***The 12 Year Limit and Endowment Mortgages***

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The information below comes from a solicitor and relates to a posting some 23 postings back by Melody. However, I think it merits a more prominent position:

The point made by Melody (August 14th) under the posting 'does the 12 years start from sale of property or MIG payout' dated the 30th July re the cause of action in respect of endowment mortgages is both interesting and important, and is not one I have come across before.

It reminds me of a Royal Bank of Scotland mortgage that I saw last year which purported to allow the lender to demand full repayment/take repo action if the borrower got into arrears with any debt to any creditor (although the OFT said that this was an unfair contract term).

It shows how important it is to read the mortgage terms and conditions.

Where the terms and conditions state that a particular event 'might' trigger the lender's right to sue, the occurrence of the event in question will result in the accrual of the cause of action. There is good case law to support this (Reeves v Butcher [1891] CA) which held that where there is a right to sue for the whole debt, albeit discretionary, the lender cannot delay the running of time by not exercising its discretion. In the case the agreement provided that the debt became repayable when any interest payment was missed, although it also stipulated that a demand for payment had to be made. No interest was ever paid but the lender did not demand payment for over six years (the relevant limitation period). The lender claimed that the cause of action only accrued when it exercised its discretion and actually made a demand made but the court held that it accrued when the first interest payment was missed, i.e. the first date that the lender could have issued a demand, with the result that the debt was statute barred.......


-- M Amos (idgroms@hotmail.com), August 22, 2003


I think the moral of this story is that however closely you read the T&C of a contract, it's of no use without an enormous amount of obscure case law at your fingertips...

-- Melody (mbc109@york.ac.uk), September 05, 2003.

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