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House Purchase:
Second Mortgages
 
Letter from C Ashford Elton
of Newton Chambers, 43 Cannon Street, Birmingham
dated June 9th 1921
(attached to a report of the Town Clerk dated June 17th 1921)
 
House Purchase
Department
 

Re: Amendment of Mortgage to provide for it being called in on notice of a Second Mortgage being received.

 

I have carefully considered this matter. I am not aware of any other case where the course suggested has been adopted, or of any decision directly bearing on the point submitted to me for consideration; on principle however, I do not see any objection to the form of mortgage being altered as proposed. The Alteration will not in any way clog the equity of redemption as the mortgagor will still be entitled to redeem in manner provided by Clause 3, 4, and 5 of the form of mortgage, and he will also be at liberty to create any further mortgage or charge on the equity of redemption if he shall so desire; the only result being that if he does an event will arise making the moneys owing by him to the Society payable immediately, but as stated in Palmer on Debentures, 12th ed., p. 276:-

 

"a provision for accelerating the time for payment of the principal moneys is not a penalty against which equity can relieve.

Thompson v Hudson L.R. 4. H.L.1.

Wallingford v Mutual Society 5 App. Cas. 685."

 

I might also point out that debentures which are a form of mortgage often specify various events on the happenings of any of which moneys primarily payable at a distant date are made immediately payable. I think that the desired object can be achieved by inserting in Clause 3 of the Society's form of mortgage after the words "herein contained", the words "or shall create any further mortgage of or charge on the premises hereby mortgaged." I do not think it necessary or desirable to also add a covenant by the mortgagor to this effect, as such a covenant might possibly be held to create a clog on the equity of redemption.

 

I regret the delay, but the matter has occasioned some considerable research.