a fetter. You have
those contrasting cases. It may well be that it comes down to what's going on in that particular
scenario.
What powers do the court have? Pretty wide powers, to be honest. They can, as we say, strike
down any unconscionable terms in the mortgage. In other words, they can take them out, or
they can even declare the whole mortgage to be void. That's possible. Martin Dixon quoting
Multiservice Bookbinding Ltd v Marden . You've got this in your textbooks. Says a term will be
unconscionable and unenforceable where it is in substance objectionable and has been
imposed by one party on the other in a morally reprehensible manner. That's a really good
summary. That's why I've used that one.
Jones and Morgan has confirmed it. What does that mean? What you're basically looking for is
not only an unfair term but bad behavior on the part of the lender in relation to it. For example, a
lender taking advantage of unequal bargaining power. In that instance, not only is the term
unfair, but they're not behaving in a conscionable way because they're taking advantage of the
situation.
We do have this power of the courts to strike down and get rid of any terms like that or they can
declare the whole mortgage void. Just to give you some other examples in terms of what they
would strike down as an unconscionable term, an extortionate interest rate, for example. We've
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seen that in the case of city land properties in Deborah 57%, interest rate, way too high. They
said extortionate.
You can, again though, there is always cases you can contrast to, the case of you can contrast
that one directly with Paragon finance PLC and Pender that wasn't deemed to be an extortion
interest rate. They said there you can have a higher interest rate charged than those of other
lenders if there are genuine commercial reasons. If there's a reason to do it, you may not be seen
as extortionate.
There's other cases linked to remedies as well that are used by the lender. Overall, the general
court's approach is the court will interfere and strike down these oppressive or these
unconscionable terms, but not necessarily declare the whole mortgage to be void. If they are
looking at it and saying it's the bigger picture, yes, these are not fair. It is not right and it is too
oppressive. Particularly, you have to look at things has the borrower received legal advice on
this. They will look at that. That will have a bear in it as to how much they'll interfere.
The courts are also fairly reluctant to interfere with commercial mortgage terms where the
parties have equal bargaining power. Whether they want a level playing field, if you like, and it's
a commercial arrangement, they will look and say that was agreed commercially between two
people on an equal fitting. That's what they'd chosen to do. Likewise, obviously they'll look at
where the legal advice and things has been taken. One thing just to mention to you before we
move onto defending right of possession, do be aware that there is also statute in place to
protect borrowers. We're not getting into that right now because again, that's an extension
going in a different direction. Be aware of it. The Consumer Credit Act 1974 as amended,
Financial Services and Markets Act 2000. Be aware, you have got information on that in your
module guides. That deals with the price of unconscionable terms. We're now going to have a
look at defending the mortgagee's right to possession. We're looking at this from the borrower's
perspective. Before I get into how you defend it, just explain how the lender can do this in the
first place very briefly. When a mortgage is taken out, a lender has a right to the borrower's
property and the quote is "before the ink is dry on the mortgage." That comes from a case called
Four-Maids Limited against Dudley Marshall Properties Limited.
Before they've even basically finished signing and the ink is dry, it is a right that the lender has a
right to the borrower's property, unless it's been contracted out for mortgage. Highly unlikely
that they would contract out of that. The reason being, if there's a default, if there's a problem,
that's exactly what they want, is the property to be able to get their money back. Do you think
lenders exercise this right fairly easily and freely? Are they interested all the time in taking
people's property away from them? No.
It'd be very unusual for a lender to exercise this right unless the borrower has done something
wrong. Basically, they have to be in default, but be aware it is a right, not a remedy. Technically
speaking, they have that right straight away to take the property if they want to. Most common
scenario, borrower has defaulted some way on a mortgage payment and the lender wants
possession at that point to sell the property. Once they sell the property, they pay themselves
the loan back. That's what you're looking at.
What we're talking about here then is if that happens, if the lender goes in and wants to sell the
property, to sell it, take the property so to sell it, can that be defended by the borrower? Which
statute can borrowers have a residential property used to defend this right to possession? The
Administration of Justice Act 1970, and in particular Section 36. Now, please just know on this,
we're talking about a residential property, not commercial premises, not commercial mortgages.
This is about a borrower defending their home basically, being taken away the residential
premises. They can use Section 36 of the Administration of Justice Act to defend a lender's
possession proceedings. This though can only be used when possession of the property has
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been taken how by the lender? How must the lender take possession of the property for the
borrower to be able to use Section 36? A court order. Section 36 can only be used when the
lender is taking possession of the property by court order. We have a case to confirm that. It is a
case Ropaigealach against Barclays bank. That is the case normally most people look at in terms
of the long spelling. Ropaigealach says that in order to use Section 36, there has to be
possession by court order. Then you might think to yourself, do they always have to have a court
order? No, they don't.
