Deck 23: Mortgages of Land and Real Estate Transactions

Question 1

A mortgagee is

A)a preferred creditor.
B)a secured creditor.
C)an unsecured creditor.
D)a general creditor.
E)a subsequent creditor.

Answer 1

B

Question 2

On receipt of an agreement of purchase and sale from a purchaser of property,the first thing a prudent lawyer should do is

A)conduct a search of title of the purchased property.
B)conduct a search of taxes for the purchased property.
C)conduct a search of the zoning by-laws affecting the purchased property.
D)ensure that the purchaser has sufficient money to purchase the property and pay all costs related to the purchase.
E)all of the above

Answer 2

D

Question 3

An order by a court that ends the right of the mortgagor to redeem the mortgage within a fixed time is called

A)an injunction.
B)the equity of redemption.
C)a foreclosure.
D)a writ.
E)damages.

Answer 3

C

Question 4

Which of the following is NOT a covenant of the mortgagor?

A)to pay the debt and accrued interest,at the stipulated times
B)to pay the taxes on the land the buildings
C)to execute the necessary discharge of the mortgage upon payment in full
D)to keep the premises in a reasonable repair
E)to keep the property adequately insured in the name of the mortgagee

Question 5

Use the fact situation in Q1 to answer the related question that follows. Assume that George comes into an inheritance and pays off the TD Canada Trust mortgage in full.TD Canada Trust will give George

A)a cancellation of the debt.
B)a transfer of its mortgage.
C)a discharge of its mortgage.
D)a partial discharge of its mortgage.
E)an assignment of its mortgage.

Question 6

Use the fact situation in Q1 to answer the related question that follows. Assuming that both the Royal Bank and the TD Canada Trust mortgage were registered on title to George's home,the equity in the home would be

A)$450 000.00
B)$250 000.00
C)$700 000.00
D)$50 000.00
E)$750 000.00

Question 7

Mary is buying a home for the first time.She has $200 000.00 in her bank account and has been pre-approved for a $100 000.00 mortgage.Mary now finds a house priced at $300 000.00 and based on her calculation of the money in her account and the pre-approved mortgage,she enters into an agreement of purchase and sale for it with its owner.In this case,

A)Mary's calculation is not correct,and she will probably not have enough money to close the transaction.
B)Mary's calculation is correct,and she will probably have enough money to close the transaction.
C)Mary's calculation is correct,and she will definitely have enough to close the transaction.
D)Mary's calculation is correct,and she will probably have enough money to close the transaction.
E)none of the above

Question 8

Use the fact situation in Q1 to answer the related question that follows. Based on the date and time of registration of the Royal Bank and the TD Canada Trust mortgages,if George defaults in payment of the Royal Bank mortgage,

A)the Royal Bank can sell George's house,but must pay off TD Canada Trust out of the sale proceeds.
B)the Royal Bank can sell George's house and can keep the sale proceeds.
C)TD Canada Trust can sell George's house,but must first pay off the Royal Bank out of the sale proceeds.
D)there is a corresponding default in the TD Canada Trust mortgage and TD Canada Trust can sell George's house.
E)the Royal Bank cannot sell George's house unless TD Canada Trust consents.

Question 9

Use the fact situation in Q1 to answer the related question that follows. The term or phrase used to describe the position or rank of the Royal Bank and TD Canada Trust mortgages on title based on the time of registration is

A)equity of redemption.
B)equity.
C)priority.
D)calculation period.
E)amortization period.

Question 10

A lender who accepts an interest in land as security for a loan is called

A)a mortgagor.
B)a insured.
C)a mortgagee.
D)a pledgor.
E)a lender.

