Chapter 8 Self-test questions

S. 85(1) and 86(1) of the Law of Property Act 1925 provide that a mortgage of a legal estate can only be created at law by a mortgage by sub-demise or by a legal charge by way of mortgage. However, an owner of a legal estate can now only enter into legal mortgage by way of registered charge.

True

False

The English mortgage has been described as a work of fiction. This is because:

It was first described in John Galsworthy's novel 'The Man of Property'.

The lender is the owner of the mortgaged property until the borrower repays the debt.

The lender is recognized as the legal owner of the mortgaged property and the borrower as the owner in equity.

The borrower remains the owner of the mortgaged property subject to the mortgage held by the lender.

A legal chargee must go to court to obtain possession of the mortgaged property if the borrower defaults.

True

False

In which of the following situations would the borrower be entitled to seek an adjournment to proceedings from the court, under s.36 of the Administration of Justice Act 1970?

An office block, which had a flat at the top at the time the mortgage was granted, but which is now incorporated into the whole and used as an office. The lender is now seeking possession.

A office block, which had an office at the top at the time of the grant, but this top floor office has since been converted and used as a flat for the caretaker.

The lender sells a house owned by an absentee landlord who lets the house to students during the academic year. The house is sold in July when it is empty because the students are on vacation.

A 30 hectare plot of ancient woodland, in one corner of which is a single roomed wooden hut, leased to a resident, ornithologist, research student. The lender seeks possession.

Which of the following duties and liabilities accrue to the mortgagee?
Please select all that apply.

Duty to take reasonable care to obtain the true market value and act bona fide.

The lender is liable for the lack of care committed by its agents.

To improve the property to obtain the best possible price.

To sell as soon as at all possible in order to repay the debt due before it incurs additional interest and charges.

Which of the following will be deemed to be a regulated mortgage contract?
Please select all that apply.

A legal charge of a landlord'shouse, in which he will allow his son to live whilst at university.

A legal charge over a businessman's home to secure funding for his business.

An individual who takes out a mortgage to purchase a field on which to graze her horses, secured by a charge on the field.

A person who purchases a small hotel in Scunthorpe, and borrows money secured on that hotel.

It is possible for a bank's security over the co-owned family home to be set aside as a result of undue influence exerted by a husband against his wife.

False

True

For a term to be found oppressive or unconscionable, the plaintiff must show that the bargain, or some of its terms, was unfair and unconscionable: it is not enough to show that, in the eyes of the court, it was ____________.

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