This section is from the book "Real Property, An Introductory Explanation Of The Law Relating To Land", by Alfred F Topham. Also available from Amazon: The New Law Of Property.
(A) On the Death of a Sole Mortgagee. - The estate of a mortgagee is personal property even if he has the legal estate in fee simple vested in him, and on the death of a sole mortgagee after 1881, his estate vests in his personal representatives.
If the Mortgagee died before 1881. - The legal estate being a fee simple passed to the heir or devisee of the mortgagee.
But the benefit of the money secured by the mortgage went to his personal representatives. Therefore, if the mortgagor wished to redeem, after the death of the mortgagee, he had to pay the money to the personal representatives, and get a receipt from them, and the heir had to re-convey the land. This was very inconvenient.
Now by s. 30 of the Conveyancing Act, 1881, on the death of a sole mortgagee after the Act the estate vests in his personal representatives "notwithstanding any testamentary disposition" and they have power to re-convey it.
(n) 17 & 18 Vict. c. 113, amended by 30 & 31 Vict. c. 69, and 40 & 41 Vict. c. 34, by which the statute was extended to equitable charges and liens.
Hence, even if the mortgagee in his will devises his mortgages to A, and appoints B his executor, the legal estate passes to B.
(B) On the Death of one of several Mortgagees. - When land is mortgaged to more than one person, the land is usually granted to them as joint tenants. In this case, on the death of one the legal estate and the benefit of the money secured both pass to the surviving mortgagees.
History of the Rule.
(a) The Legal Estate. - This' always passed to the survivor.
(b) The Benefit of the Money secured.
If the mortgage was made before 1881, this passed to the personal representatives of the deceased mortgagee and did not go to the survivors.
Equity presumed that when two or more persons joined in lending money, they did not wish the whole to go to the one who lived longest; consequently, in equity, a share of the benefit of the money secured went to the representatives of each mortgagee who died.
As a matter, of fact, when money is advanced by several persons in this way, they are almost always trustees, and it is therefore more convenient that the benefit of the money should pass to the survivors. This led to an alteration of the rule.
If the Mortgage teas made after 1881. - By the Conveyancing Act, 1881, s. 61, when money has been advanced by several mortgagees and the land has been conveyed to them as joint tenants, on the death of any one of them the benefit of the mortgage debt passes to the survivors unless a contrary intention appears in the mortgage deed.
Before the Act, this result was usually secured by an express clause to that effect, called a "joint account clause." Such a clause is now unnecessary; but it is better to state expressly that the money was advanced on a joint account.
In ease of a Contributory Mortgage. - When several persons contribute to advance a sum of money, but not as joint tenants, each being entitled to a specific share of the mortgage debt, then on the death of any one, his share passes to his personal representatives.
This is a very unsatisfactory way of advancing money, so much so that trustees are not allowed to advance money on contributory mortgage.