TOPIC 29 - Possession procedures Flashcards
Legal remedies available to a lender in England on a borrower defaulting are contained in which legislation?
Law of Property Act 1925.
Housing Act 1988.
Land Registration Act 2002.
Law of Property Act 1925.
The Land Registration Act 2002 covers the requirements for a property to be registered with the Land Registry. The Housing Act 1988 covers the rights of landlords renting out properties.
Which of the following is true in relation to a lender exercising the power of sale and foreclosure?
Foreclosure allows the lender to keep any surplus from the sale of the property; power of sale does not.
Exercising the power of sale requires court authorisation; foreclosure does not.
Both allow the borrower to redeem the mortgage after the lender takes possession.
Foreclosure is seen to be unfair and is rarely, if ever, used today. Foreclosure allows the lender to keep any surplus from the sale, while the power of sale requires the lender to pass on to the borrower any surplus after the mortgage plus arrears and expenses have been settled. Both actions require authorisation from the court, although the foreclosure process is far more onerous and complex. While the power of sale allows the borrower to redeem the mortgage by settling the mortgage and arrears before the lender exchanges contracts with a buyer, foreclosure does not allow redemption.
Foreclosure allows the lender to keep any surplus from the sale of the property; power of sale does not.
Foreclosure is seen to be unfair and is rarely, if ever, used today. Foreclosure allows the lender to keep any surplus from the sale, while the power of sale requires the lender to pass on to the borrower any surplus after the mortgage plus arrears and expenses have been settled. Both actions require authorisation from the court, although the foreclosure process is far more onerous and complex. While the power of sale allows the borrower to redeem the mortgage by settling the mortgage and arrears before the lender exchanges contracts with a buyer, foreclosure does not allow redemption.
The court has granted a suspended possession order to a lender. This means that:
the lender has 30 days to make possession arrangements with the borrower.
possession is suspended to allow the borrower time to sell the property.
possession is suspended as long as the borrower makes court-ordered payments.
possession is suspended as long as the borrower makes court-ordered payments.
The court can grant a suspended possession order, imposing on the borrower an obligation to make payment in accordance with the court’s decision. The suspended possession order becomes enforceable if the borrower fails to keep up the repayments. The court will have to grant a final possession order in this situation.
Which document contains the contractual obligation that gives a lender the right to sue on the borrower’s covenant? The:
mortgage contract.
legal charge.
court order.
legal charge.
Taking this action is often futile because, even if the court makes an award to the lender, the borrower may not have the resources to pay it.
A lender would exercise its right to appoint a receiver in the case of a borrower in arrears when:
suing for the borrower’s bankruptcy.
there is a tenant in the property.
taking possession of the property.
there is a tenant in the property.
The right to appoint a receiver is exercised when there is an income from the property. The receiver collects the rent and any other income from the property on behalf of the lender, and this money is applied to the mortgage account to reduce the overall debt.
Once a lender has been granted a possession order, the borrower will usually be required to vacate the property within what timescale?
7 days.
14 days.
28 days.
28 days.
Argos Bank has taken possession of George’s house, but George has left various curtains and rugs behind. What action should the lender take?
Sell the items for the best possible price and pay the proceeds to George.
Allow George to enter the property to collect the items.
Hold the items in trust for George for a specified period.
Hold the items in trust for George for a specified period.
Any fittings, such as curtains and rugs left behind by the borrower, are held in trust on their behalf. If the borrower reclaims them, the lender must take care not to readmit them to the property, or a new possession order may be required.
Once the lender has taken possession of a property, the ‘equity of redemption’ gives the borrower the right to:
settle the arrears and regain possession before the lender completes the sale of the property.
settle the mortgage plus arrears and regain possession before the lender exchanges contracts on the sale of the property.
negotiate an equitable amount to settle the debt and take the property back.
settle the mortgage plus arrears and regain possession before the lender exchanges contracts on the sale of the property.
The equity of redemption is the borrower’s right to settle the mortgage debt in full at any time until the lender exchanges contracts with a new buyer. ‘In full’ means the settlement must include any arrears.
Many lenders in England demonstrate they have met their duty of care to obtain the best price reasonably obtainable for a repossessed property by:
commissioning at least two valuations from independent RICS-qualified valuers.
seeking best and final offers after an acceptable offer has been received by advertising in a local newspaper.
always selling repossessed properties through property auctions.
seeking best and final offers after an acceptable offer has been received by advertising in a local newspaper.
Which of the following is untrue of a claim made under a mortgage indemnity guarantee (MIG) policy?
The insurer has the right to claim back from the borrower all money paid to the lender.
The policy may not cover the entire mortgage shortfall.
The lender has no right to reclaim from the borrower any policy excess deducted by the insurer.
The lender has no right to reclaim from the borrower any policy excess deducted by the insurer.
The insurer can exercise its right of subrogation to claim from the borrower all money paid to the lender. The MIG covers the difference between the amount lent and the normal loan-to-value threshold, but any further shortfall is not covered. The lender has the right to sue the borrower for the amount of the excess deducted from the MIG claim.
Which of the following legal remedies is not used in the UK today?
Exercising the power of sale.
Suing on the borrower’s personal covenant.
Appointing a receiver.
Foreclosure.
Foreclosure.
Appointing an LPA receiver is a legal remedy available where a property is let to tenants. True or false?
True False
True
Once a possession order has been granted, the lender can usually take possession within:
7 days.
14 days.
28 days.
60 days.
28 days.
Once a property has been taken into possession, the borrower has the right to regain possession by:
paying off the arrears, up to the point at which the lender exchanges contracts with a new buyer.
paying off the full mortgage debt, up to the point at which the lender markets the property for sale.
paying off the full mortgage debt, up to the point at which the lender exchanges contracts with a new buyer.
paying off the full mortgage debt, up to the point of completion of the sale to a new buyer.
paying off the full mortgage debt, up to the point at which the lender exchanges contracts with a new buyer.
A suspended possession order automatically becomes an outright possession order if the borrower fails to keep up the agreed repayments. True or false?
True False
False: a suspended possession order, if enforced, requires that the borrower make payment. If they do not, the lender can return to court to seek possession.
