Topic 4 - Principles of Mortgage and Property Law Flashcards
A property held as an ‘estate in fee simple absolute in possession’ is more commonly known as:
leasehold.
freehold.
commonhold.
Freehold - Leasehold is referred to as ‘estate for a term of years absolute’. Commonhold does not have a definition under the property Acts of 1925, as it is a recent development.
Where two or more loans are secured on a property, their priority is determined by the:
date of their registration.
amount of the loan.
term of the loan.
Priority of charges is determined by the date of registration. The amount and term of the loan are irrelevant.
The maximum number of people that can be registered as legal owners of a property is:
three.
four.
unlimited.
The maximum number of legal owners is four. If more than four people own a property, four will be registered as legal owners and hold the property on trust for themselves and the equitable (non-legal) owners.
Greg and Max are civil partners who own their mortgaged house on a joint tenancy basis. This means that, if one of them dies:
A - their share of the property will be passed on according to the terms of their will.
B - the survivor will have to seek the lender’s permission to become the sole legal owner of the property.
C - the survivor will automatically become the legal owner of the whole property.
C - Joint tenancy means each partner technically owns 100% of the property and, under the principle of survivorship, the survivor will automatically become owner of the property, regardless of the terms of any will.
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 is regarded as having a beneficial interest equal to their agreed share of the property, ie their share of the remaining equity in 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?
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,E&F - 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:
A - owns their unit and an equal share of the common areas of the building.
B - owns their unit and a share in the commonhold association.
C - can choose whether to own their unit on a commonhold or leasehold basis.
B - Each unit owner owns their unit and a share in the commonhold association, a company owned by the shareholders. The commonhold association manages and maintains the common parts of the building.
Which of the following statements apply to a leaseholder buying the freehold of their leasehold flat?
A - The original lease on their flat must have been for more than 21 years.
B - At least 50% of the flats in the block must be held on a similarly long lease.
C - At least two thirds of the owners in the block must agree to participate in the purchase.
D - There must be at least 21 years left on the lease.
E - No more than 25% of the internal floor area of the building, excluding common areas, can be used for non-residential purposes.
F - Owners who rent out their flat can participate.
A,E&F - At least two thirds of the flats in the block must be held on a long lease. At least 50% of the owners in the block must agree to participate in the purchase. The time left on the lease is irrelevant, as long as the original lease was for more than 21 years.
Andrea has 40 years left on the lease of her flat and meets the criteria to extend her lease. If she took advantage of this right, what would be the length of the new lease?
60 years.
90 years.
130 years.
The extension would add 90 years to the existing term of the lease.
If Andrea extended the lease on her flat, she would need to negotiate a new ground rent figure as part of the arrangement. True or False
False - No ground rent is payable on the extended period of the lease.
The borrower is known as the mortgagor. True or false?
True
Which of the following is the technical definition of freehold land tenure?
Estate in fee simple for a term of years absolute.
Absolute term in possession for fee simple.
Estate in fee simple absolute in possession.
Estate in possession for fee simple absolute.
C - Estate in fee simple absolute in possession.
A legal charge is known in Scotland as a mortgage by demise. True or false?
False: a legal charge is known in Scotland as 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 known as a ‘further 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:
which lender is owed the most money.
the Financial Ombudsman Service.
the magistrates’ court.
the date order in which the charges were registered.
D - the date order in which the charges were registered.
