Section 1; Contract Law; Types Of Borrower Flashcards Preview

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Flashcards in Section 1; Contract Law; Types Of Borrower Deck (23)
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1
Q

1.1.1 In property terms what is the ‘consideration’ that a buyer gives?

A

Money

2
Q

1.1.1 In property terms what is the ‘consideration’ that the seller gives?

A

The property

3
Q

1.1.1 What’s the Latin for ‘let the buyer beware’?

A

Caveat Emptor

4
Q

1.1.1 What is the Latin for the principle of ‘upmost faith’?

A

Uberrima fides

5
Q

1.1.1 Insurance contracts have been based traditionally on the principle of uberrima fides. What does this mean?

A

All material facts must be disclosed by both parties (the principle of utmost faith)

6
Q

1.1.1 When was the Consumer Insurance (Disclosure and Representations) Act legislated? And how did it affect consumers material disclosures?

A
  1. It abolished the duty of consumers to volunteer material facts when applying for insurance, instead requiring them to take reasonable care to answer the insurers questions fully and accurately
7
Q

1.1.1 If careless misrepresentation is identified on an insurance contract in situations other than a claim, what rights do the insurer and the policy holder have?

A

The insurer and the policy holder have the right to terminate the contact with reasonable notice

8
Q

1.1.1 If careless misrepresentation is identified on a life insurance contract, can the insurer terminate the contract?

A

No

9
Q

1.1.1 What is the following known as: the setting out in writing of the remit of an agent (estate agent) on behalf of a principal (seller)?

A

Actual Authority

10
Q

1.1.2 What does the Principle Of Agency mean?

A

That the principal (for example a seller) is liable for the agent’s actions, unless the agent acted outside of their remit

11
Q

1.1.2 What is apparent authority?

A

When the principal has done or communicated something which apparently gave the agent authority to act outside of their remit on something

12
Q

1.1.2 In relation to apparent authority, what is ratification?

A

When the principal agrees after the event when the agent has acted outside their remit

13
Q

1.1.3 in relation to mortgages, what are the three Ps that mortgage lenders will focus on and what do they mean?

A

Person: is the lender legally able to lend to the person

Property: is the property suitable security for the required mortgage

Purpose: whether the purpose of the mortgage is acceptable eg house purchase, home improvement, raising capital etc

14
Q

1.1.4 What two types of Personal Buyers are there?

A

First time buyers

Second or subsequent buyers

15
Q

1.1.4 When did the FSA publish a policy statement in relation to the Mortgage Market Review (MMR) and when did the changes to MCOB take effect from?

A

2012 and April 2014

16
Q

1.1.4 What’s the main change that MMR required lenders to do?

A

To focus more on a borrowers affordability as part of the assessment process for mortgage applicants

17
Q

1.1.4 How did maximum affordability used to be worked out compared with post MMR?

A

Max used to be worked out with income multiples (eg income x 3 etc) but now it is worked out with income vs expenditure

18
Q

1.1.4 When people take out a loan or a mortgage, what can the contract also be known as?

A

The deed

19
Q

1.1.4 When two people take out a mortgage and the mortgage deed makes them jointly and severally liable for that loan, what does this mean?

A

This means that they are both liable for the whole amount of the loan not just their ‘share’ of it

20
Q

1.1.4.2 for BTL criteria what does the level of rent typically need to be for most lenders in relation to the mortgage repayments?

A

125% of the repayments

21
Q

1.1.4.2 are BTL mortgages usually regulated?

A

No

22
Q

1.1.4.2 why are BTL mortgages not usually regulated (2 reasons)?

A

Because they are defined as business loans and are not secured on the borrower’s main residence

23
Q

1.1.4.2 loans that are secured on a property of which at least ? % will he occupied as a main residence by the borrower or a relative are regulated mortgages and subject to MCOB

A

40%

This would include mortgages raised on the borrowers own main property in order to finance a BTL purchase and mortgages secured on a BTL property where a relative will be in occupation