Topic 4 Flashcards
Which one of the following statements regarding a ‘second mortgage’ is FALSE? Second mortgages:
A. are often for home improvements.
B. are secured without deposit of the title deeds.
C. represent a higher risk than a first charge.
D. usually have a lower interest rate.
D. usually have a lower interest rate.
Which of the following statements is correct in respect of a leasehold property?
A. Its value is likely to increase substantially as the expiry date of the lease approaches.
B. Any ground rent is paid by the freeholder to the leaseholder.
C. The leaseholder is automatically entitled to purchase the freehold interest.
D. A lender would always insist that the term of the lease extends beyond the agreed redemption date of any mortgage granted.
D. A lender would always insist that the term of the lease extends beyond the agreed redemption date of any mortgage granted.
A lender would take steps to avoid the forfeiture of a borrower’s lease because the:
A. mortgage conditions do not permit it.
B. lender has requested it as an option.
C. lender’s security would become of no value.
D. borrower would be unable to make repayments.
C. lender’s security would become of no value.
Which type of property ownership allows each party a defined share of the property?
A. Joint and several.
B. Joint tenancy.
C. Ownership by demise.
D. Tenancy in common.
D. Tenancy in common.
Which of the following is correct in relation to second mortgages?
A. Second mortgages carry lower risk to the lender because the loan amounts are usually less than those of first mortgages.
B. In cases of possession and subsequent sale of a property by the first lender, the second lender is not entitled to receive any surplus funds.
C. A second mortgage is usually offered at a lower rate of interest than the first mortgage.
D. Title deeds remain with the first lender and the second lender will notify the first that it has taken a subsequent charge.
D. Title deeds remain with the first lender and the second lender will notify the first that it has taken a subsequent charge.
Steven and Mary own a flat situated in a purpose-built block comprising 12 identical properties. They are keen to purchase the freehold interest, but, for this to be possible, leasehold reform legislation requires that:
A. The entire block must be only for residential use.
B. The lease must have at least 21 years to run.
C. All other qualifying leaseholders in the block must be party to the transaction.
D. The lease must have originally been granted for a term exceeding 21 years.
D. The lease must have originally been granted for a term exceeding 21 years.
Steve and Gemma are unmarried and have purchased their house as joint tenants with the help of a mortgage from Downtown Building Society. In which of the following circumstances would Steve’s share of the property automatically pass to Gemma?
A. If Steve were declared bankrupt.
B. If Steve were to default on his share of the payment.
C. On Steve’s death.
D. On their marriage.
C. On Steve’s death.
Which of the following is true in relation to leasehold properties?
A. There are usually no restrictions on alterations to the property.
B. Lenders will only grant mortgages for 30 years or less.
C. Annual ground rent is always payable to the leaseholder.
D. Any freeholder can create a lease on their property for any length of time.
D. Any freeholder can create a lease on their property for any length of time.
Ellen has lived in her flat since 1979 and still has 32 years remaining on the lease. In relation to any rights she might have under the Commonhold and Leasehold Reform Act 2002, which of the following is correct?
Ellen:
A. Will never be able to purchase the freehold interest on the property.
B. Can extend the lease by a further 90 years.
C. Is able to convert the building and use it for commercial purposes.
D. May extend the lease indefinitely.
B. Can extend the lease by a further 90 years.
Which one of the following statements regarding the creation of mortgages is TRUE?
A. Creation of a legal mortgage by demise is very rare nowadays.
B. Legal mortgage by demise is more common than legal mortgage by legal charge.
C. Legal mortgage by demise is another name for an equitable mortgage.
D. Legal mortgage by demise can now only be used for leasehold properties.
A. Creation of a legal mortgage by demise is very rare nowadays.
When a lease on a property expires:
A. The leaseholder is left with the reversionary interest.
B. The property must be sold.
C. A new lease must be arranged immediately.
D. The land and property revert to the freeholder.
D. The land and property revert to the freeholder.
Which of the following would NOT be an obligation of a freeholder?
A. To observe any restrictive covenants.
B. To adhere to local authority planning legislation.
C. To maintain boundaries.
D. To pay ground rent.
D. To pay ground rent.
Which of the following is true of a legal mortgage?
A. Borrowers who fail to make a payment on time lose their right to redeem a mortgage.
B. Borrowers are not entitled to any surplus funds if the lender sells.
C. It is usually affected, nowadays, as a mortgage by demise.
D. It is defined as using a property as security for money borrowed.
D. It is defined as using a property as security for money borrowed.
Joint tenancy means that:
A. Each owner has an identifiable share of the property and, should one owner die, their share passes to the next of kin.
B. A property is owned jointly and should one of the owners die, the remaining owner automatically takes sole possession.
C. Ownership of the property is equally divided.
D. Any mortgage is held in joint names but the property can be owned by anyone.
B. A property is owned jointly and should one of the owners die, the remaining owner automatically takes sole possession.
Which one of the following is TRUE of a legal mortgage formed by a legal charge?
A. It provides the lender with direct rights over the property.
B. It always has priority over an existing equitable mortgage.
C. There is a Deed containing the mortgage terms.
D. It can only apply to freehold property.
C. There is a Deed containing the mortgage terms.
