Jurisdiction(s):
United Kingdom

Equity of redemption and receivers’ sale contracts: EWHC grants brief injunction delaying completion to allow potential redemption in Lexham Securities v Earlsfort

Published on: 05 May 2023

Published by a LexisNexis Property Disputes expert

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Article summary

Lexham Securities Ltd and another v Earlsfort Capital Partners Ltd and others [2023] EWHC 909 (Ch) What are the practical implications of this case?

This decision confirms that a mortgagor may still exercise the equity of redemption even after a receiver has concluded a contract on their behalf. Historically, it has been accepted that the equity of redemption is, for a period, put on hold between the making of a sale contract by the mortgagee and the subsequent completion of that contract (see Property and Bloodstock Ltd v Emerton [1968] Ch. 94). The situation is, in practice, different where the sale contract is made by a receiver. Although the receiver is appointed by the mortgagee, the receiver acts as the owner/mortgagor’s agent, not the mortgagee’s. That almost invariably follows from the provisions of the original loan agreement; agreed at the outset, at a time when the mortgagor hopes and expects to comply with the loan terms. Consequently, in National Westminster Bank plc v Hunter [2011] EWHC 3170 (Ch) (‘Hunter’), Mr Justice Morgan determined and held that the equity of redemption (as between the mortgagee and mortgagor) is not brought to an end in cases where the receiver had entered into a...

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