CHAPTER VI. MORTGAGES UNDER THE LAND TRANSFER ACTS, 1875 AND 1897. ALL mortgages and charges are within the Acts including a sub-lease, but not including a term created for mortgage purposes (a). Mortgages and charges of registered land may be made in three principal ways:-(1) By a statutory instrument of charge completed by registration (b); (2) By mortgage or charge off the register protected by a caution or restriction (c), or by a statutory transfer to the mortgagee with a caution to protect the equity of redemption; (3) By deposit of the land certificate protected by notice, which notice will operate as a caution (d). The Act of 1875, as modified by the Act of 1897, contains the following provisions with regard to incumbrances: S. 19. "Where upon the first registration of any freehold or Discharge of leasehold land, notice of an incumbrance affecting such land has incumbrance. been entered on the register, the registrar shall, on proof to his satisfaction of the discharge of such incumbrance, notify in the prescribed manner on the register, by cancelling the original entry or otherwise, the cessation of such incumbrance." For the procedure under this section, see Rules 216, 217. The first schedule to the Act of 1897 provides that this section "shall apply to part discharges." This, it would seem, means a discharge either of part of the money or part of the land (e). But in the case of discharge of part of the money it would be prudent for a purchaser or puisne mortgagee, notwithstanding notification, to inquire as to the state of the mortgage debt. S. 22. "Every registered proprietor of any freehold or leasehold Creation of land may, in the prescribed manner, charge such land with the charges and delivery of Chap. VI. certificates of charge. payment at an appointed time of any principal sum of money either with or without interest and with or without a power of sale to be exercised at or after a time appointed. The charge shall be completed by the registrar entering on the register the person in whose favour the charge is made as the proprietor of such charge, and the particulars of the charge, and of the power of sale, if any; and the registrar shall also, if required, deliver to the proprietor of the charge a certificate of charge in the prescribed form." Charges created under this section are subject to the provisions of the principal Act in respect of qualified or possessory titles (f). The section applies to an annuity or other periodical payment (g). Sub-charges can be created in the same manner as charges mutatis mutandis, and, subject to any entry to the contrary, will rank according to the order in which they are entered on the register (h). A charge can also be created by a person entitled to be registered as proprietor before being himself actually so registered (i). The registrar may, on the application or with the consent of the registered proprietor and of the proprietors of all registered charges of equal or inferior priority, alter the terms of a charge (k). It seems to be no longer necessary to enter the power of sale, since under sect. 9 (2) of the Act of 1897 the provisions of the Conveyancing Act, 1881, ss. 19-24, with certain exceptions, apply to registered charges (7). The words "if required" are modified by the Act of 1897, s. 8 (1). An exception to the use of the prescribed form of charge is made in favour of incorporated building societies (m), and in practice this exception is extended to friendly and industrial and provident societies. Nothing contained in a charge will take away the registered proprietor's statutory power of transferring it by a registered disposition, or of requiring the cessation thereof to be noted on the register (n). Nor can the power to consolidate charges (which may be reserved by excluding sect. 17 of the Conveyancing Act, 1881) affect any registered land in respect of which the charge is not expressly registered (o). It does not appear that a charge confers the legal estate on the creditor, though by exercising his power of sale he has power to confer it or its equivalent by statutory transfer (p). In charges of leaseholds it does not appear that privity is established between the charge creditor and lessor, though if the creditor sells under his power of sale privity seems to be established between the purchaser and lessor (q). In the case of sub-charges inquiry should be made as to the state of the mortgage debt, since registered charges are still matters of account. The charge should be completed by registration as soon as possible, as priority depends upon the time of delivery at the registry (r). Chap. VI. S. 23. "Where a registered charge is created on any land, there Implied shall be implied on the part of the person being registered pro- covenant to prietor of such land, at the time of the creation of the charge, his pay charges. heirs, executors, and administrators, unless there be an entry on the register negativing such implication, a covenant with the registered proprietor for the time being of the charge to pay the principal sum charged, and interest, if any, thereon, at the appointed time and rate; also a covenant if the principal sum or any part thereof is unpaid at the appointed time, to pay interest half-yearly at the appointed rate on so much of the principal sum as for the time being remains unpaid." For a form negativing this implication, see Form 44. If inserted in the charge it is entered on the register as a matter of course (s). Trustees should be careful to insert this provision. The implied covenant seems to apply to an annuity or periodical payment under sect. 9 (3) of the Act of 1897. Where the land is sold subject to the charge, covenants by either party to pay the money