Question 11

Use the fact situation in Q1 to answer the related question that follows. Based on date and time of registration,if the property is worth $200 000.00 and George defaults on the Royal Bank mortgage and the bank immediately brings foreclosure proceedings,

A)it can only gain possession of the property.
B)it will have title to George's house subject to the TD Canada Trust mortgage.
C)it will obtain enough money from the sale to pay off the TD Canada Trust mortgage.
D)it will cut out the interest of TD Canada Trust.
E)none of the above

Question 12

Use the fact situation in Q1 to answer the related question that follows. Assuming that the Royal Bank mortgage was to be a first mortgage,in Ontario,

A)it would transfer legal title of George's house to the Royal Bank.
B)it would simply be a lien on encumbrance on title to George's home.
C)it would transfer an equitable interest in George's house to the Royal Bank.
D)it would transfer the equity in George's house to the Royal Bank.
E)it would transfer the equity of redemption in George's house to the Royal Bank.

Question 13

Use the fact situation in Q1 to answer the related question that follows. Based on the date and time of registration of each of the two mortgages,assume that six months after the registration of the mortgages,George defaults on the TD Canada Trust mortgage and that his house is now worth $600 000.00.On a sale of the house by TD Canada Trust,the Royal Bank would receive

A)$450 000.00.
B)$50 000.00.
C)$700 000.00.
D)$250 000.00.
E)$100 000.00.

Question 14

The right of the mortgagee,given by a statute or the terms of the mortgage,to sell the property upon default is called

A)an equitable sale.
B)legal sale.
C)a power of sale.
D)an equitable right to sell.
E)sale by court.

Question 15

Use the fact situation in Q1 to answer the related question that follows. Given the time of registration of the Royal Bank and the TD Canada Trust mortgages,

A)the Royal Bank mortgage is a first mortgage.
B)the TD Canada Trust mortgage is a first mortgage.
C)both mortgages rank equally.
D)the TD Canada Trust mortgage is void as against the Royal Bank mortgage.
E)the Royal Bank mortgage is void as against the TD Canada Trust mortgage.

Question 16

George owns an acre of land and severs,or divides,it into building lots.Before George can build on the lots he requires money to finance the construction costs,so he goes to his bank and gets first mortgage financing in the amount of $1.5 million and the bank registers the mortgage on all the building lots.If George finishes construction on one building lot,sells it,and pays down the bank's mortgage,the bank will give George

A)a complete assignment of the mortgage.
B)a complete discharge of the mortgage.
C)a partial assignment of the mortgage.
D)a reconveyance of legal title to all the lots.
E)a partial discharge of the mortgage.

Question 17

A mortgage that permits repayment of the debt at any time without notice or penalty is called

A)a partial mortgage.
B)a closed mortgage.
C)a conventional mortgage.
D)an open mortgage.
E)an insured mortgage.

Question 18

Use the fact situation in Q1 to answer the related question that follows. If only the Royal Bank mortgage were registered on title to George's home,based on what was on title,the equity of redemption in George's home would be

A)$250 000.00
B)$50 000.00
C)$750 000.00
D)$450 000.00
E)$700 000.00

Question 19

Use the fact situation in Q1 to answer the related question that follows. Given the date and time of registration of the Royal Bank and the TD Canada Trust mortgages,if George defaults in payment of the TD Canada Trust mortgage,TD Canada Trust can

A)sell the property under power of sale.
B)seek judgment on the covenant for payment for the balance remaining on its mortgage.
C)bring an action for foreclosure.
D)bring an action for possession of the property.
E)all of the above

Question 20

Under the registry system,when a first mortgagee gives a discharge of its mortgage to the mortgagor,the effect of the discharge if registered is to

A)act to reconvey legal title of the land to the mortgagor.
B)acknowledge that the mortgage debt has been paid in full.
C)act as a cancellation of the encumbrance on the land.
D)act to bring all rights and remedies of the mortgagee to an end.
E)all of the above

Question 21

A third mortgage is a mortgage of the equity of redemption.

Question 22

Upon a sale of property,the document that sets out the debits and credits that must be adjusted to arrive at the proper amount to be paid on closing is called the

A)requisitions.
B)draft deed.
C)statement of adjustments.
D)charge.
E)charge/mortgage.

