Chapter 25 Self-test questions

. The key differences between security and quasi security are that…

Security properly so called is more secure than quasi security.

In quasi security the person seeking credit support owns the property which is the source of the credit support.

Security interests are exercisable against property, the title to which is either in the obligor or where the obligor has a proprietary right recover title on repayment of the debt.

Security interests require registration to be valid as against a third party

. In order to be valid, security interests require attachment to the property which is the subject of the security and normally will require ___ to be binding on third parties.

. Which of the following statements are true? Please select all that apply.

Since a pledge is a possessory security the pledgee must always retain possession of the property.

A possessory lien can arise only where the parties agree that it should.

It is clear that where a debtor recovers possession of property from a pledgee under a trust receipt a purchaser from him will obtain good title.

All liens are possessory securities

. Which of the following statements is incorrect?

In a legal mortgage the mortgagee is entitled to possession of the property as soon as the mortgage is created unless agreed otherwise.

In a mortgage the mortgagor transfers ownership of the property to the mortgagee by way of security.

The most important right of a mortgagor is the right to redeem the mortgage by meeting the obligations which it secures.

Mortgages of personal property must be in writing.

. Which of the following statements are correct? Please select all that apply.

Mortgages can be created simply by agreeing to create a mortgageso long as the agreement is specifically enforceable.

If a mortgagee forecloses, he may retain the whole proceeds of any sale, even if they exceed the outstanding debt of the mortgagor.

A mortgagee will typically seek to take possession of the mortgaged property before he exercises his power of sale.

Apart from foreclosure, taking possession and selling the mortgaged property a mortgagee has no other way of realising his security.

. Which of the following statements is incorrect?

In a mortgage created by deed the mortgagee has the power to sell the mortgaged property once the legal date for repayment has passed.

In effecting sale, the mortgagee owes no duties to the mortgagor.

Once his right to sell has arisen and is exercisable, a mortgagee can choose when to sell and need not delay, even if an increase in the value of the property is very likely to happen in the near future.

The mortgagee owes the mortgagor and other incumbrancers a duty to obtain a proper price if he sells the mortgaged property.

. Which of the following statements is incorrect?

A charge is a possessory security.

A charge arises when a piece of property is expressly or constructively made liable to discharge a debt where there is no intention that ownership should pass to the chargee.

A charge may arise very easily even in the absence of writing.

A specifically enforceable agreement to grant a charge over future property attaches to the property the moment the property is acquired by the chargor.

. Charges may be fixed and/or ___.

. When a floating charge ___ the charge attaches to all of the assets specified in it as being subject to the charge.

. The key test to identify a floating charge is whether…

The assets include those that the chargor currently owns and assetsto be acquired in the future

The assets charged include property the chargor would be regularly changing

The charge is over assets which the chargor is permitted to deal with in a way which takes them outside the charge, for example by selling them

The label the parties put on their arrangement

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