Posts Tagged ‘power of sale’

Mortgagor in default: does default give rise to adverse possession?

May 21, 2013

InĀ Common Luck Investment Ltd v Cheung Kam Chuen ((1999) 2 HKCFAR 229, CFA) C executed a mortgage assigning a property to X Bank as security for a loan. C defaulted in payment in 1965 but X Bank took no action and C remained in possession. X Bank went into liquidation and the property was assigned by the liquidator to CLI. The question was whether C had been in adverse possession since 1965 so that CLI’s title had been extinguished. C’s argument failed. C had a right to redeem even after default and he had remained in possession under the terms of the mortgage and not as a trespasser (236, Litton P.J.). As to the effect of the sale by the liquidator to CLI, it seemed likely that C had remained in possession as CLI’s licensee. Even if C were to be regarded as a squatter from the time of the sale, not enough time had passed from then to extinguish CLI’s title (238, Litton P.J.).

Michael Lower