clog or fetter on the equitable right to redeem

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Any provision in a mortgage deed to prevent redemption on payment of the debt or performance of the obligation for which the security was given. Such provisions are void. An example is an option contained in the mortgage deed for the mortgagee to purchase the mortgaged property before or after the mortgage has been redeemed (Jones v Morgan [2001] EWCA Civ 995). Unconscionable provisions in a mortgage (for example, one to prevent redemption for 100 years) are also void. However, a company may issue irredeemable debentures. A provision that would otherwise be unconscionable may be valid if the transaction containing it is a commercial arrangement rather than a mortgage. Thus, such provisions in mortgages of public houses or garages by their tenants or owners to breweries or oil companies will be upheld, provided that they do not infringe the contractual rules against restraint of trade. Under the Unfair Terms in Consumer Contracts Regulations 1994 unfair redemption penalties may also be subject to challenge.

Subjects: Law.

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