Question 1

Flora lives in Winnipeg and has recently defaulted on her mortgage.Which of the following will likely occur?

Accepted Answer

The answer of Flora lives in Winnipeg and has recently...

Question 2

As used in the context of a mortgage,a "prepayment privilege"

Accepted Answer

A prepayment privilege allows the borrower to make certain payments without penalty, such as making extra payments or paying off the entire mortgage before the end of the term. It does not give the lender the ability to demand repayment sooner or make the entire amount due immediately. It also has nothing to do with an insurance contract and is not prohibited in Canadian provinces.

Question 3

A person who occupies a piece of land without any right or permission to do so is legally known as

Accepted Answer

A squatter is someone who occupies a piece of land without any legal right or permission to do so. The other options are not commonly used terms for someone who occupies land illegally.

Question 4

Aidan and Nadia are parties to a contract that allows Nadia to enforce an "acceleration clause" (as that term was used in the text).Which of the following statements is most likely TRUE?

Accepted Answer

An acceleration clause allows the lender to demand immediate repayment of the entire loan if the borrower fails to comply with certain terms, such as making payments on time. Therefore, Nadia's right to enforce an acceleration clause suggests that she is the lender and Aidan is the borrower. Option A and D are both incorrect as they suggest that Nadia borrowed money from Aidan, which is contrary to the scenario presented. Option E is also incorrect as it suggests that Nadia has the right to repay a debt to Aidan more quickly, whereas the scenario only mentions Nadia's right to demand earlier repayment from Aidan. Option B is not necessarily true as there is no indication in the scenario that the parties' contract is subject to any condition precedent.

Question 5

Ngari borrowed $250 000 from Phoebe.As security for the repayment of that loan,he created a mortgage over a piece of land called Blackacre.Ngari has repaid part of the loan to Phoebe,but he still owes $150 000.He is unable to repay the outstanding amount.Which of the following statements is TRUE?

Accepted Answer

The rules regarding when the right of foreclosure can be exercised vary depending on the jurisdiction in which Blackacre is located. In some provinces, Phoebe may have to attempt to sell the property first, while in others she may be entitled to foreclose immediately. Without knowing where Blackacre is located, we cannot assume that Phoebe can exercise the right of foreclosure without attempting to sell the property first. Therefore, option C is the correct answer.

Question 6

Zoe and Lucius are parties to a contract that allows Zoe to take the benefit of a "prepayment privilege" (as that term was used in the text).Which of the following statements is most likely TRUE?

Accepted Answer

The prepayment privilege allows a borrower to repay a loan earlier than agreed without penalty, preventing liability for the lender's loss of interest.

Question 7

Reginald lives in Alberta and wants to buy a farm.Kevin owns a farm in Alberta,but he has been living in Norway for the last 5 years.His sister,Colleen,has been living at the farm while he is gone.Reginald purchases the farm from Colleen.Six months later,Kevin returns from Norway.Which of the following is true?

Accepted Answer

The answer of Reginald lives in Alberta and wants to...

Question 8

A purchaser's lien

Accepted Answer

A purchaser's lien is a form of security that gives the purchaser the right to retain possession of the property until the purchase price is fully paid. It is not found within a mortgage document and does not allow the purchaser to occupy the property before full payment. Specific performance may be an option if the seller breaches the contract, but it is not directly related to a purchaser's lien.

Question 9

Alpha Inc is interested in purchasing a particular piece of land.The company's president is,however,worried that the land may be worth less than the current owner claims.The company should therefore retain the services of

Accepted Answer

An appraiser would be the best choice in this scenario because they specialize in the valuation of real estate. They can provide an unbiased opinion of the land's worth, taking into account factors such as location, zoning, and any potential environmental issues. This would be a more reliable way for Alpha Inc to determine if the land is worth the asking price or not.

Question 10

Jessica wants to purchase an old house to turn into a museum.Which of the following would be the most advantageous to have as a condition of the sale?

Accepted Answer

In order for Jessica to turn the old house into a museum, commercial zoning must be approved for the lot. This would allow for the house to become a public space and potentially generate revenue through ticket sales or donations. The other options may be helpful or necessary, but without commercial zoning approval, Jessica would not be able to proceed with her plans for the museum.

Question 11

Ramla borrowed $100 000 from Wilhelm.As security for repayment of that loan,she created a mortgage over a piece of land called Blackacre.Which of the following statements is TRUE?

Accepted Answer

A bonus clause in a mortgage contract typically imposes a financial penalty on the borrower if they repay the loan earlier than agreed, as it compensates the lender for the loss of anticipated interest.

Question 12

Dianne is interested in a new condo being built in Hamilton,so she puts down a deposit.The condo is to be completed in 18 months.Nine months later,Dianne decides she no longer wants to move to Hamilton,so she asks for her money back and the seller refuses.In order to actively get her money back,Dianne should

Accepted Answer

The answer of Dianne is interested in a new condo...

