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Under section 63A(2) of the Transfer of Property Act, 1882, a mortgagor must reimburse the proper cost…

Under section 63A(2), the proper cost of qualifying improvements is added to the principal and bears interest at the rate payable on the principal. Where no such rate is…

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Under section 63A(2) of the Transfer of Property Act, 1882, a mortgagor must reimburse the proper cost of qualifying improvements. There is no contrary contract and no rate fixed on the principal. What annual interest rate applies to the cost?

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Answer and explanation

Correct answer A

Under section 63A(2), the proper cost of qualifying improvements is added to the principal and bears interest at the rate payable on the principal.

Where no such rate is fixed, the statute supplies a rate of 9% per year.

Option feedback

Option A

Nine per cent per annum is the statutory fallback when no principal rate is fixed.

Option B

The statutory fallback is nine per cent, so six per cent does not apply on these facts.

Option C

Section 63A(2) specifies nine per cent as the fallback, so ten per cent is too high.

Option D

Section 63A(2) does not set an eleven per cent default.

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