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Mortgages Introduction

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Questions and Answers

What is the primary purpose of a mortgage?

To finance the purchase of valuable chattels

To give the borrower the right to possess the property

To provide security for a debt (correct)

To transfer property ownership

In the context of mortgages, what does a lien refer to?

The right to use a property in exchange for debt repayment

A right to possess or retain property (correct)

A conveyance of land as security

The payment of a debt or obligation

What are examples of valuable chattels used in chattel mortgages?

Furniture and household items

Buildings and real estate

Ships, aeroplanes, and cars (correct)

Jewelry and precious metals

How is a mortgage different from a lien?

A mortgage involves debt repayment, while a lien involves property possession. Signup and view all the answers

How does a mortgage provide security for the lender?

By allowing the lender to repossess the property if the debt is not repaid Signup and view all the answers

What is the key difference between a lien and an equitable lien?

A lien grants the right to sell the property, while an equitable lien does not. Signup and view all the answers

In what circumstances does a vendor typically have an equitable lien?

When the land is conveyed to the purchaser before it is fully paid. Signup and view all the answers

What distinguishes the mortgagor's relationship with the property in legal mortgages compared to equitable mortgages?

In legal mortgages, the mortgagee has an absolute interest in the property while in equitable mortgages, the mortgagor is considered the true owner. Signup and view all the answers

What does equity look at when considering a mortgage transaction?

The substance of the transaction as security for a debt. Signup and view all the answers

What characterizes an equitable right to redeem in mortgage transactions?

It arises once the loan repayment date has passed. Signup and view all the answers