Mortgage Law and Property
The legal foundations of a mortgage: what makes a loan a 'regulated mortgage contract', how property is owned and secured, the priority of charges, and the difference between a lender's valuation and a buyer's survey.
Regulated contracts, tenure and security
Under Article 61 of the Regulated Activities Order, a loan is a regulated mortgage contract where it is secured by a mortgage on UK land, the borrower is an individual or trustee, and at least 40% of the land is used, or intended to be used, as a dwelling by the borrower or a related person. Property may be held freehold (outright, indefinite) or leasehold (a fixed term granted by a freeholder). The lender takes a legal charge registered at HM Land Registry; a first charge ranks ahead of a second charge on sale. Co-owners hold as joint tenants (right of survivorship) or tenants in common (distinct shares passing under the will). A basic mortgage valuation protects the lender; a buyer wanting a condition report needs a separate survey.