Who owns the house?

If you’ve got a mortgage out on your house you probably think of yourself as the owner but, if we look a bit deeper into it, that is arguably not correct as a statement of law. The position in law is that the mortgagee – the lender – has rights which are wholly superior to the rights of the registered owner of the property. The only constraint on those rights is that the lender will have agreed that, as long as the terms of the Mortgage Deed are complied with, he will not seek to exercise those rights. So the lender’s contractual undertakings to the borrower restrain his superior interest.

That might seem all rather academic, but it was certainly not academic to Paul Clark and Carol Beech[1]. They failed to comply with the Mortgage Deed. The lender’s rights thereby became paramount. The lender appointed a well-known LPA Receiver (see the article on LPA receivership). The LPA Receiver put the house in auction, and it was sold. The party to whom it was sold (Horsham) inherited the rights of the lender, not of the registered owners, Paul and Carol. That was the situation that arose before the case was decided, and it was decided in favour of the purchaser. Because the purchaser had inherited superior rights from the mortgagee by his purchase, he was able to get possession of the house, as against those who regarded themselves as the owners of the house throughout. There’s a moral there: comply with the Mortgage Deed! Don’t – to take a random example – let the house out in contravention of the Mortgage Deed without the consent of the lender.


[1] Horsham Properties Group Ltd v Clark [2008] EWHC 2327 (Ch)