The recent case of Bank of Scotland plc v Waugh  EWHC 2117 (Ch) considered the position where the borrower’s signature had not been witnessed and how that affected the mortgage. It was held that where the signature of the borrower had not been witnessed contrary to s.52 of the Law of Property Act 1925, the mortgage still existed as an equitable mortgage.
The defendants were trustees of a trust that had been created for the purpose of property development. The lending to the trust was to be secured and the defendants signed a legal charge. However, their signatures were not witnessed and the trust was wrongly assumed to be incorporated.
The defendants argued the bank had confirmed to them that they were not personally liable (as the trust was) and that, together with the fact the charge had not been witnessed, made the mortgage void.
The court held that the defendants were still liable as trustees, rather than in the sense that the lending was to them direct. S.52 of the Law of Property Act 1925 provides that conveyances of land or interests therein must be made by deed. S.1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 provides that the signature of an individual on a deed must be witnessed. That had not happened and so the deed was void in creating a legal charge. However, the court held the charge was not void altogether, finding that it still existed as an equitable mortgage.
In the event that a borrower’s signature to a mortgage deed has not been witnessed, that is not the end of the mortgage altogether. It can still be protected at the Land Registry as an equitable mortgage. The lender can then apply to the court to enforce the mortgage or compel the proper completion of the deed as had been envisaged, to create a legal charge.