They can use, lenders can use common law rules, actually, to take possession of the property.
They're perfectly free to do that. If that happens, if the lender goes in under common law rules,
the borrower cannot use Section 36. The only way they can do this is if there is a court order for
possession. Do you think it's likely that the lender would get a court order for possession, or do
you think they're more likely to go under common law rules? Do you think lenders just walk in or
do you think they go to the court first, get the order and then go in?
Get the court order. Yes. The reason being they can use the common law rules, but they have to
be really careful because they can actually risk committing a criminal offense under Section 6 of
the Criminal Law Act 1977. We are not getting into criminal law today, but they very much risk
committing an offense if they just walk in and take people's premises.
Most lenders, pretty much all lenders will go to the court and get a court order for possession
first. If they do that, that's when the borrower then has the opportunity to defend using Section
36. What powers does the court have? Quite wide-ranging really, under Section 36.
They have the power to adjourn proceedings, stay or suspend execution of a judgment or order
for delivery of possession of the property, or postpone the delivery date for possession. Quite
wide-ranging what they can do. Adjourn the whole proceedings, stay or suspend execution of a
judgment or order for delivery of possession, or postpone the delivery date as to when
possession has to be given.
What does the borrower have to be able to show? In order to get the court to do, make any of
those orders and for the borrower to be successful in defending this, they have to show to the
court certain things. What they have to demonstrate to the court is that the borrower is likely
within a reasonable time to pay any sums due. That is what they have to prove to the court to
get the court to do one of the things. Likely, within a reasonable time to pay any sums due. What
then does that mean? Breaking that down. Reasonable time. Let's deal with that one first.
What do we mean that they have to do this within a reasonable time? What is a reasonable time?
Well, this was explained in a bit more detail. In the case of Cheltenham and Gloucester Building
Society against Norgan. Pre-Norgan, a reasonable time or reasonable period was considered to
be commonly and it was commonly, it's not a part of false rule around two years.
What they would have to show was that they were likely within a two-year period to pay any
sums due.
Norgan changed that. Norgen says that the court can consider the remaining term of the
mortgage as a reasonable time period in which to make the payments of any sums due. The
remaining time left on the mortgage is quite often now the starting point. Just to give you an
example of that. If the mortgage was taken out for 30 years, five years down the line, the
borrower's defaulting. To defend possession proceedings, they have to show they're likely to pay
any sums due within a reasonable period.
The court may say our reasonable period is going to be the remaining 25 years that are left on
the mortgage. We're not saying you have to make these payments within the next two anymore,
25 years. So we can spread them out over the remaining term. Norgen says that can be your

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starting point. That's your reasonable time frame. What then do we mean by any sums due?
What do they actually have to pay within this reasonable time? Well, the case of Halifax Building
Society and Clark said that any sums due means the entire amounts of the loan.
If you think about it before Norgan, they were saying that within the next two years, you've got
to show that you can pay the entire amount of the loan. Logically, if you're making default
payments, that's going to be quite hard to do. Granted, Norgan is now the remaining period.
From following Clark, it was considered that there was actually an error in the drafting of Section
36 in this way.
Section 8 of the Administration of Justice Act 1973 came in and amended this. Now, under
Section 8 of the 1973 Act, we consider any sums due to mean the outstanding arrears and the
normal monthly payments. We're not talking about immediately the whole loan, it's just
whatever they're supposed to be paying month by the month together with any arrears that
have accrued.
The other element of this is likely, when we say that it's likely that they can pay this, what we're
looking for is the borrower to show that they can realistically make those payments. Practically
speaking, they would have to show to the court a detailed financial plan of how they're going to
make these payments. Overall, to summarize what you're looking at for Section 36, is the
borrower has to show that they can make the normal monthly payments that they would be
expected to make under the mortgage, plus the arrears over the remaining term of whatever is
left on the mortgage. It's realistic to do that. That is what we're looking for.
In terms of case examples, you have got cases that you're directed to in your textbooks, that you
have a look at them, but just to give you an idea on the court's approach to this. First National
Bank and Syed, the borrower there couldn't show an improvement in their finances or a way of
showing how they were going to make repayments on the loan without a sale happening.
The order for possession wasn't suspended because they couldn't show that realistic financial
plan of how they were going to do this. In terms of another case, Cheltenham and Gloucester
against Krausz, they said that if the borrower wants to use Section 36 to suspend possession
proceedings for sale, there must be enough money to pay off the mortgage completely. In other
words, the sale is going to result in the whole loan being paid back. You've got other cases as I
say, have a look at them to see the court's approach, but generally speaking, that's what we're
talking about and that is what the borrower was going to have to prove.

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