Chapter 7 - Mortgage Law

Question 1

what is an acceleration clause

Answer 1

upon borrower’s default, lender can demand payment in full of outstanding mortgage amount

Question 2

what is an omnibus clause

Answer 2

gives lender alternative to accelerating loan if borrower defaults on property tax, strata fees, as required under mortgage. amount added to principle with interest.

Question 3

define guarantor

Answer 3

one who becomes contingently or secondarily liable for another’s debt or performance

Question 4

covenantor vs guarantor

Answer 4

covenantor is a primary debtor and can be collected upon like a borrower, before exhausting all remedies. guarantor is secondary debtor and responsible after lender exhausted all remedies against primary debtor.

Question 5

what is an interim blanket mortgage

Answer 5

used for condos/subdivisions to raise money for the project. Permits the mortgage to be released from each individual lot as it is purchased, but keeps security over the rest of the project.

Question 6

Reverse Annuity Mortgage (RAM)

Answer 6

a loan arrangement in which the lender makes periodic payments to the borrower during the loan term. At the end of the term, the borrower will have to repay the balance owing by refinancing or selling the property.

Question 7

two instances lenders can become liable for remediation

Answer 7

1. they exercise control over or impose requirements which cause site to be contaminated.
2. lender become registered owner of property (ie. forclosure)

Question 8

Assumption of mortgage

Answer 8

original borrower may be liable if new buyer defaults on mortgage assumption.

Question 9

what is novation

Answer 9

the substitution of one contract for another. replacing original contract between lender and seller with new contract for lender and buyer.

Question 10

statutory priorities

Answer 10

Builder’s Lien Act, Employment Standards Act, Local government, Strata Property Act, Workers Comp. Act, deemed trust claims under federal Acts

Question 11

Foreclosure

Answer 11

extinguish borrower’s equitable right to redeem, allow lender to realize on its security.

Question 12

Order Absolute of Foreclosure

Answer 12

respondents are foreclosed of any right, title or interest. lender can apply for indefeasible title and no further court proceedings are required.

Question 13

Agreement for Sale

Answer 13

vendor sells land to purchaser, paid by installments. Seller is registered owner and purchaser is charge on title.