Mortgage Default Recovery Options

Summary

Middle Bank plc can demand repayment, initiate court proceedings, or seek possession for missed mortgage payments. Annie and Ben can negotiate a repayment plan or apply for a Time Order under the Consumer Credit Act 1974. Ezzie and Dais liability depends on their legal connection to the mortgage. For the second mortgage with North Bank plc, Annie, Ezzie, and Dai may challenge its validity due to undue influence or lack of independent advice, as established in Barclays Bank plc v O’Brien and Royal Bank of Scotland v Etridge.

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Ben takes out an additional loan from North Bank plc. The loan is used in part to pay the arrears due to Middle Bank plc, who agree not to take any further action, and in part to fund the expansion of Ben’s second-hand car business that he solely owns. The loan is secured by a second legal mortgage on Green Gables to which Annie, Ezzie and Dai reluctantly agree. Ben fails to keep up loan repayments to North Bank plc, and owes one month of arrears of interest to them. Explain whether Annie, or Dai and Ezzie are able to challenge the validity of the mortgage to North Bank plc. Give reasons for your answer supported by case law.
Annie, Ezzie, and Dai may be able to challenge the validity of the second mortgage to North Bank plc under the following grounds:
- Undue Influence: If they were unduly influenced or pressured into agreeing to the mortgage, they might challenge its validity (Barclays Bank plc v O’Brien [*]).
- Lack of Independent Advice: If they did not receive independent legal advice before agreeing, it could be a ground for challenge.
Do you need more details on how they can proceed with these challenges?
more detail
Certainly! Here are more detailed insights for each part:
*. Undue Influence:
- Definition: Occurs when a person is pressured into a transaction without exercising free will.
- Case Law: Barclays Bank plc v O’Brien [*] - established the principle that if a person is unduly influenced, the contract can be set aside.
- Application: If Annie, Ezzie, and Dai were pressured by Ben or North Bank plc, they might argue undue influence to invalidate the mortgage.
*. Lack of Independent Advice:
- Importance: Independent legal advice ensures individuals understand the implications of their actions.
- Case Law: Royal Bank of Scotland v Etridge (No *) [*] - reinforced the need for independent advice to avoid undue influence claims.
- Application: If Annie, Ezzie, and Dai did not receive independent legal advice before agreeing, they might challenge the mortgage's validity.
Do you need more details on how to initiate these challenges?