Law of Property Act 1925: Difference between revisions
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''Sections 93 ('''restriction on consolidation of mortgages''') and 103 ('''regulation of exercise of power of sale''') of the Law of Property Act 1925 shall not apply. The liabilities shall become due for the purposes of section 101 ('''mortgagee powers''') of that act, and the statutory power of sale and of appointing a receiver conferred under it and all other powers shall be deemed to arise immediately after execution.''}} | ''Sections 93 ('''restriction on consolidation of mortgages''') and 103 ('''regulation of exercise of power of sale''') of the Law of Property Act 1925 shall not apply. The liabilities shall become due for the purposes of section 101 ('''mortgagee powers''') of that act, and the statutory power of sale and of appointing a receiver conferred under it and all other powers shall be deemed to arise immediately after execution.''}} | ||
Wondered what it was for? | Wondered what it was for? Well, wonder no more. | ||
===Section 93=== | |||
By contracting out of section 93 of the Act we can consolidate all [[security]] granted by a counterparty into a single [[security interest]].Relevant if you have multiple documents, charges, mortgages and assignments. If you don't disapply it, you would be left with parallel security interests - so you may lose out if there is an excess under one and a shortfall under the other (in that you may wind up as an unsecured creditor for that rump). There is no particular benefit to the client in resisting it, so HOLD THE LINE, TOTO. | |||
===Section 103=== | |||
Section 103 predates cuddly consumer protection we have now and is meant to stop aggressive mortgagees seizing mortgaged property before any breach by the mortgagor. It imposes grace periods which, by the atomic-clock-like standards of the modern finance industry, seem positively heroic in length. Three months, for example. | |||
Prime brokers, of course, are a more genteel breed and typically the document would contain provisions protecting the client from the ravages of nasty Edwardian robber barons and Georgian loan sharks. Three months - I mean, come ''on''. | |||
===Section 101=== | |||
The relevant paragraphs here are Sections 101(1) (i) and (iii): the powers to sell and appoint a receiver. These powers arise "when the mortgage money has become due". Generally under a [[Prime brokerage]] relationship liabilities become due immediately after execution of the agreement, so there is no need for due and unpaid money to acquire these two powers. | |||
a {{tag|prime broker}} generally won't be able to enforce security until there has been an [[Event of Default]] . It is key to be able to sell charged assets to a third party. Without this amendment selling the charged assets would be practically difficult as the purchaser would need to investigate whether an Event of Default had occurred. The effect of this clause is that the power of sale arises as soon as the agreement is signed. | |||
Revision as of 18:14, 26 January 2016
Ever seen something like this?
Sections 93 (restriction on consolidation of mortgages) and 103 (regulation of exercise of power of sale) of the Law of Property Act 1925 shall not apply. The liabilities shall become due for the purposes of section 101 (mortgagee powers) of that act, and the statutory power of sale and of appointing a receiver conferred under it and all other powers shall be deemed to arise immediately after execution.
Wondered what it was for? Well, wonder no more.
Section 93
By contracting out of section 93 of the Act we can consolidate all security granted by a counterparty into a single security interest.Relevant if you have multiple documents, charges, mortgages and assignments. If you don't disapply it, you would be left with parallel security interests - so you may lose out if there is an excess under one and a shortfall under the other (in that you may wind up as an unsecured creditor for that rump). There is no particular benefit to the client in resisting it, so HOLD THE LINE, TOTO.
Section 103
Section 103 predates cuddly consumer protection we have now and is meant to stop aggressive mortgagees seizing mortgaged property before any breach by the mortgagor. It imposes grace periods which, by the atomic-clock-like standards of the modern finance industry, seem positively heroic in length. Three months, for example.
Prime brokers, of course, are a more genteel breed and typically the document would contain provisions protecting the client from the ravages of nasty Edwardian robber barons and Georgian loan sharks. Three months - I mean, come on.
Section 101
The relevant paragraphs here are Sections 101(1) (i) and (iii): the powers to sell and appoint a receiver. These powers arise "when the mortgage money has become due". Generally under a Prime brokerage relationship liabilities become due immediately after execution of the agreement, so there is no need for due and unpaid money to acquire these two powers.
a prime broker generally won't be able to enforce security until there has been an Event of Default . It is key to be able to sell charged assets to a third party. Without this amendment selling the charged assets would be practically difficult as the purchaser would need to investigate whether an Event of Default had occurred. The effect of this clause is that the power of sale arises as soon as the agreement is signed.