Chapter 14 Scenario questions

. Build!, Build!, Build! Ltd recently acquired a mortgage to help them in the development of a new housing estate. It acquired the mortgage from a privately wealthy individual (Silvester), who makes similar loans to companies impacted by the pandemic's 'credit crunch'. Part of the mortgage agreement stipulates that it cannot be redeemed for 23 years, but the interest rate being charged is slightly below market rates. Will this restriction on the right to redeem be considered a clog or fetter?

Yes, because it is unconscionable

Yes, because the restriction cannot exceed 10 years

No, because the restriction must last for more than 170 years to be considered unconscionable

No, because the term is not unconscionable

. The mortgage between Build!, Build!, Build! Ltd and the Silvester contains a further clause. It states that Build!, Build!, Build! Ltd must buy all of their sand from Silvester for 15 years at market price, and all of their kitchen doors from him for 45 years. Will these terms be deemed clogs or fetters?

Both will be deemed a clog or fetter

The clause for the sand will not be deemed a clog or fetter, but the clause for the kitchen door will be

The clause for the sand will be deemed a clog or fetter, but the clause for the kitchen door will not be

Neither will be deemed a clog or fetter

. Chrisoulla has fallen behind on her mortgage payments. Her bank have taken possession of her house, and have sold it. However, this failed to cover the mortgage and interest payments. This means there is still £124,000 in capital to be repaid, and £45,000 in interest payments. How long will Chrisolla's bank have to recover these outstanding moneys?

6 years for the capital moneys, and 12 years for the interest moneys

24 years to recover both

12 years for the capital moneys, and 6 years for the interest moneys

12 years to recover both

. Narissa has fallen behind on her mortgage payments, and is now £34,000 in arrears. The mortgage has 23 years to go, and the total outstanding amount on the mortgage is £568,000. The reason for Narissa falling behind on her mortgage payments is that she became ill and lost her job, meaning she could not work for 6 months. She is now, however, in part time employment, earning £2,300 a month before tax. However, owing to her illness, it is unlikely that she will ever be able to return to full time employment. Her monthly mortgage payments are £1,700. The bank have just applied for a possession order for the house. Will Narissa meet the relevant factors set out in Cheltenham and Gloucester Building Society v. Norgan [1996] 1 WLR 343 for the court to exercise its direction under s36 Administration of Justice Act 1970 and postpone possession?

Yes, because there is still more than 15 years to run on the mortgage

Yes, because her difficulties are only temporary

Yes, because the illness was not her fault

No, because she cannot reasonably afford to pay her mortgage payments and arrears from her part-time salary

. Cautious Finance Plc have recently been approached by a self-employed businessman and his wife about taking out a second mortgage over their family home. It is claimed that the moneys will be used to help the husband's business. The wife is very quiet, refuses to maintain eye contact and only nods when her husband asks her if she agrees. What should Cautious Finance Plc do to avoid being bound by any potential undue influence claim from the wife? Choose all that are applicable.

Ensure a solicitor explains the consequences of signing the mortgage documents

Nothing – the wife is free to enter into any agreement

Ensure the solicitor meets the wife in private and away from the husband

Disclose all the husband's financial information to the wife

Quiz Content