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Mortgage Flash cards > Mortgage Law > Flashcards

Mortgage Law Flashcards

1
Q

Is a Mortgage a Loan?

A

No mortgage is not a loan, it is a…
1. Contract which is an evidence for a loan
2. Security for a loan

NOTE: Lender = Mortgagee, Borrower = Mortgagor

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2
Q

Definition of a Mortgage

A
  • Interest in land created by contract as a security for a loan
  • Made from lender to borrower
  • Transfers legal and equitable interest in land
  • Interest returned to borrower upon debt repayment
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3
Q

Explain Legal and Equitable Mortgage

A
  • 1st Mortgage is only legal mortg.
  • Borrower retains equitable interest in land (Equity of Redemption) after granting legal mortg.
  • Free to mortg. this interest by 2nd, 3rd mortg.

NOTE: Registered as charges against title

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4
Q

By Deposit of Duplicate Certificate of Title

A
  • Fee simple owner of property, free of financial charges can apply fir DCOT in writing to the registrar of LTO.
    -Can obtain equitable mortg. by giving it to new lender as security
  • Lender holds it as collateral because person cannot sell or take out another mortg without the certificate in LTO.
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5
Q

Explain Agreement to Give a Mortgage

A
  • Agreement to grant a mortgage in future, is a present equitable mortgage.
  • Mortgage granted, but not registerable for procedural reasons, is an equitable mortgage
  • Lender can file a caveat to protect its interests
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6
Q

What is an Indemnity Clause?

A
  • Amount equal to 3 months interest be paid where loan must be recovered due to default.
  • Found in many mortgages, but unenforceable according to Interest Act
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7
Q

What Type of Legal Action is a Foreclosure?

A
  • Legal action taken by lender, for the default on the mortgage by the borrower
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8
Q

What is Vendor Take-back Mortgage?

A
  • Mortgage taken back from purchaser to complete a sale.
    -Vendor becomes mortgagee, -
    Purchaser becomes mortgagor
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9
Q

In British Columbia, if a collateral advantage was intended to be a term of the mortgage, it will be ______ if it continues after redemption.

A

Void

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10
Q

What is an Acceleration Clause?

A
  • Allows lender to demand full payment of OSB on mortg. upon borrowers default
  • Even if mortgage has not matured yet.
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11
Q

Which statute dealing with interest rates contains provisions allowing a court to intervene where the cost of the loan is excessive and the transaction is harsh and unconscionable?

A
  • Business Practices and Consumer Protection Act
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12
Q

What is a Reverse Annuity Mortgage?

A
  • Lender makes periodic payments to borrower during loan term.
  • At the end of term, borrower must repay balance owning by refinancing or selling property.
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13
Q

Explain Novation

A
  • Substitution of one contract for another

three principles to establish Novation are…
1. Borrower must assume complete liability
2. Lender must accept new borrower as principal debtor
3. Lender must accept new contract in full. and full substitution of old contract

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14
Q

What is an Assumable Mortgage?

A
  • Allows purchaser to assume or take over responsibilities and liabilities, under the mortgage from vendor
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15
Q

Explain Guarantor

A

-Someone who becomes liable for another persons debt or performance

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16
Q

Explain Order Nisi

A
  • Lender can request Order Nisi from court for foreclosure
  • Grants relief, and fixes redemption period
  • Final order by court, cannot be challenged except by appeal
  • Owner can hire licensee to try and sell property during redemption period
  • Borrower free to list and market property without judicial supervision
17
Q

Order for Conduct of Sale (Judicial Sale)

A
  • Application made if property worth less than mortg. debt
  • Petitioner entitled to recover difference between sales proceeds, and mortgage debt from borrower
  • If property is worth more, petitioner will try to get order absolute
  • No requirement to account to borrower for profits made
  • Petitioner can make offer on property. If court approves sale and proceeds are not enough to pay debt, and costs of sale. Petitioner can sue borrower for difference

Mortgage Flash cards (12 decks)

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