Question 23

Under the land titles system,a first mortgage transfers legal title in the mortgage land to the mortgagee.

Question 24

The rules regarding assignments continue in respect of mortgages that are assigned.

Question 25

A creditor who has no security other than the debtor's promise to pay is

A)a secured creditor.
B)an preferential creditor.
C)a preferred creditor.
D)a general creditor.
E)a mortgagee.

Question 26

In order to prevent mortgage fraud,as between a bank or finance company that is in the business of giving mortgages and the lawyer who acts on the mortgage,who do you think might have a higher duty to ensure that the borrowers are not imposters,and is this the case in the real world?

Question 27

Explain the difference between equity of redemption and equity.

Question 28

In a foreclosure,even after the final day for redemption,the mortgagee may successfully sue the mortgagor for the debt

A)until the six-month period has expired.
B)until the one-month period has expired.
C)until the period prescribed in the Statute of Limitations runs out.
D)after the property has been sold to another party.
E)only if the mortgagor has sufficient funds to pay the debt.

Question 29

Usually there is no difference in the rights and remedies afforded to a first and second mortgagee in their respective mortgages.

Question 30

Partial discharges of a mortgage act to reconvey all of the land that is mortgaged.

Question 31

Who is a general creditor?

Question 32

The date for completing the sale of a real estate transaction is known as

A)the discharge date.
B)the mortgage date.
C)the closing date.
D)the equitable date.
E)the final date.

Question 33

Foreclosure can only be obtained by commencing an action at law for foreclosure.

Question 34

If a mortgagee does not register the mortgage,the mortgagee

A)loses the right to foreclose on the property.
B)loses the right to sue the mortgagor.
C)cannot enforce the mortgage against the property if it is sold.
D)loses the right to have a court-supervised sale.
E)all of the above

Question 35

On default of a mortgage,the full amount of the balance outstanding becomes due.

Question 36

A mortgage that can be paid off before its maturity date without penalty or bonus is a closed mortgage.

Question 37

In a real estate transaction,the draft deed is usually prepared by the vendor.

Question 38

A mortgage need not require registration of a discharge to cancel the mortgage debt.

Question 39

Explain why,in difficult economic times,it might be wiser for a mortgagee to foreclose rather than to sell the property.

Question 40

Which of the following is NOT a typical stage in a real estate transaction?

A)cleaning the premises
B)acceptance of the offer
C)submission of an offer to purchase
D)preparation of documents,including a statement of adjustments,by the seller
E)the submission of requisitions by the purchaser's solicitor

Question 41

When faced with a mortgagor's default,a mortgagee has options available to collect on the outstanding mortgage indebtedness.Briefly describe the options available to a mortgagee and what factors may influence a mortgagee's decision on how to proceed.

Question 42

Explain the concept of a mortgage.

Question 43

Who does the equity of redemption benefit,and how does it do so?

Question 44

What is an acceleration clause,and what is its purpose?

Question 45

Explain why,when there is a first mortgage on title of property,interest rates are higher for subsequent mortgages given on the same property.

Question 46

Where the vendor accepts an offer to purchase his or her property,what are five of the matters that the purchaser will have to investigate before closing?

Question 47

Assume that you are a developer of land who wants to purchase some land and divide it into building lots and then build and sell homes on them.Explain the type of mortgage that you will obtain and how it will permit you to sell the homes you build.

Question 48

Today,with an increase in instances of mortgage fraud,there are times when homeowners can actually lose their property.Explain why recourse to the Land Titles Assurance Funds of various provinces may be of little value to such homeowners.

Question 49

What should a prudent mortgagee do when a mortgagor defaults on the mortgage and abandons the mortgaged property?

Question 50

What is a reverse mortgage? Why might a reverse mortgage be an advantage to an older person?

Question 51

Explain why a mortgage is good protection for the mortgagee in circumstances where the mortgagor may be insolvent or goes bankrupt.