Chapter 15 Clauses Flashcards
Which of the following contractual clauses in a mortgage could apply where a borrower defaults?
(1) An “omnibus” clause
(2) A “mortgagee in possession” clause
(3) An “acceleration” clause
(4) All of the above clauses could apply.
4
Any clause contained in a mortgage which clogs the equity of redemption is:
(1) valid.
(2) void.
(3) illegal.
(4) an unreasonable restraint of trade.
2
Which of the following clauses contained in a mortgage would constitute a clog on the equity of redemption and therefore be void?
(1) collateral advantage clause
(2) option to purchase clause
(3) indemnity clause
(4) acceleration clause
2
ABC Loan Co. (“ABC”) has agreed to lend $2 million dollars to Devco Ltd. in exchange for a registered first mortgage against Devco’s current residential construction project. The loan is to be paid out in four equal instalments over a five month period, but all payments are at the discretion of ABC under the “advances” clause in the mortgage. The first instalment has been paid and it is now time to pay out the second instalment. ABC has discovered that a builder’s lien has been filed against Devco’s property. You correctly advise ABC that:
(1) it is obligated to pay out the second instalment to Devco; to refuse to do so would be a breach of the mortgage contract.
(2) if the second instalment is advanced to Devco, the lien claimant will have priority over this and any other advances made under the mortgage after the date of registration of the lien.
(3) the lien cannot take priority over ABC’s mortgage because the lien was registered after the mortgage.
(4) None of the above statements is correct.
2
which of the following contractual clauses in a mortgage could apply where the mortgage is in otherwise goodstanding but the borrower has not paid their property taxes
- an “further charge” clause
- an “repayment clause”
- an “accelleration clause”
- an “obnibus clause”
4
