Unit 3

Question 1

ALAN IS INTERESTED IN BUYING A PROPERTY THROUGH THE MODERN METHOD OF AUCTION. THE GUIDE PRICE IS £130,000. ASSUMING THAT THE PROPERTY SELLS AT THE GUIDE PRICE, WHICH OF THE FOLLOWING IS TRUE IF HIS BID IS SUCCESSFUL?

HE WILL HAVE TO:

• exchange contracts and complete the purchase within 28 days of the auction.
• pay a non-refundable £13,000 deposit on the day of the auction.
• pay a non-refundable reservation fee of up to £6,500 on the day of the auction.
• pay compensation of £13,000 if he fails to exchange contracts within 28 days of the auction.

Answer 1

Answer:

Pay a non-refundable reservation fee of up to £6,500 on the day of auction.

Question 2

ALAN, ANDREW AND ALEX ARE PARTNERS IN A LIMITED LIABILITY PARTNERSHIP, AND HAVE APPLIED IN THE PARTNERSHIP’S NAME FOR A MORTGAGE ON THEIR OFFICE BUILDING. ASSUMING A MORTGAGE IS GRANTED, WHICH OF THE FOLLOWING IS TRUE?

• Each partner will be liable for one third of the mortgage.
• The partners can allocate responsibility for the mortgage between themselves.
• The partners will be jointly and severally liable for the mortgage.
• The partners will have no personal liability for the mortgage.

Answer 2

The partners will have no personal liability for the mortgage.

Question 3

WHICH OF THE FOLLOWING BORROWERS WOULD NOT BE CLASSED AS A VULNERABLE CUSTOMER UNDER MCOB RULES?

• Maddie, who is remortgaging her home to reduce her outgoings.
• Marcus, who is exercising his right to buy his local authority owned home.
• Maria, who is entering into a sale and rent back arrangement.
• Mike, who is considering a lifetime mortgage.

Answer 3

Maddie, who is remortgaging her home to reduce her outgoings.

Question 4

RICHARD AND LIZ HAVE DECIDED TO RE-ARRANGE OWNERSHIP OF THEIR HOUSE AS TENANTS IN COMMON. IF RICHARD DIED, LEAVING HIS SHARE OF THE PROPERTY TO THEIR DAUGHTER KAREN:

• Karen could force Liz to sell the property.
• Liz and Karen would automatically be joint equitable owners.
• Liz and Karen would automatically be joint legal owners.
• Liz would be the sole legal owner, and Karen would be an equitable owner.

Answer 4

Liz would be the sole legal owner, and Karen would be an equitable owner.

Question 5

LEN IS INTERESTED IN BUYING A LEASEHOLD PROPERTY AT AUCTION. THE VENDOR’S SOLICITOR HAS PREPARED A LEGAL PACK FOR PROSPECTIVE PURCHASERS. WHICH OF THE FOLLOWING DOCUMENTS WOULD NOT USUALLY BE INCLUDED IN THE PACK?

A copy of the lease.

A survey report.

Local searches.

Memorandum of sale.

Answer 5

A Survey report

Question 6

TO MEET THE FCA DEFINITION OF A HOME REVERSION PLAN, IT MUST BE FOR A SPECIFIED PERIOD. THE SPECIFIED PERIOD MUST BE AT LEAST:

10 years.

15 years.

20 years.

25 years.

Answer 6

20 Years

Question 7

WHICH OF THE FOLLOWING WOULD NOT BE CONTAINED IN A RICS CONDITION REPORT?

A valuation for insurance purposes.

Advice on certain issues for the buyer’s solicitor.

Issues for further investigation.

Serious issues or those needing attention.

Answer 7

A valuation for insurance purposes.

Question 8

WHICH OF THE FOLLOWING MORTGAGES, TAKEN OUT FOR BUSINESS PURPOSES, WOULD BE REGULATED UNDER MCOB?

A MORTGAGE TAKEN OUT BY:

Angela, who is a partner in a limited liability partnership and wishes to secure a mortgage on her flat to help expand her business.

Clare, who is a self-employed accountant and wishes to arrange a mortgage on a unit in an office development for her business.

George, who is a self-employed electrician, and will secure a mortgage on his family home to raise cash to replace his van.

Gordon, who is a director of a limited company and wishes to secure a mortgage on the family home to inject cash into the company.

Answer 8

George, who is a self-employed electrician and will secure a mortgage on his family home to raise cash to replace his van.