owing and to indemnify the other party may be added to the instrument of transfer, and may be noted on the register (†). S. 24. "Where a registered charge is created on any leasehold land, there shall be implied on the part of the person being regis (0) Act of 1897, and see r. 169. (p) Act of 1875, ss. 27, 30, 35. See Capital and Counties Bank v. Rhodes, (1903) 1 Ch. 631. (2) Act of 1875, ss. 27, 35. (s) Rule 158. (t) Rule 133. Implied covenant in case of leaseholds Chap. VI. tered proprietor of such land at the time of the creation of the charge, his heirs, executors, and administrators, unless there be an to pay rent, entry on the register negativing such implication, a covenant with &c., and the registered proprietor for the time being of the charge that the indemnify proprietor of person being registered proprietor of such land at the time of the charge. creation of the charge, his executors, administrators, and assigns, will pay, perform, and observe the rent, covenants, and conditions by and in the registered lease reserved and contained, and on the part of the lessee to be paid, performed, and observed, and will keep the proprietor of the charge, his heirs, executors, and administrators indemnified against all actions, suits, expenses, and claims on account of the non-payment of the said rent, or any part thereof, or the breach of the said covenants or conditions, or any of them." Entry by proprietor of charge. Foreclosure For a form negativing this implication, see Form 44, and see note to last section. The covenants implied under the Conveyancing Act, 1881, 8. 7 D, appear to be wider than those under this section, and may be adopted under Rule 99. S. 25. "Subject to any entry to the contrary on the register, the registered proprietor of a registered charge may, for the purpose of obtaining satisfaction of any moneys due to him under the charge, enter upon the land charged, or any part thereof, or into the receipt of the rents and profits thereof, subject nevertheless to the right of any persons appearing on the register to be prior incumbrancers, and to the liability attached to a mortgagee in possession." For a form excluding this section, see Form 44. S. 26. "Subject to any entry to the contrary on the register, the by proprietor registered proprietor of a registered charge may enforce a foreclosure of charge. or sale of the land charged, in the same manner and under the same circumstances in and under which he might enforce the same if the land had been transferred to him by way of mortgage, subject to a proviso for redemption on payment of the money named at the appointed time.” Remedy of proprietor of charge with a power of sale. For a form excluding this section, see Form 44. On obtaining an order for foreclosure absolute the mortgagee can apply to be registered as proprietor of the land under Rule 164, and a new land certificate will be granted under Rule 263. S. 27. "Subject to any entry to the contrary on the register, the registered proprietor of a registered charge with a power of sale may, at any time after the expiration of the appointed time, sell and transfer the land on which he has a registered charge, or any part thereof, in the same manner as if he were the registered proprietor of such land." Under the Act of 1897, s. 9 (2), the provisions of sect. 19 Chap. VI. and ancillary sections of the Conveyancing Act, 1881, apply to registered charges, and therefore it would seem only necessary to make an entry under this section where some modification of those provisions is desired. For the form and procedure of such a sale and the effect of the transfer, see Rule 137 and sects. 8 (4) and 9 (1) of the Act of 1897. Where a first mortgagee sells under his power of sale the purchaser will be registered free from the second and other charges (u). S. 28. "Subject to any entry to the contrary on the register, Priority and registered charges on the same land shall as between themselves discharge of rank according to the order in which they are entered on the registered charges. register, and not according to the order in which they are created. The registrar shall, on the requisition of the registered proprietor of any charge, or on due proof of the satisfaction thereof, notify on the register in the prescribed manner by cancelling the original entry or otherwise the cessation of the charge, and thereupon the charge shall be deemed to have ceased." See Rules 170 to 173; and for form varying the provisions of this section as to priority, see Form 44. Under Rule 179 the section applies to sub-charges, and under the Act of 1897, Schedule, it applies to part discharges, but by Rule 175 it does not apply to incumbrances created prior to the first registration of the land. S. 40. "The registered proprietor of any charge may, in the Transfer of prescribed manner, transfer such charge to another person as pro- charges on prietor. The transfer shall be completed by the registrar entering register. on the register the transferee as proprietor of the charge transferred. The registrar shall also, if required, deliver to the transferee a fresh certificate of charge, but the transferor shall be deemed to remain proprietor of such charge, until the name of the transferee is entered on the register in respect thereof. [A registered transferee for value of a charge and his successors in title shall not be affected by any irregularity or invalidity in the original charge itself of which the transferee was not aware when it was transferred to him.]" The manner of transfer is prescribed by Rule 168, Form 49. The transferee should inquire of the mortgagor as to the state of the mortgage debt, since there is nothing in the Acts which (u) Re Richardson, L. R. 13 Eq. 142. |