CILEx L3 Land Law Basics 4 — Questions and Answers
Question 1: What is a 'mortgage' in land law?
- A security interest given over property to secure repayment of a loan (Correct answer)
- Ownership of property shared between a lender and borrower
- A lease granted to a lender until the loan is repaid
- A transfer of title to a lender until repayment
Correct answer: A security interest given over property to secure repayment of a loan
A legal mortgage is a charge by way of legal mortgage under s.87 LPA 1925. The mortgagor (borrower) retains ownership of the land but gives the mortgagee (lender) certain rights (including possession and sale) as security for the loan.
Question 2: What is the 'equity of redemption'?
- The mortgagor's right to redeem (repay) the mortgage and recover the property free from the mortgage (Correct answer)
- The mortgagee's right to sell the property on default
- A court's power to order a sale of mortgaged property
- The surplus proceeds after a mortgagee's sale
Correct answer: The mortgagor's right to redeem (repay) the mortgage and recover the property free from the mortgage
The equity of redemption is the mortgagor's equitable right to redeem the mortgage — i.e., to pay off the debt and have the mortgage discharged. Courts of Equity protected this right against 'clogs and fetters' that might prevent redemption.
Question 3: What is the mortgagee's right of 'possession' and when does it arise?
- A mortgagee has the right to possession of the mortgaged property as soon as the mortgage is created, but the courts will restrict this unless there is default (Correct answer)
- Possession only arises after a court order in all cases
- The mortgagee can only take possession after selling the property
- Possession is only available where the mortgage is in arrears for more than 6 months
Correct answer: A mortgagee has the right to possession of the mortgaged property as soon as the mortgage is created, but the courts will restrict this unless there is default
At law, a legal mortgagee has the right to possession as soon as the mortgage is created (Four-Maids v Dudley Marshall [1957]), though in practice courts will only permit possession where the mortgagor is in default, particularly for residential mortgages under s.36 Administration of Justice Act 1970.
Question 4: What is a 'rentcharge'?
- A periodic sum charged on freehold land independent of any lease or mortgage (Correct answer)
- Rent paid under a leasehold tenancy
- A charge levied by a landlord for maintenance of common areas
- Service charges payable by a leasehold flat owner
Correct answer: A periodic sum charged on freehold land independent of any lease or mortgage
A rentcharge is a legal interest under s.1(2)(b) LPA 1925 — it is an annual or periodic sum charged on land owned in fee simple (freehold), not arising under a lease. New rentcharges cannot be created under the Rentcharges Act 1977.
Question 5: What is meant by 'indefeasibility of title' in registered land?
- Once title is registered, it is guaranteed by the state and generally cannot be defeated by prior unregistered interests (Correct answer)
- Registered title cannot be transferred without the owner's consent
- A registered title cannot be subject to mortgages or charges
- Once registered, land cannot be subject to adverse possession
Correct answer: Once title is registered, it is guaranteed by the state and generally cannot be defeated by prior unregistered interests
In registered land, the register is conclusive as to title. A registered proprietor's title is guaranteed by the state (through the Land Registry's indemnity scheme), and prior unregistered interests that do not qualify as overriding interests are generally overridden.
Question 6: What are 'overriding interests' in the context of registered land?
- Interests that bind a purchaser of registered land even though they are not entered on the register (Correct answer)
- Interests that override the registered title holder's right to sell
- Mortgages that take priority over all other charges
- Planning restrictions that take priority over the register
Correct answer: Interests that bind a purchaser of registered land even though they are not entered on the register
Overriding interests (Sch.1 and Sch.3 Land Registration Act 2002) are rights that bind a purchaser of registered land even though they are not entered on the register, such as short legal leases, rights of persons in actual occupation, and legal easements.
CILEx L3 Land Law Basics 4
What is a 'mortgage' in land law?