THE DIFFERENCE BETWEEN EQUITABLE CHARGE AND THE OTHER TYPES OF EQUITABLE MORTGAGES

The difference between equitable charge and the other types of equitable mortgage is well illustrated in the case of MATHEWS V. GOODAY(1861)as follows:

“With regard to what are called “equitable mortgages", my notion is this: suppose a man signed a written contract by which he simply agreed that he thereby charged his real estate with fifty pounds to ‘A’, what would be the effect of it? It would be no agreement to give a legal mortgage, but a security by which he equitably charged his land with payment of a sum of money and the mode of enforcing it would be by coming into Court of Equity to have the money raised by sale or mortgage; that would be the effect of such a simple charge.

Credit - indiatimes.com

It is the same thing as if a testator devised an estate to ‘A’ charged with the payment of a sum of money to ‘B’, ‘B’s right is not to foreclose ‘A’ but to have his charge raised by sale or mortgage of the lands.But the thing would be distinctly an equitable and not a mortgage nor an agreement to give one.On the other hand, the party might agree that having borrowed a sum of money, he would give a legal mortgage when called upon.That agreement might be enforced according to its terms and the court would decree a legal mortgage to be given and would also foreclose the mortgage unless the money was paid.”

A charge differs from the first two in respect of the remedies it confers.The charge is a security by which the mortgagee has a lien on the property. What does a lien mean? According to Osborn’s Concise Law Dictionary, Sweet & Maxwell, 8^thEdition, at page 202, a lien is the right to hold the property of another as security for the performance of an obligation. At Common Law, lien lasts only so long as possession is retained but while it lasts can be asserted against the whole world. A vendor’s lien is the right of a seller to retain the property till payment of the purchase price.

To be continued with Equitable Mortgage of Registered Land

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