FLK2 · Property Practice

Mortgages & security in conveyancing

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

PP.09 — Mortgages & Security in Conveyancing

How a lender's security is created, protected and discharged on a purchase, and the solicitor's duties when acting for borrower and lender.

Creating the charge

A first legal mortgage of registered land is a registrable disposition — it must be completed by registration to take effect at law (LRA 2002 ss.23 and 27). Until registered it is only equitable.
The lender usually requires a first legal charge. One solicitor often acts for both buyer and lender (allowed where their interests do not conflict), giving the lender a certificate of title before completion and drawing down the advance to complete.

Priority and further advances

Priority of registered charges runs in the order shown on the register, not the order of creation (LRA 2002 s.48).
A lender may tack a further advance so it ranks with the original charge in defined cases (LRA 2002 s.49) — e.g. the further advance is made before the lender has notice of a later charge, or there was an obligation to make it noted on the register.

Occupiers, overriding interests and undue influence

An adult occupier with a beneficial interest who is in actual occupation can hold an overriding interest binding the lender (LRA 2002 Sch 3 para 2; Williams & Glyn's Bank v Boland). Overreaching that interest needs the advance paid to two trustees.
So the lender takes a signed consent / postponement (waiver) from every adult occupier (aged 18+), agreeing their interest ranks behind the charge.
Undue influence: where a non-commercial surety charges their home for another's debts (e.g. a spouse for the other's business), the lender is put on inquiry and must follow the Royal Bank of Scotland v Etridge (No 2) steps — ensure the surety takes independent legal advice — or the charge may be set aside.

Completion and discharge

The seller's existing mortgage is redeemed on completion; the charge is then released electronically by e-DS1 (or paper DS1) and removed from the register.
SDLT/LTT is charged on the purchase, not the mortgage, and the return/payment deadline is 14 days from completion.

Common traps

A legal charge does not bind at law until registered (s.27) — completion alone is not enough.
Priority follows the register order (s.48), not the date of creation.
A single trustee cannot overreach — an occupier's beneficial interest can still bind the lender (Boland); take the consent/postponement from every adult occupier.
Adult occupier means 18+, not 17.
The Etridge inquiry is triggered by the non-commercial surety relationship itself, whether or not the lender suspects anything wrong.

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A woman is the treasurer of a small amateur football club. Members pay £20 each month in cash, which the woman is instructed by the club's rules to bank into the club's dedicated account within seven days. One month she receives £200 in subscriptions but, being short of money, uses the cash to pay her own gas bill. She intends to replace the £200 from her wages before anyone notices, and she does in fact pay an equivalent £200 into the club account two weeks later. The woman is charged with theft of the £200. Which of the following is the strongest basis for finding the property belonged to another at the time she used it?

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