Question 13

Primus Inc has agreed to purchase a piece of land from Cherie.That agreement is subject to a "condition" (as that word was used in this context in Chapter 16).The condition reflects the fact that Primus must arrange financing through a bank in order to afford the purchase.Which of the following statements is most likely to be TRUE?

Accepted Answer

The condition suspends Cherie's obligation to transfer the land until Primus arranges financing.

Question 14

Stanislav contractually agreed to sell a piece of land to Tien for $250 000.When the time came to transfer title,however,Stanislav refused to complete the transaction.Tien consequently refused to pay any part of the price and justifiably sued for specific performance.At that time,the market value of the land was $300 000.The case was not decided by a court for five years.The judge then held that Stanislav was liable for breach of contract.At that time,the land was worth $400 000.Which of the following statements is TRUE?

Accepted Answer

Tien is entitled to receive $150,000, which is the difference between the market value at the time of breach ($300,000) and the contract price ($250,000).

Question 15

As used in the context of a mortgage,the legal concept of a "charge"

Accepted Answer

A charge, in the context of a mortgage, means that the land is subject to a legal claim or liability. In jurisdictions that use the land titles system, a mortgage is often registered as a charge on the title to the property. This does not necessarily involve the transfer of title at the outset, nor does it directly refer to the interest rate, demand for possession, or pre-existing interests.

Question 16

Solomon recently purchased a piece of land for $200 000.A short time later,however,the land was seized by the government and sold.That is true even though Solomon never breached any obligation and always paid his debts on time.Which of the following statements may best explain this set of events?

Accepted Answer

It is possible that Solomon's vendor had a debt owed to the government and failed to pay it, resulting in a seizure of the land and subsequent sale to recover the debt. This would explain why Solomon, who had no involvement in the debt, lost the land.

Question 17

Suki was recently involved in a successful application of the insurance principle under the land titles system.This most likely means that

Accepted Answer

The answer of Suki was recently involved in a successful...

Question 18

Yun-Fat wants to start a new manufacturing plant and needs to buy a factory in which to run it.Marlon sells a factory to Yun-Fat and the land titles office issues him a certificate of title.Afterwards,it is revealed that Marilyn is the true owner and that the land titles office mistakenly issued the certificate.Which of the following statements is true?

Accepted Answer

In Western Canada, the Torrens system of land registration provides that a certificate of title is conclusive evidence of ownership, protecting buyers like Yun-Fat from claims of prior ownership.

Question 19

Horace borrowed $100 000 from Blossom.As security for repayment of that loan,he created a mortgage over a piece of land called Blackacre.Horace has repaid part of the loan,but still owes $40 000 to Blossom.He is unable to repay the outstanding amount or make the next mortgage payment.Which of the following statements is TRUE?

Accepted Answer

An acceleration clause in a mortgage contract allows the lender to demand the full repayment of the outstanding loan amount if the borrower defaults on a payment. Therefore, if such a clause exists, Horace may be required to pay the entire $40,000 immediately.

Question 20

Hofflehaus Inc owns a large piece of land known as Schwarzermorgen.It wanted to use that land as security for loans totaling $6 million.When it explained the situation to Primus Bank,however,it was told that it qualified for a loan of only $4 million.The company accepted the offer of that loan and allowed Primus Bank to take a mortgage over Schwarzermorgen.Primus Bank did not,however,immediately register its mortgage.The next day,the company approached Deuce Bank,asked for a loan of $2 million,and offered security in the form of a mortgage over Schwarzermorgen.The company did not mention that it had already granted a mortgage to Primus Bank and Deuce Bank had no other way of knowing about that first mortgage.Deuce Bank then (1)checked the records at the land registration office and found that there were no interests registered against Schwarzermorgen,(2)loaned $2 million to the company,and (3)immediately filed its own mortgage.The next day,Primus Bank finally registered its mortgage.And later that same day,the company suffered a devastating financial loss.That loss wiped out virtually every asset that the company had,including the $6 million that it had borrowed from the two banks.The company's only remaining asset is Schwarzermorgen.The value of Schwarzermorgen has,however,dropped to $1.5 million.That land has now been sold and the only question before the court concerns the disposition of the $1.5 million in cash.Which of the following statements is TRUE?

Accepted Answer

Deuce Bank's mortgage was registered before Primus Bank's mortgage, and thus Deuce Bank has priority over the proceeds from the sale of the land. Since Schwarzermorgen was sold for $1.5 million, Deuce Bank will receive the full amount. Primus Bank will not receive any payment from the sale of the land because its mortgage was registered after Deuce Bank's mortgage.

Quiz 16: Real Property: Sales and Mortgages