Unit 3 Topic 4 Flashcards
Principles of mortgage and property law
Phil and Fern are unmarried and bought their house as joint tenants with the help of a mortgage from the Tyseley Building Society. In which of the following circumstances would Fern automatically take over legal ownership of the property? (4.4.1)
A. If Phil was declared bankrupt
B. If Phil defaulted on his share of the mortgage repayment
C. On Phil’s death
D. On their marriage
C. On Phil’s death
With a joint tenancy arrangement, on the death of a joint owner, the surviving joint owner will take over legal ownership of the property.
Under the Commonhold and Leasehold Reform Act 2002, the borrower has the right to: (4.5.4.1)
A. enfranchisement in a flat development with 35% non residential usage
B. buy the freehold in a flat development with 15% non-residential usage
C. set the price at which the freehold may be purchased
D. insist on a lease extension of 100 years
B. buy the freehold in a flat development with 15% non-residential usage
Under this Act, a qualifying tenant can purchase the freehold where certain criteria are met. One of these criteria is that no more than 25% of the building’s internal floor area can be used for non- residential use. In this correct answer only 15% is being used.
Where more than one charge is held over a property, the order of priority for repayment in the event of default is determined by: (4.3.2)
A. a civil court.
B. the date when the charges were registered.
C. the Financial Ombudsman Service.
D. which lender is owed the most money.
B. the date when the charges were registered.
The date when charges are registered with the relevant registry will determine its priority.
Under the provisions of the Commonhold and Leasehold Reform Act, in order for leaseholders to purchase the freehold in a block of flats, what percentage of them must agree to participate? (4.5.4.1)
A. There is no minimum percentage
B. 25%
C. 50%
D. All of them must agree to participate
C. 50%
For the freehold in a block of flats to be purchased, at least 50% of the leaseholders in the block must agree to participate
Suraj, a leaseholder, has 30 years remaining on the lease of his property. He is applying to extend his lease under the provisions of the Commonhold and Leasehold Reform Act 2002. What will the term of Suraj’s new lease be? (4.5.4.2)
A. 90 years
B. 99 years
C. 120 years
D. 129 years
C. 120 years
Tenants who have held a long lease for more than two years have the right to buy a new lease, which will extend the existing lease by 90 years. Suraj’s new lease will be 90 + 30 = 120 years
David and Samantha own their property on a tenants-in-common basis. If David dies, legal ownership of the property passes to: (4.4.2)
A. Samantha only
B. David’s beneficiaries and Samantha jointly
C. David’s beneficiaries only
D. David’s estate
A. Samantha only
When David, (who is a joint tenant-in-common), dies, legal title to the whole property passes to
Samantha, who is now the one legal owner of the propert
Which of the following is true regarding commonhold tenure (4.5.3)
A. An existing building can be converted to commonhold if at least 50% of the residents wish to participate
B. Each unit holder negotiates a separate ground rent with the freeholder
C. The commonhold association must be formed before the property is registered with the Land Registry
D. Those who wish to participate in the commonhold ownership will lease from a freeholder
C. The commonhold association must be formed before the property is registered with the Land Registry
The land or property can only be registered with the Land Registry after the commonhold association is formed.
Jack made an offer of £85,000 to purchase a leasehold flat in a small purpose-built block, but his mortgage application has been declined, because : (4.5.2)
A. The block was built more than 50 years ago.
B. The flat is in urgent need of internal decoration
C. The lease makes no provision for payment of ground rent
D. The lease on the flat has 38 years to run
D. The lease on the flat has 38 years to run
Most lenders are wary of short leases and specify that the lease must have a certain number of years left to run beyond the mortgage term. A typical requirement would be 30-40 years more than the mortgage term. If Jack was looking for a typical mortgage term of say, 25 years, the lender would want to see at least 55-65 years remaining on the lease.
A lender would take steps to avoid the forfeiture of a borrower’s lease, because: (4.5.2)
A. the mortgage conditions do not permit it
B. the lender has requested it as an option
C. the lender’s security would then be of no value
D. the borrower would be unable to make repayments
C. the lender’s security would then be of no value
The word forfeiture in this context means that if the borrower fails to meet the conditions of the lease, it can be terminated and the lender would then be left with no security,
Steve and Mary own a flat situated in a purpose-built block comprising 12 identical properties. They are keen to purchase the freehold interest. The
Commonhold and Leasehold Reform Act requires that: (4.5.4.1)
A. all other leaseholders must agree to participate.
B. the entire block must be for residential use
C. the lease must have 21 years to run.
D. the lease must originally have been granted for a minimum of 21 years
D. the lease must originally have been granted for a minimum of 21 years
For leaseholders to be able to buy the freehold of a flat, they must be ‘qualifying’ tenants. The main requirement for being a qualifying tenant is that the original lease on the flat was for a period of more than 21 years.
Under the Commonhold and Leasehold Reform Act, in a block comprising six flats, how many of the flats would need to be held on a long lease to enable the leaseholders to purchase the freehold? (4.5.4.1)
A. Two
B. Three
C. Four
D. Five
C. Four
To purchase the freehold of a flat in a block, at least two-thirds of the flats must be held on a long lease. In this question, there are six flats, so four flats must be held on long leases.
Jonathan left his entire estate in his will to his children; this included his share of the house that he and his wife Nicky owned as tenants in common. As a result, (4.4.2)
A. Nicky will have to sell the property as soon as possible
B. the court will decide on the legal ownership of the property
C. Nicky can continue to live in the property as sole legal owner
D. Jonathan’s children automatically become joint legal owners of the property with Nicky
C. Nicky can continue to live in the property as sole legal owner
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 now one legal owner of the property.
