Under section 103 of the Law of Property Act 1925, when does the power of sale become exercisable?

• A. When the borrower fails to make one monthly payment
• B. When a demand for the principal sum outstanding is unpaid for three months, or interest is in arrears for two months, or there is a breach of covenant
• C. When the loan term ends
• D. When the property is no longer insured

Answer: (B)

Section 103 of the Law of Property Act 1925 sets when a mortgagee’s power of sale can be exercised, based on default rather than simply the loan reaching its end. It recognises that the lender may enforce by sale once there has been a material default: either the principal sum after a demand has remained unpaid for a set period, or interest has fallen into arrears for a short period, or there is a breach of covenant. The specific thresholds—three months for principal after demand, or two months for interest, or any breach of covenant—are the points at which the power of sale becomes exercisable. This is why the option describing those exact triggers is the correct one. The other scenarios—just missing one monthly payment, the loan term ending, or the property being uninsured—do not by themselves automatically activate the power of sale under s103.