equity of redemption

This right is referred to as the "equity of redemption".

The notion of equity with respect to real estate comes the equity of redemption.

Since the 17th century, lenders have not been allowed to carry interest in the property beyond the underlying debt under the equity of redemption principle.

New Patagonia argued that the exclusivity provision was a clog on the equity of redemption and should be consequently held void.

Subsequently, the clog on the equity of redemption rule as a whole was abolished by what is now section 739 of the Companies Act 2006.

Knightsbridge Estates argued that the long repayment schedule was a clog on the equity of redemption.

Historically the equity of redemption would naturally expire upon the mortgagor breaching the terms of repayment.

In such a case the mortgagee acts for the benefit of the equity of redemption as much as for that of the security.

The equity of redemption is itself recognised as a separate species of property, and can be bought, sold or even itself mortgaged by the holder.

However, in modern times, extinguishing the equity of redemption (and leaving the mortgagee with absolute title to the property) ordinarily requires a court order in most jurisdictions.

The loan was to be repayable by 80 half-yearly instalments spread over 40 years but became immediately repayable if the mortgagor should sell the equity of redemption.

The equity of redemption refers to the right of a mortgagor in law to redeem his or her property once the liability secured by the mortgage has been discharged.

This effect is the same as the strict foreclosure that occurred at common law in England's courts of equity as a response to the development of the equity of redemption.

Vernon v Bethell (1762) 28 ER 838 is an English property law case, where it was affirmed that there could be no clog on the equity of redemption.

The equity of redemption was the right to petition the courts of equity to compel the mortgagee to transfer the property back to the mortgagor once the secured obligation had been performed.

Five years later the company wished to pay off the mortgage in full and argued that the term making the mortgage irredeemable for 40 years was void as a clog on the equity of redemption.

It was unthinkable to have such a person govern a major colony, and in 1708 the Lord Chancellor ruled that "the equity of redemption still remained in William Penn and his heirs."

Such impediments are "clogs" on the equity of redemption, and the courts of equity were particularly astute in striking down any provision which was, or in later cases, which might be, a clog.

The real owner, the mortgagor, could not convey any legal title because he had none; and the legal owner, the mortgagee, could only convey a title subject to the mortgagor's equity of redemption.

The price of the land by then had risen significantly, and Vernon sought a declaration that he retained the equity of redemption, that he could get full title to his land back with debts repaid.

Lord Henley LC held that there could be no clog on the equity of redemption, so that any restriction on the right to redeem one's property had the debt been discharged was ineffective.

On March 10, 1911, Lord Ashburton commenced this action against Nocton and the various persons interested in the equity of redemption in the Church Street property and against the Economic Life Assurance Society.

The debtor remains in a sense owner; he has a new sort of equitable ownership, 'an equity of redemption', which he is only to lose after the court has given him ample opportunity to repay, and it becomes plain to the court that he cannot or will not pay.

Before 1926, either the debtor conveyed the legal right to a mortgagee, and retained an equitable interest - the 'Equity of Redemption'- or else he retained the legal right himself, and gave an equitable interest to the lender, as by a deposit of title-deeds.

The House of Lords held that the option to purchase the sheepskins exclusively for five years was separate and sound from the main contract and not void, given that the purpose of the clog on equity of redemption rules was chiefly to preclude unconscionable bargains.