1Where a deed combining a loan advance with an option to require transfer of an interest in property is found to be in substance a mortgage, the obligation to transfer the property interest without consideration additional to the loan advance is a collateral advantage that constitutes an invalid clog on the equity of redemption.
2Lord Parker's Proposition (3) from Kreglinger should be adjusted so that parties may include in a single mortgage transaction an option to purchase the mortgaged property, but only where the option requires the mortgagee to pay a proper price referable to the property's value; an option exercisable for no additional consideration beyond the loan advance remains void as a clog on the equity of redemption.
3A contractual term making a party 'responsible for one third of all outgoings... and all repairs and maintenance' is properly construed as an obligation to meet one third of the cost of those items, not as an obligation to personally perform repair and maintenance work or to participate actively in a business conducted on the property.
Case Details
Citation[2021] NSWSC 1558
CourtNSWSC
JurisdictionNew South Wales
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