Mortgagee's duty on sale: timing is for the mortgagee; true market value at sale (Silven)

A mortgagee exercising its power of sale owes the mortgagor a duty to take reasonable precautions to obtain the true market value or a proper price at the time when it chooses to sell, and must act in good faith. In Silven Properties Ltd v Royal Bank of Scotland plc [2003] EWCA Civ 1409 the Court of Appeal confirmed that the mortgagee is under no duty of care to the mortgagor as to the timing of a sale and can act in its own interests in deciding whether and when to sell. It also held that the mortgagee is entitled to sell the property as it is and is under no obligation to improve it or increase its value, for example by pursuing planning permission. Fenwick sold after proper marketing at the best price reasonably obtainable at the time, so it met its duty, and Tanaka has no claim even though a later sale might have produced more.

Why A is wrong: Silven confirms the mortgagee owes no duty as to the timing of a sale and may sell in a depressed market.

Why B is wrong: A mortgagee may sell the property as it is; it has no obligation to improve it or seek planning permission first.

Why C is wrong: A mortgagee is not a trustee of the power of sale; its duty is to take reasonable care to obtain the true market value at the time of sale.

Why D is wrong: The test is the true market value at the time of sale, not the mortgagor's own valuation.