Chapter 13 Covanant Flashcards
The transfer by the borrower of the equity of redemption to a subsequent buyer does not always relieve the borrower of the covenant to repay the debt. However, there are circumstances where the borrower may be relieved of liability on the personal covenant. Which one of the following events would NOT relieve the borrower from this liability?
(1) The borrower has received a release from the lender.
(2) The borrower has sold the property with the knowledge of the lender.
(3) The Property Law Act releases the borrower.
(4) The lender has become disabled from restoring the property unimpaired.
2
In a mortgage contract, the promise by the borrower to pay the installments of principal and interest as they fall due entitles the lender to exercise the remedy of an ordinary creditor, separately from a foreclosure application, in the case of default. This promise is known as:
(1) the equity of redemption.
(2) the personal covenant.
(3) the insurance covenant.
(4) a collateral advantage.
2
A term of the mortgage provides that the full outstanding balance will become due and payable in the event of default by the borrower in making any payment. This term is known as:
(1) the repayment clause.
(2) the personal covenant.
(3) the omnibus clause.
(4) the acceleration clause
4
Which of the following statements regarding mortgagees is FALSE?
(1) A mortgagee may require the addition of a guarantor to provide a separate personal covenant as a third party in addition to the borrower’s personal covenant to pay.
(2) Where the property secured is a condominium, a mortgagee may require the borrower to grant to the mortgagee the right to vote at meetings of the strata corporation on various matters affecting the security of the mortgage.
(3) Although a number of remedies are usually available to a mortgagee in the event of borrower default, the lender usually has complete discretion in deciding the most suitable remedy to use in the circumstances.
(4) Once the mortgage terms have been agreed to by the mortgagor and the mortgagee, the mortgagee is bound to advance the total amount of the funds when requested by the borrower, regardless of the terms of the mortgage.
4
Which one of the following is NOT a mortgagor covenant?
(1) pay all taxes on the land and on the improvements
(2) keep the premises in a reasonable state of repair
(3) to convey the property to the mortgagee, at its option, in exchange for an amount equal to current market value
(4) pay the debt and accrued interest according to the agreed upon schedule
3
Under the Land Title Act, in British Columbia a mortgage is registered on the title as:
(1) a charge.
(2) an agreement for sale.
(3) a right to purchase.
(4) a restrictive covenant.
1
Which of the following is NOT a common covenant of the borrower?
(1) provision to pay all property taxes
(2) provision to keep the property well maintained
(3) provision to insure the property to replacement value or such lesser amount as the mortgagee determines
(4) provision to waive the rescission rights under the Mortgage Brokers Act
4
When an Order Absolute of Foreclosure is obtained by a petitioner who is in the position of second mortgagee:
A. that mortgagee can no longer exercise its right to sue the borrower on his or her personal covenant.
B. the order forecloses the registered owner’s interest in the mortgaged land and permits the petitioner to transfer title into his or her own name.
C. all other charges, liens, encumbrances and interests registered on the borrower’s title are foreclosed or “wiped” off the title.
D. the petitioner may sell the property after taking title to it and does not have to account to the borrower for any profit which might be realized in excess of the mortgage debt.
3
