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Legal Question

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  • Legal Question

    Help required please !

    If a mortgagor and a guarantor are one and the same person, what is the legal position if that person loses mental capacity

  • #2
    Re: Legal Question

    I think that someone has to be appointed legal guardian over them via the court of protection
    this is the details of the Mental Capacity
    http://www.dca.gov.uk/legal-policy/m...et-english.pdf

    Comment


    • #3
      Re: Legal Question

      How would a mortgagee be able realise its security in circumstances such as these

      Comment


      • #4
        Re: Legal Question

        if both mortgagee and guarantor are mentally incapacitated then the court of protection appointed attorney would be the legal person who would make the decisions. Am i reading the question correctly?

        Comment


        • #5
          Re: Legal Question

          The mortgagor and guarantor(both one and the same person) lost mental capacity and had not made an enduring power of attorney. When wishing to realise its security the mortgagee just helped itself and failed to apply to the Court of Protection for a receiver or attorney to be appointed.

          Comment


          • #6
            Re: Legal Question

            It seems unusual that an individual is both the morgagor and guarantor of a single charge?

            Comment


            • #7
              Re: Legal Question

              if the mortgagee simply helped themselves then when was the paperwork signed for the mortgage? That bit I am sure could be contested in a court of law

              Comment


              • #8
                Re: Legal Question

                the mortgagee exercised the powers conferred by the charge, even though they lost these powers when the mortgagor lost capacity
                The mortgagee instructed Law of Property Act Receivers to take possession of the mortgagor's property and realise its security
                The conveyance was signed by the LPA receiver on the mortgagor's behalf.

                Comment


                • #9
                  Re: Legal Question

                  this one is now outside of my realm I think, cyn, will try and have a hunt around tinternet

                  Comment


                  • #10
                    Re: Legal Question

                    if both mortgagee and guarantor are mentally incapacitated then the court must appoint 'power of attorney' usually to the next of kin. Often this is not suitable as it is reliant on the appointed attorney being honest. If they do turn out to be dishonest during this appointment it is up to the police to prosicute. So I would always advise that more than one person be appointed, so they can keep tabs on one another.
                    Borrow money from a pessimist -- they don't expect it back.

                    Comment


                    • #11
                      Re: Legal Question

                      The Court only appoints an Attorney or Receiver if it receives an application.
                      Such an applicaion is usually made by a family member, but if a family member or friend is unwilling or unable to apply any interested party ie a creditor may apply. In this case the mortgagee was aware of the mortgagors incapacity, but it failed to make an application to the court and just helped itself instead.

                      Comment


                      • #12
                        Re: Legal Question

                        But, are there not contract law considerations, as to the fitness of the debitor/Guareentee when they signed the agreement, and if found that a mental Illness (for want of a better word) was likely or a syptom of,or actually diagnosed, or probable, at the time of signing the agreement, then the contract would be void?

                        Comment


                        • #13
                          Re: Legal Question

                          The Guarantor lost capacity a few years after giving the guarantee. Because the charge deed included a clause giving the bank irrevocable powers of sale the bank considered the incapacity of the mortagor/guarantor was irrelevant. Normally irrevocable powers survive mental incapacity. I do not believe that in circumstances such as these that Banks have carte blanche to do just as they please.

                          Comment


                          • #14
                            Re: Legal Question

                            The Law as it stands
                            If a person loses capacity and has not made an Enduring Power of Attorney, providing that person has assets other than social security benefits no one may administer their property and affairs unless an application is made to the Court of Protection.
                            The Bank appointed Law of Property Act Receivers to act on the mentally incapable persons behalf, and gave these receivers instructions to take possession of his property and to realise the banks security.

                            In any event the law prevented the guarantor from entering into any further contracts after he lost capacity, so he was completely at the banks mercy.

                            Its like taking chocolate from a baby - unable to fight back

                            Comment


                            • #15
                              Re: Legal Question

                              Was the condition, a progresive one like Altziemers, if the mental capacity of a person gradually diminishes, then could it not be argued, at the time of signing the agreement, they was in a state of mind, that could have easily been manipulated, swayed etc?

                              Comment

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