Mortgages - Problems in Possession, Rents, and Mortgagee Liability
Mortgages - Problems in Possession, Rents, and Mortgagee Liability
Robert Kratovil 0 1
Recommended Citation
0 Robert Kratovil, Mortgages - Problems in Possession , Rents, and Mortgagee Liability, 11 DePaul L. Rev. 1 (1961) Available at: https://via.library.depaul.edu/law-review/vol11/iss1/2
1 Thi s Article is brought to you for free and open access by the College of Law at Via Sapientiae. It has been accepted for inclusion in DePaul Law Review by an authorized editor of Via Sapientiae. For more information , please contact
Volume XI
Number 1
MORTGAGES-PROBLEMS IN POSSESSION,
RENTS, AND MORTGAGEE LIABILITY
HE HISTORY of mortgage law is the history of hundreds of years
of ceaseless struggle for advantage between borrowers and
lenders, and the lawbooks reflect the constantly shifting
fortunes of this war. Occasionally the battle has gone in favor of the
lenders. More recently the battle has usually gone in favor of the
borrowers, and many laws favorable to the borrowers have been passed.
To understand how the modem mortgage developed out of these
centuries of struggle is to take a long step forward toward
understanding modem mortgage law.
Much of our mortgage law comes to us from England. In that
country, mortgage arrangements of various kinds existed even in the
Anglo-Saxon times before the conquest of England by William the
Conqueror in 1066 A.D. However, it will suffice for our purposes to
begin with the mortgage of the 14th century. This document was a
simple deed of the land, running from the borrower, (mortgagor) to
the lender (mortgagee). All the ceremonies needed for a full transfer
of ownership took place when the mortgage was made. The
mortgagee became the owner of the land, just as if a sale had taken place.
However, this ownership was subject to two qualifications:
1. The mortgagee, as owner, could and often did oust the
mortgagor and take immediate possession of the property and collect the
rents. However, it was necessary that the rents so collected be
ap
MR. KRATOVIL, author of the book, REAL ESTATE LAW, currently in its third edition,
was formerly an instructor of Real Property and Mortgage Law in the De Paul
University College of Law, and presently is an instructorin these subjects at the American
Savings and Loan Institute. The present article was originally a lecture presented by
Mr. Kratovil before the School of MortgageBanking in June, 1961.
plied on the mortgage debt. For this reason, the mortgagee often
permitted the mortgagor to remain in possession.
2. The mortgage described the debt it secured and stated a date of
payment known as the law day. The mortgage gave the mortgagor
the right to pay the debt on the law day. If he did so, the mortgage
provided that it was thereby to become void. This provision was
known as the defeasance clause, for payment of the debt on the law
day defeated the mortgage and put ownership back in the mortgagor.
In early times, the courts enforced the mortgage as it was written.
Foreclosure proceedings were not necessary and did not even exist.
Failure to pay the mortgage debt when due, termed a default,
extinguished all the mortgagor's interest in the land.
For many years no one dreamed of questioning this scheme of
things. Then, slowly at first, and later in greater numbers, borrowers
who had lost their property through default began to seek the
assistance of the king. A typical petition addressed to the king by such a
borrower would set forth the borrowing of the money, the making of
the mortgage, the default in payment, and the resulting loss of the
land. The petition would continue with the statement that the
borrower now had funds and offered to pay the mortgage debt in full,
with interest. The petition would then ask or pray that the king order
the mortgagee, who now owned the land, to accept the proffered
money and to convey the land back to the borrower. The king had
little time or inclination to tend to these petitions personally, and so
he habitually referred them to a high official, the Lord Chancellor.
Since the king was the fountain of all justice, it was the Chancellor's
duty to dispose of these petitions justly and equitably, according to
good conscience, and this he did. In cases of hardship or accident, for
example, where the mortgagor had been robbed while on his way to
pay the debt, the Chancellor would order the mortgagee to accept
payment of the debt from the borrower and to convey the land back
to the borrower. A mortgagee who refused to do as he was told was
sent to jail. In time, by about the year 1625, what had begun as a
matter of grace on the part of the king had developed into the purest
routine. Borrowers filed their petitions directly with the Chancellor,
who was now functioning as the judge of a court, instead of with the
king, and with routine regularity his order issued, commanding the
mortgagee to convey. Thus a new and very important right was born,
the right of the mortgagor to pay his debt even after default, and (...truncated)