“If the Freedom of Home-Owners to Make Economic Use of Their Homes Is Not to Be Frustrated, a Bank Must Be Able to Have Confidence That a Wife's Signature of the Necessary Guarantee and Charge Will Be as Binding Upon

Q.4 “If the freedom of home-owners to make economic use of their homes is not to be frustrated, a bank must be able to have confidence that a wife’s signature of the necessary guarantee and charge will be as binding upon her as is the signature of anyone else on documents which he or she may sign.   Otherwise banks will not be willing to lend money on the security of a jointly owned house or flat.”   Per Lord Bingham in Royal Bank of Scotland v Etridge (no 2)   [2001]

This quote is regarding mortgages.   A mortgage is a disposition of some interest in property by the mortgagor   as security for payment by the mortgagee.   The mortgagor retains the ownership of legal estate , but the mortgagee obtains a legal third party right against that estate, which is   retransferred when the loan is repaid.     A legal mortgage of registered land can now only be created by a charge expressed to be by way of a legal mortgage: S23 (1) (a) of Land Reg Act 2002, under ss.87(1) and 86 (1) LPA 1925.   Unregistered land must be registered on the creation of first legal mortgage, however if unregistered land is taking out a second mortgage this will not trigger compulsory registration so the mortgage could also be created by demise for a term of years absolute. S.85 (2).

When securing a loan with a property, banks require that anyone who has rights to the property which could be enforced against the mortgagee, to sign a document postponing those rights to those of the mortgagee. Where there are co-owners, the mortgagee will have to seek the signatures of all involved. This is because where a mortgagor defaults on payment under terms of mortgage the mortgagee is given various rights and remedies under certain conditions.   These include right to take possession, remedies of sale,   suing personal covenant to repay, appointment of receiver and the most draconian method of foreclosure- which ends the mortgagors equitable right to redeem, which allows the mortgagor to pay back the loan....