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The three months’ interest penalty: is it payable?

Wednesday, August 29, 2018 @ 9:02 AM | By Richard Worsfold and Reshma Kishnani

Many mortgagees will add a three-month interest penalty to their discharge statements delivered to mortgagors who are in default. Frequently those mortgagees will also deduct the three months’ interest penalty from proceeds of sale even if they are the ones who have caused the property to be sold by power of sale.

Their entitlement to claim this penalty is rarely challenged, as frequently the amount may be small or the mortgagor may not have the resources to mount a court challenge.

A recent Court of Appeal...