2. Legal Framework - Section A - C Flashcards
What is a mortgage?
A secured lending arrangement through which a borrower obtains finance by offering a property as security for the loan.
What conditions are set out in the mortgage deed?
Borrower’s covenants
Rights of the lender
What 4 things must a mortgage contract be?
In writing
Signed and dated
witnessed
sealed
When can a mortgage variation take place?
When the lender has reserved the right to vary a term by inserting a condition into the mortgage ie. interest rate changes
Both parties agree that a variation can take place
What 3 ways can a mortgage be discharged?
Agreement between the two parties
Performance (loan paid back in full)
Breach (Failure to comply with terms, lender resorts to legal remedies)
What is equity of redemption?
The legal right of any person to redeem a loan at any time.
What is Freehold Estate?
The highest form of ownership available, only subject to obligations in respect of land and roads in the vicinity of the property.
What is Leasehold Estate?
The right to a person to occupy the land for a specified period of time, usually in return for annual ground rent. The right is granted by the owner of the freehold which can be sold.
What circumstance allows for a leaseholder to purchase freehold interest?
The original lease is a long lease of 21 years or more
Qualifying tenants must have been resident for two years or more
At least half of the qualifying tenants must agree to the purchase.
What is Commonhold?
A very uncommon form of land tenure through which owners of property in an apartment block form an association which owns the land, building and common areas. The individual units are owned by their individual purchasers.
What are easements?
Rights in favour of one piece of land over another. IE. a property owner has a right of way across nearby land. This can increase the value of the property and decrease the value of the land.
What are positive covenants?
Conditions attached to the title. They require the owner to carry our certain actions such as maintenance of specified boundaries.
What are restrictive covenants?
Negative conditions that prevent the owner from doing certain things such as running a business from the land or keeping certain types of animals.
What is overriding interests?
Something which can be claimed by someone living in the property who is not a party to the mortgage. This can prevent the lender from obtaining vacant possession.
How is an equitable mortgage created?
By depositing the title deeds of the property as security for the advance.
