If default is not remedied with one month after

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If default is not remedied with one month after service of the notice, mortgagee can exercise power of sale under s 77(1) S 77(1): when selling, mortgagee must act ‘in good faith and having regard to the interests of the mortgagor, grantor or other persons’. 5. What interest does purchaser acquire from the mortgagee on registration? Sec 77(4): on registration of transfer, purchaser acquires all the mortgagor’s interest in the land free of encumbrances except Those that bound the mortgagee, and The usual exceptions to indefeasibility. The purchaser’s registered title cannot be impeached on the ground that the mortgagee did not have power to sell or exercised the power improperly Mortgagor is confined to a remedy in damages against the mortgagee 6. Priority dispute between mortgagor and purchaser from mortgagee Need to separately consider the post registration and the pre-registration situations Post registration, the purchaser’s title is defeasible only for fraud (protected by s 42 and s 77(4) Pre-registration, you have a priority dispute between unregistered interests 7. Post registration - no third party interest If purchaser is held to be defeasible for fraud, the purchaser is treated in equity as having acquired only the mortgagee’s interest, not the mortgagor’s. So purchaser holds the registered title subject to the former mortgagor’s right of redemption. If mortgagor pays the debt, the purchaser must transfer the land to him. 8. Post-registration- third party interest In Latec , a third party (MLC) had acquired an equitable interest bona fide from the fraudulent purchaser So HT had to show that its interest was entitled to priority over the third party’s Majority held that the mortgagor’s right to set aside the transfer for fraud was a mere equity that could not prevail against a subsequent equitable interest of a bona fide purchaser for value without notice. Classification of HT’s interest 1. Kitto J: before court order setting the sale aside, HT has a mere equity; after the order, a full equitable interest 2. Taylor J: HT’s interest is a full equitable interest 3. Menzies J: classification depends on the purpose. For a priority dispute, it’s a mere equity. For purpose of devising it by will, it’s an equitable interest (and therefore assignable) Post-registration- classification of mortgagor’s interest 1. The classification issue is unsettled. 45
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46 2. In Breskvar v Wall, High Court refrained from classifying the Breskvar’s interest, but proceeded on the basis that it was an equitable interest Pre-registration situation 1. Pre-registration, the mortgagor has an equitable right to have the sale set aside on the basis that it was conducted in breach of the mortgagee’s duty under s 77(1).
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