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

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.

Answer 2

C

Question 3

The land titles system has changed the legal nature of a mortgagee's interest in land.Under the land titles system,a mortgage is called

A)a transfer of legal title.
B)a foreclosure.
C)a charge.
D)a real registration.
E)an acceleration clause.

Answer 3

C

Question 4

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 5

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 6

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 7

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

Question 8

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 9

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 10

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 11

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

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

Question 12

Under the federal legislation entitled Proceeds of Crime (Money Laundering)and Terrorist Financing Act,professionals and financial institutions are required to report

A)suspicious transactions or large cash payments of $10,000 or more.
B)mortgages registered in the names of family members.
C)all documentation confirming clients' identities.
D)the names and addresses of non-Canadian clientele.
E)bank accounts and trust statements of any lawyer under suspension.

Question 13

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.

Question 14

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 likely not correct because real estate commissions are usually paid on top of the sale price.
E)none of the above

Question 15

A mortgagee rarely takes possession of the property upon default.It usually waits until a final order of foreclosure has been obtained.The main reasons for a mortgagee not going into possession include all of the following EXCEPT

A)it generally wants its money rather than the mortgagor's property.
B)it would prefer to encourage the mortgagor to pay off the debt.
C)its possession would remain uncertain since the mortgagor might at any moment tender payment,redeem his interest and demand possession.
D)it must account for any benefit it receives from the occupation of the land and deduct it from the amount owing if the mortgagor ultimately tenders payment.
E)it gives up any rights it may have to obtain a final order of foreclosure.

Question 16

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

Question 17

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 18

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 19

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 20

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

Question 21

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 22

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

Question 23

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

Question 24

A defect not readily apparent to an ordinary purchaser during an ordinary inspection is referred to as a patent defect.

Question 25

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

Question 26

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

Question 27

Explain the difference between equity of redemption and equity.

Question 28

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

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

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

Question 31

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

Question 32

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

Question 33

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 34

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

Question 35

Explain the concept of a mortgage.

Question 36

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

Question 37

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

Question 38

Lawyers are covered by the Proceeds of Crime (Money Laundering)and Terrorist Financing Act since their work involves receiving large sums of money from their clients.

Question 39

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

Question 40

Who is a general creditor?

Question 41

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 42

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 43

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

Question 44

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 45

William lists his rental property for sale.He recently learned that the property was infested with termites and wants to sell it before having to spend any money fixing the problem.Briefly discuss the difference between a latent defect and a patent defect and whether or not William is required to disclose the issue to prospective purchasers.

Question 46

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 47

Briefly describe the relevant factors that dictate whether a mortgagee requests a sale or forecloses in circumstances where a mortgage goes into default.