Clog Equity of Redemption | Fetter on Mortgage Redemption

clog equity of redemption

A fetter, restriction or impediment, especially such an impediment on the mortgagor’s equity of redemption. A stipulation or provision in a mortgage deed that prevents the mortgagor from recovering his property unencumbered, after repayment of all the monies due to the mortgagee or performance of all the obligations for which the property was given as security. A clog on the equity of redemption may arise, for example, “where the mortgagee will suddenly bestow unnecessary costs upon the mortgaged lands, of purposes to clog the lands, to prevent the mortgagor’s redemption”, Bacon v Bacon (1639) Toth 133, 134, 21 Eng Rep 146 (Biggs v Hoddinott [1898] 2 Ch 307, 314).

Mortgage void: Clog Equity of Redemption

clog equity of redemptionAny fetter or clog on the mortgagor’s right to redeem his property is void as being alien to the nature of a mortgage (Noakes & Co Ltd v Rice [1902] AC 24, [1900–3] All ER Rep 34 (HL); Williams, Clogging the Equity of Redemption, 40 W Va LQ 31, 49 (1933); Hoar v Mills (No. 2) [1935] 1 WWR 433, 434 (Sask. CA Can)). However, this rule is less stringently enforced today than ever before and a limitation or restriction on the right of the mortgagor to repay the loan is less likely to be construed as a fetter where both parties are business persons, represented by lawyers, and are clearly aware of the consequences of the agreement (MacArthur v. North Palm Beach Utilities, Inc., 202 P.2d 181, 186 (Fla 1967); Jones v Morgan [2001] EWCA Civ 995, (2001) The Times, July 24 (CA)); “the doctrine of a clog on the equity of redemption is, so it seems to me [Lord Phillips, M.R.], an appendix to our law which no longer serves a useful purpose and would be better excised”, Jones v Morgan, supra at § 86 ).  See also once a mortgage always a mortgage, option, redemption, unconscionable bargain. (Clog Equity of Redemption)

Bibliographical references on ‘clog equity of redemption’:

G.S. Nelson & D.A. Whitman. Real Estate Finance Law (4th ed. St. Paul, MN: 2001), §§ 3.1—3.3. J.P.Devenney. A pack of unruly dogs: unconscionable bargain, lawful act (economic) duress and clog equity of redemption. JBL (Sep 2002) 539–53. W.B. Duncan & L. Willmott, ‘Clogging the Equity of Redemption: An Outmoded Concept?’ (2002) 2 QUT Law and Justice Journal 1, 10. 32 Halsbury’s Laws of England, Mortgage (4th ed. 2005 Reissue), § 517–23 (clog equity of redemption).

fetter

A fetter is the same as a clog as it also prevents the mortgagor exercising his equity of redemption, i.e. repaying the loan and taking back an unencumbered right to the property, and is considered anathema to the concept of a mortgage. “As I [Walker, L.J.] understand the principle, it is that when a transaction appears, or has been declared to be a mortgage … the mortgagor is entitled to get back his property as free as he gave it, on payment of principal, interest, and costs, and provisions inconsistent with that right cannot be enforced. The equitable rules that ‘once a mortgage always a mortgage’ and that the mortgagee cannot impose any ‘clog or fetter on the equity of redemption’ are merely concise statements of the same rule”, Browne v Ryan [1901] IR 653, 676 (CA). Go to our bookstore for more books on Property Law (incl. mortgage law). Terms in bold including clog, equity of redemption, fetter, mortgage and other contract terms are all defined and explained in detail, with more references, in Real Estate Definitions Online. A 15-day FREE trial of this Online resource is available, as well as our SPECIAL OFFER for new subscribers. Read all about the Clog Equity of Redemption, Fetter on Mortgage Redemption, and other mortgage issues, with multiple cross references, in Real Estate Defined. (Clog Equity of Redemption)

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