TOPIC 4 - Principles of Mortgage and Property Law Flashcards
1) The borrower is known as the ‘mortgagor’. True or false?
True
Which of the following is the technical definition of ‘freehold’ land tenure?
a) Estate in fee simple absolute in possession.
b) Estate in fee simple for a term of years absolute.
c) Estate in possession for fee simple absolute.
d) Absolute term in possession for fee simple.
a) Estate in fee simple absolute in possession.
A legal charge is known in Scotland as a mortgage by demise. True or false?
False, it’s called a standard security.
A ‘second mortgage’ is a further loan from the original lender. True or false?
False. A further loan from the original lender is called an advance.
Where more than one charge is held over registered land, the order of priority for repayment in the event of default is determined by:
a) which lender is owed the most money.
b) the magistrates’ court.
c) the date order in which the charges were registered.
d) the Financial Ombudsman Service.
c) the date order in which the charges were registered.
Gary had a property subject to a legal charge with the Pleasant Building Society, registered 15 years ago on 1 May, securing a loan of £140,000, and a legal charge with the Consolidated Loans company, registered 10 years ago on 11 July, securing a loan of £30,000. Gary defaulted on his loans and the house was taken into possession and sold for £160,000 on 10 May this year. Who would get what from the proceeds of the sale?
a) Consolidated Loans would receive £30,000 and Pleasant Building Society would receive £130,000.
b) Pleasant Building Society would receive £140,000 and Consolidated Loans would receive £20,000.
c) Pleasant Building Society would receive £140,000, Gary would receive £20,000 and Consolidated Loans would receive nothing.
d) Pleasant Building Society and Consolidated Loans would require the court to decide how the proceeds should be divided between them
b) Pleasant Building Society would receive £140,000 and Consolidated Loans would receive £20,000.
Tenancy in common’ means that when one joint owner dies their beneficiaries automatically become joint legal owners of the property. True or false?
False. The survivor becomes the legal owner but must hold their deceased’s co-owner’s part in trust for the beneficiaries.
Keith and Linda have just married. They have both been married before and each has two adult children. Each has a house of their own, but they have now decided to sell them and buy a home together. Which ownership arrangement would enable them each to leave their share of the property value to their children on their death?
a) Joint tenancy.
b) Joint and several tenancy.
c) Tenancy in common.
d) Ownership in one name with the partner as a beneficial owner.
c) Tenancy in common.
Why might it be inadvisable for a leaseholder with 20 years remaining on their lease to put their flat on the market?
They would get considerably lower market value.
Iliana owns one of two flats in a converted house on a leasehold basis. She and her fellow leaseholder cannot buy the freehold of the property because it is too small to qualify under the commonhold legislation. True or false?
False. A building only need contain a minimum of two flats in order for the leaseholders to have the right to buy the freehold.
A property held as an ‘estate in fee simple absolute in possession’ is more commonly known as:
leasehold.
freehold.
commonhold.
freehold.
The maximum number of people that can be registered as legal owners of a property is:
three.
four.
unlimited.
four.
Which of the following statements about tenancy in common is true?
a) Each joint owner has a beneficial interest equal to their agreed share of the property.
b) If one owner dies, the surviving owner can place a restriction at the Land Registry to prevent the deceased’s beneficiaries forcing a sale.
c) Once the surviving owner has been registered as the legal owner, they can sell the property.
a) Each joint owner has a beneficial interest equal to their agreed share of the property.
On the death of a joint tenant in common, legal title to the whole property passes to the survivor, who continues to hold it as a trustee in land. There is then one legal owner of the property.
When a tenancy in common is set up, a restriction is placed on the title at the Land Registry. This prevents either party from selling the property or their share without agreement from the co-owner. A surviving legal owner cannot sell the property without following a legal process.
Which of the following statements are false in relation to land tenure? Select all the false statements.
a) There may be some restrictions on what an owner can do with, or on, a freehold property.
b) Lenders generally prefer freehold flats to leasehold flats.
c) Lenders are usually reluctant to lend on property with a flying freehold.
d) Leaseholders may be required to contribute towards the cost of maintenance for common areas of the building.
e) For a 25-year mortgage on a leasehold flat, a lender would require an unexpired lease term of at least 30–40 years.
f) If the borrower fails to comply with the conditions of a lease, their rights are forfeited to the lender.
b) Lenders generally prefer freehold flats to leasehold flats.
e) For a 25-year mortgage on a leasehold flat, a lender would require an unexpired lease term of at least 30–40 years.
f) If the borrower fails to comply with the conditions of a lease, their rights are forfeited to the lender.
Lenders are generally reluctant to lend on freehold flats due to lack of clarity about the responsibility for common areas in the building.
A lender for a leasehold flat usually requires a minimum unexpired lease term of 55–65 years.
If the borrower fails to comply with the conditions of a lease, the freeholder has the right to claim forfeiture, the lease is cancelled and the leaseholder no longer has any rights to the property. This also causes the lender’s security to disappear.
With commonhold tenure, each individual unit holder:
owns their unit and an equal share of the common areas of the building.
owns their unit and a share in the commonhold association.
can choose whether to own their unit on a commonhold or leasehold basis.
owns their unit and a share in the commonhold association.
