Unit 3 Topic 7 Flashcards
Legal aspects of property purchase
Because the title of the property Shirley was buying was not free from defects, it was agreed that an insurance policy would be arranged that would protect her and her lender against future losses that may occur as a result of defect. This type of insurance is known as: (7.2)
A. Defective Title Indemnity Insurance
B. Title Insurance
C. Search Indemnity Insurance
D. Defect Indemnity Insurance
A. Defective Title Indemnity Insurance
These policies are used to provide cover if a solicitor fails to identify a defect, which could include easements, covenants and types of title. The policy can be arranged to protect the lender, the borrower and subsequent purchasers. Cover is usually needed when buying or selling a house and defects in the title are discovered.
When arranging a mortgage, at which point does the legal charge take effect? (7.5)
A. Before exchange of contracts
B. At exchange of contracts
C. At completion
D. After completion
C. At completion
The legal charge for the mortgage doesn’t take effect until completion ; at this point, ownership of the property is transferred.
A certificate of title confirms that the person selling the property is the legal owner. Who usually produces this certificate? (7.2)
A. The lender
B. The buyer’s solicitor
C. The seller’s solicitor
D. The Registrar of Titles
B. The buyer’s solicitor
The certificate of title is usually produced by the conveyancing (buyer’s) solicitor.
Which of the following processes is not carried out between exchange of contracts and completion? (7.3.1)
A. The vendor’s solicitor obtains a settlement figure to repay any outstanding mortgage on their property.
B. The buyer signs the mortgage deed.
C. The vendor completes a ‘seller’s property information form’.
D. The buyer’s solicitor applies for release of mortgage funds.
C. The vendor completes a ‘seller’s property information form’.
Part of the work carried out by the solicitor prior to exchange of contracts is to arrange for the vendor to complete a ‘seller’s property information form’
As a general rule, a mortgage deed can be varied: (7.4)
A. at any time by the lender.
B. by the borrower, if their circumstances deteriorate.
C. only with the consent of both parties to the contract
D. under no circumstances.
C. only with the consent of both parties to the contract
The buyer’s solicitor will normally arrange for the buyer to sign the mortgage deed a day or two before the purchase is due to be completed, ready for execution on the day.
The deed is a formal and binding contract between mortgagee (lender) and mortgagor (borrower). Its contents and those of any document ‘linked’ to it (such as the mortgage conditions). cannot be varied without the consent of both parties to the contract.
Charles has incurred various charges with his recent house purchase and
mortgage application. Which one was in respect of services after completion? (7.6)
A. Bankruptcy search
B. Environmental search
C. Land Registry fee
D. Land Registry search fee
C. Land Registry fee
One of the tasks that the solicitor carries out after completion is to register the new owner’s details at the Land Registry.
What type of insurance must all solicitors carry against claims for negligence? (7.1.1)
A. Public liability insurance.
B. Professional indemnity insurance.
C. Partnership insurance.
D. Law Society insurance.
B. Professional indemnity insurance.
All solicitors carry professional indemnity (PI) insurance against negligence claims.
The process of investigating title is becoming progressively more straightforward, because of : (7.2)
A. defective title insurance.
B. freehold and leasehold reform.
C. compulsory land registration in England and Wales.
D. codes of practice.
C. compulsory land registration in England and Wales.
The process of investigating title is becoming progressively more straightforward as land registration is now compulsory in England and Wales, as well as in many areas of Scotland.
A solicitor can identify details of the obligations and restrictions attaching to a property, by carrying out a search of the: (Fig.7.1)
A. Local Land Charges Register
B. Land Registry
C. Land Charges Registry
D. Environmental Register
A. Local Land Charges Register
A search at the Local Land Charges Register is required to ensure that a purchaser is not caught out by the existence of obligations or ‘charges’, enforceable against successive owners by local authorities, or central government.
In relation to fixtures and fittings, which of the following would be treated as a fixture? (7.3.1)
A. Bathroom wall cabinet
B. Curtains
C. Carpets
D. Free-standing wardrobe
A. Bathroom wall cabinet
Fixtures are usually included in the sale and comprise items that are screwed in, nailed down or plumbed in.
A bankruptcy search is carried out by the lender’s solicitor on whom, if any? (Fig.7.1)
A. The applicant only
B. The vendor only
C. The applicant and sometimes the vendor as well.
D. Neither the applicant nor the vendor.
C. The applicant and sometimes the vendor as well.
Bankruptcy searches are carried out before exchange on the applicant by the lender’s solicitor and sometimes are also carried out on the vendor, to make sure they’re entitled to receive the sale proceeds.
