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OBSERVATIONS UN MORTGAGES.
The duties of the solicitor of a party about to lend money on mortgage are, in many respects, the same as those which devolve upon him when acting on behalf of a purchaser, and the observations which have been made with reference to the investigation of the title and protection against dower, and other incumbrances, on the investment of money, in the purchase of land, apply with more or less force to investments by way of mortgage only. But where the security is ample, and there is no reason to anticipate the necessity of resorting to a sale as a means of obtaining repayment of the money advanced, a mortgagee would scarcely be justified in insisting upon as rigid an investigation of the title as would be proper and
necessary on a purchase ; for, by so doing, the difficulties which drive a person to borrow money would be considerably increased by great expenses, for which the party lending would obtain no adequate return.
Where an estate is of a value which puts the adequacy of the security beyond all doubt, and, from the circumstances of the case, (as where the property has been some years in a family,) there is no reason to doubt the goodness of the title, a very moderate degree of investigation only will be necessary. The dangers to be guarded against in accepting the title of property which has been for any length of years in one family are not, generally speaking, those aris
* The preparation of the securities in all mortgage transactions is the duty of the solicitor of the mortgagee ; Kennedy v. Green, 3 M. and K. 699. See also Painter v. Linsel, 9 L. J. 151, C. P. N. S.
ing from the adverse claims of strangers, but from some member of the family claiming under a will or settlement which may have been suppressed or forgotten, and under which the estate of the apparent owner in fee may be only that of tenant for life or in tail. To guard against claims arising from this source, a statement of intestacy and heirship should never be relied upon without the production of letters of administration, or a search in both the prerogative and district ecclesiastical court, to ascertain whether any will is in existence.
When it appears that the party had any vested interest in the property at the time of his inarriage, whether in possession or reversion, and rests his title upon the statement that no settlement was then made, a statutory declaration of that fact should be obtained from the parties, and where it is stated that a settlement was made, but that the property in question was not included in it, that fact should be ascertained by the production of the settlement itself.
Where the property is of much greater value than the sum proposed to be lent upon it, and not subject to any incumbrances, a mortgage for a term of years may with propriety be taken, and then the estate in the premises and the right to the money will, upon the mortgagee's death, devolve upon the same person, and prevent any inconvenience arising from the heir of the mortgagee being an infant at the time of the redemption of the premises; but where, from the value of the property, or other circumstances of the case, it is considered advisable that the mortgagee should have the power of obtaining repayment by a sale of the property, the mortgage should be in fee with a full power of sale, which should authorize the mortgagee to sell without the concurrence of the morigagor, to give valid receipts for the purchase-money, to pay off any prior incumbrances, or sell subject to them; and though, for the mortgagor's protection, there should be a provision for giving him a reasonable notice (as for three or six months) previous to
such sale, the purchaser should be relieved from the necessity of making any inquiries as to the fact of the notice having been given and exempted from responsibility, in consequence of any negligence in giving such notice.
Where the money belongs to two or more persons jointly, as in the case of trustees, it should be stipulated that the survivor will be entitled to the entire amount, and that his receipts will alone be necessary.
As a mortgagee, when he sells the mortgaged property under the power of sale, will be bound to make out his own title, as in the case of vendors selling their own property, he would, in cases where a sale may be reasonably anticipated, be justified in insisting upon the title being investigated and verified with nearly as much care and particularity as in the case of a purchase.
The form of a mortgage-deed, so far as it operates as a conveyance, does not vary from a conveyance on a purchase. The great difference between the deeds is the covenant for payment of the amount intended to be secured, and the proviso for redemption on such payment. The same covenants for title are alike applicable to both modes of conveyance, those in the mortgage not being qualified as those in an absolute conveyance. In the former," the conveying party covenants that he is absolutely seised of or entitled to the property, and that he has good right to convey it, but in the latter those covenants are qua. lified, the party covenanting only, that notwithstanding any act of his own, or of some ancestor, or other particular person named, he is seised, and has good right to convey ; or, in other words, that neither be or such other person have by any act disqualified him from conveying the interests professed to be conveyed; and in the concluding covenant in a mortgagedeed the costs of any further assurance of the premises
The propriety of this course will appear by reference to the case of Vickers v. Cowell, 1 Beav. 529.
Cripps v. Reade, 6 T. R. 606.
is thrown upon the inortgagor, and not, as in purchase-deeds, on the person requiring it. The other clauses peculiar to mortgages, as the power of sale, &c., have been already referred to.
Where several persons concur in making up a sum about to be lent on mortgage, and it is wished to avoid the
expense of several mortgage-deeds, or of the increased ad valorem duty which would be payable where the money is made repayable to the different parties in the proportions in which each advanced it, and not to them all jointly, the premises may be conveyed to all the mortgagees as joint-tenants, or may be vested in a trustee named by them all, or, if so agreed upon, in one of their own number, and such person should give to each party a declaration of trust as to his interest in the mortgage.money and premises, and if there should be any terms of years in the property, they may be assigned to those mortgagees in whom the fee is not intended to be vested, in order to give thein some additional security by making their concurrence necessary in any future dealing with the property.
Mr Jarman, in his notes to Bythewood's Convey- Copyholds. ancing, makes the following suggestions with reference to, the mortgage of copyholds, which are well worthy of attention : “ In preparing mortgages of copyholds," says that writer, « it is usual for the mortgagor to enter into a covenant with the mortgagee to surrender them, which is followed by an actual conditional surrender of the copyhold lands to the mortgagee, and simultaneously enter into a deed of covenant for the payment of the money, and for the title, further assurance, &c., and the latter seems to be the more eligible plan, as it leaves nothing to be done to render the mortgagee's title complete, except admission, which is his own act. The accompanying deed also frequently contains a power of sale."
A mortgagee of leasehold property should not only Leaseholds. ascertain at the time of the loan that the rent has
Title-deeds and notice.
been paid, and that the covenants in the lease, especially those for the insurance and repair of the premises, have been performed, but should, from time to time, during the continuance of the loan, satisfy himself upon these points, and should (in case of the mortgagor's neglecting to do so) take the proper steps for the preservation of the premises, and pre. venting the lease from becoming forfeited to the lessor, and he will be entitled to a lien on the mort. gaged premises for the amount so expended with interest;" but in order to prevent the mortgagee from becoming liable to the rents and covenants of a lease as assignee thereof, it is the usual practice to effect a mortgage of leaseholds by means of an underlease, leaving a merely nominal reversion of a day or two in the mortgagor.
A mortgagee should never allow the title-deeds to be retained by the mortgagor, but where they are in the hands of a prior mortgagee, or other incumbrancer, immediate notice of the loan should be given to such person, from whom inquiries should also be made as to the amount due to bim on his security. The advantage of giving such notice must be apparent, when it is considered that a first mortgagee will be entitled to a prior lien for any further sums lent by him to the mortgagor, even after the creation of the second incumbrance, if he had no notice of it at the time of making the advance.
Should the mortgage be of an equitable interest only, and the title-deeds be in the hands of trustees, who would not be justified in giving them up to the mortgagee, a notice of the charge should be given to such trustees; and, in short, it may be laid down as a general rule, which ought rarely to be departed from, that where the mortgagee is unable to procure both a conveyance of the legal estate and the possession of the title deeds, notice of his incumbrance should be given to the trustee or other party in
Hardy v. Reeves, 4 Ves. 466.