This is land law subject. Please follow theFormat for answering: - issue - law

- application (apply law) -conclusion

Theo decided to purchase the registered freehold title of a small farm and convert some of the farm buildings for the use of his wine-making business. Theo borrowed 95% of the purchase price from the Red Dragon Bank and in return, granted the bank a forty-year legal mortgage over the property. The mortgage gave the Red Dragon Bank power to increase the monthly interest rate 'for any reason whatsoever, and at any time throughout the term of the mortgage'. The mortgage agreement also stated that Theo needs to supply 50 crates of wine, at half the market value, every year for Red Dragons Annual Dinner. Theo moved his family into the farmhouse, and converted the other buildings to facilitate the wine-making process. For a number of years, Theo's business was successful. However, earlier this year, sales fell sharply after Theo had to recall a batch of wine which had been contaminated. At about the same time, the Red Dragon Bank announced that it was increasing the interest rate on Theo's mortgage repayments because the pandemic was affecting the banking industry. Within a few months, Theo defaulted on the mortgage as he was unable to meet the higher monthly repayments. A few months ago, Gabe, a neighboring farmer, told Theo that he would be interested in buying the whole farm from him provided the sale was concluded quickly. Gabe offered to pay the market rate for agricultural land. However, financial analysts have assured the Red Dragon Bank that the land would be worth considerably more if it was sold for property development. Last week, the Red Dragon Bank wrote to Theo telling him it will be taking possession of the farm and waiting six months before selling it at a specialist auction organized specifically for property developers. Theo, who is in dire financial need, seeks your advise on: (a) whether the terms of the mortgage are valid; and (b) the rights of the Bank now that he has defaulted (100 marks)