CII R01 CORE EXAM MANUAL UPDATED QUESTIONS AND
ANSWERS GRADED A+
✔✔Minors and contracts - ✔✔contract between adult and minor is only binding on adult
must then be ratified after the minor comes of age for them to be bound
a contract by a minor is NOT void and any value transferred by them can only be
recovered if they prove a complete failure of consideration
✔✔mentally disordered and contracts - ✔✔generally valid
contract can be cancelled if they prove that they were unable to understand AND the
other party was aware of this
if its so severe that their property is controlled by the court then any contracts made to
dispose of their property only bind the other party
they can ratify once they recover
✔✔intoxicated and contracts - ✔✔similar to those with mental disorder
if they weren't in a fit state AND the other party knew then the contract isn't binding
the contract can later become binding
✔✔law of agency - ✔✔agent acts on behalf of the principle
legal relationship with the third party
an IFA is the agent of the consumer who is the principle
the IFA has a duty to pass info on behalf of the customer so if they didnt contract is
invalidated
A tied adviser is the agent of the product provider not the client so not the same
✔✔freehold - ✔✔encompasses the property AND the land it stands on
easiest form
✔✔Leasehold - ✔✔ownership and land separate
the owner of the freehold can create a lease to temporarily transfer rights to the
leaseholder
the leaseholder can then use the land as per the terms for the duration of the contract
after which it reverts back to original ownership
shorter lease terms makes it harder to resell property
lenders usually require lease terms to extend past repayment
usually over 65 years
agreement sets out new owners repsonsibilities like upkeep
✔✔commonhold - ✔✔relates to flats usually
owners are unit holders and are members of commonhold association.
commonhold association owns land and common areas
units are owned by the individuals
fee to commonhold association
unitholders funds are pooled and used for maintenence
, unit holders can vote
✔✔beneficial joint tenants - ✔✔joint means neither can sell without others agreement
when one dies, their ownership passes to surviving owner
this share cant be given to anyone else in the wil
usually for marriages where everything is split evenly
✔✔beneficial tenants in common - ✔✔property held by 2 or more in specific proportions
tenants may not own equal parts
if one dies, their share forms part of their estate and can be passed on in their will
there must be a declaration of trust stating ownership proportions
✔✔shared ownership - ✔✔purchaser buys a percentage share of property and then
rents the remaining share from them
usually can buy a larger share over time
✔✔rent to buy - ✔✔scheme where housing associations apply for loans to build new
houses
landlords then make the houses available to rent at below market rates for 7 years
this helps tenant save a deposit
at the end of the term the tenant has first refusal
✔✔starter home scheme - ✔✔new build homes offered to 23-40 yo at least 20% off
market price
subject to price caps
✔✔help to buy equity loan - ✔✔Govt lends buyer 20% off cost of new build
no loan charges for first 5 years
25 year term
can only own one
must be new build
cant be more than 600k
✔✔help to buy mortgage guarantee - ✔✔offered lenders a guarantee on mortgage
loans so the lender could lend a higher percentage of the house value
✔✔bankruptcy - ✔✔takes basically all assets and shares them fairly to the creditors
applies to individuals
added to register
subject to restrictions for 12 months unless fully paid off
assets from their estate during this period can still be used to pay off debts
✔✔insolvency - ✔✔applies to companies
✔✔trustee in bankruptcy - ✔✔the official receiver or an insolvency practitioner
ANSWERS GRADED A+
✔✔Minors and contracts - ✔✔contract between adult and minor is only binding on adult
must then be ratified after the minor comes of age for them to be bound
a contract by a minor is NOT void and any value transferred by them can only be
recovered if they prove a complete failure of consideration
✔✔mentally disordered and contracts - ✔✔generally valid
contract can be cancelled if they prove that they were unable to understand AND the
other party was aware of this
if its so severe that their property is controlled by the court then any contracts made to
dispose of their property only bind the other party
they can ratify once they recover
✔✔intoxicated and contracts - ✔✔similar to those with mental disorder
if they weren't in a fit state AND the other party knew then the contract isn't binding
the contract can later become binding
✔✔law of agency - ✔✔agent acts on behalf of the principle
legal relationship with the third party
an IFA is the agent of the consumer who is the principle
the IFA has a duty to pass info on behalf of the customer so if they didnt contract is
invalidated
A tied adviser is the agent of the product provider not the client so not the same
✔✔freehold - ✔✔encompasses the property AND the land it stands on
easiest form
✔✔Leasehold - ✔✔ownership and land separate
the owner of the freehold can create a lease to temporarily transfer rights to the
leaseholder
the leaseholder can then use the land as per the terms for the duration of the contract
after which it reverts back to original ownership
shorter lease terms makes it harder to resell property
lenders usually require lease terms to extend past repayment
usually over 65 years
agreement sets out new owners repsonsibilities like upkeep
✔✔commonhold - ✔✔relates to flats usually
owners are unit holders and are members of commonhold association.
commonhold association owns land and common areas
units are owned by the individuals
fee to commonhold association
unitholders funds are pooled and used for maintenence
, unit holders can vote
✔✔beneficial joint tenants - ✔✔joint means neither can sell without others agreement
when one dies, their ownership passes to surviving owner
this share cant be given to anyone else in the wil
usually for marriages where everything is split evenly
✔✔beneficial tenants in common - ✔✔property held by 2 or more in specific proportions
tenants may not own equal parts
if one dies, their share forms part of their estate and can be passed on in their will
there must be a declaration of trust stating ownership proportions
✔✔shared ownership - ✔✔purchaser buys a percentage share of property and then
rents the remaining share from them
usually can buy a larger share over time
✔✔rent to buy - ✔✔scheme where housing associations apply for loans to build new
houses
landlords then make the houses available to rent at below market rates for 7 years
this helps tenant save a deposit
at the end of the term the tenant has first refusal
✔✔starter home scheme - ✔✔new build homes offered to 23-40 yo at least 20% off
market price
subject to price caps
✔✔help to buy equity loan - ✔✔Govt lends buyer 20% off cost of new build
no loan charges for first 5 years
25 year term
can only own one
must be new build
cant be more than 600k
✔✔help to buy mortgage guarantee - ✔✔offered lenders a guarantee on mortgage
loans so the lender could lend a higher percentage of the house value
✔✔bankruptcy - ✔✔takes basically all assets and shares them fairly to the creditors
applies to individuals
added to register
subject to restrictions for 12 months unless fully paid off
assets from their estate during this period can still be used to pay off debts
✔✔insolvency - ✔✔applies to companies
✔✔trustee in bankruptcy - ✔✔the official receiver or an insolvency practitioner
