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McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
True/False Questions
1) Hiram owns a piece of land that he wants to sell to Regina. She wants to buy it for the
purpose of building a shopping mall. It is not yet clear, however, whether the municipal
government will give planning approval for the proposed mall. Hiram and Regina
consequently will probably immediately create a contract that is subject to a condition
subsequent.
a. True
b. False
2) The remedy of specific performance is available only if monetary damages would be
inadequate. Consequently, while that remedy is frequently available to purchasers, it is
never available to vendors.
a. True
b. False
3) Horatio owns a piece of land called Blackacre. He contractually agreed to sell it to
Bharati for $200 000. Although the sale was not scheduled to close for four weeks, Horatio
required Bharati to pay $10 000 immediately. Shortly before the sale was scheduled to
close, Horatio told Bharati that he had changed his mind and that he was not willing to
complete the sale. If he refuses to refund her $10 000, she would be entitled to use a
vendor's lien.
a. True
b. False
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
4) As a matter of risk management, commercial lenders (such as banks) are normally
willing to accept a mortgage for 100 percent of a property's current market value. That
practice is based on the effects of inflation and on the fact that property values always
increase no matter what happens in the economy.
a. True
b. False
5) A mortgage under a registry system involves an immediate conveyance of title, but a
mortgage under a land titles system does not.
a. True
b. False
6) Jacinta owns a piece of land called Blackacre. She created a mortgage over Blackacre in
favour of Simon. She then created a second mortgage in favour of Paolo. Simon has
foreclosed on the property. As a result, he was able to extinguish Jacinta's title because she
did not repay her loan to him. However Simon's foreclosure cannot extinguish Paolo's
second mortgage interest in Blackacre.
a. True
b. False
7) The priority of mortgages is always determined by the order of registration rather than
by the order of creation.
a. True
b. False
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
8) Alexis borrowed $500 000 from Chong. As security for the repayment of the loan, she
gave a mortgage over her property. She has now repaid the loan and otherwise satisfied the
terms of the mortgage. Consequently, assuming that the facts arose in a land titles
jurisdiction, she is entitled to a re-conveyance of title.
a. True
b. False
9) Robert borrowed money from Yanami. As security for that loan, he gave a mortgage
over his house. The parties' agreement does not contain a prepayment privilege.
Consequently, if Robert repays the loan more quickly than agreed, Yanami may be entitled
to a bonus.
a. True
b. False
10) A mortgage exists between Jonah and Marina with respect to a piece of property called
Blackacre. The mortgage agreement contains a prepayment privilege. In normal
circumstances, Jonah would want the inclusion of that clause if he is the mortgagor, but not
if he is the mortgagee.
a. True
b. False
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
11) The remedies for breach of a mortgage were developed over several centuries by both
the courts of law and the courts of equity. Consequently, it has not been necessary to
legislate in the area.
a. True
b. False
12) A piece of land called Blackacre is subject to a mortgage in favour of Henri. The
mortgage was used to secure a debt that Sophie owed to him. Sophie defaulted upon
payment of that debt. Henri can extinguish her equity of redemption by exercising his right
to take possession of Blackacre.
a. True
b. False
13) A piece of land called Blackacre was subject to a mortgage in favour of Alona. After
the mortgage went into default, she asked the court for the remedy of foreclosure. She was
granted an order nisi. Blackacre therefore now belongs to her and cannot be taken away.
a. True
b. False
14) A piece of land called Blackacre is subject to a mortgage in favour of Hal. The
mortgage was created to secure a debt of $100 000 that Myriam owed to Hal. Myriam
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
defaulted on the repayment of that debt. Blackacre is worth $250 000. Hal has announced
that he intends to use the remedy of foreclosure. Because Myriam's default was negligent, a
court would probably allow him to do so even if Myriam asked for an order for judicial sale
instead.
a. True
b. False
15) A piece of land called Blackacre is subject to a mortgage in favour of Maia. The
mortgage is in default. It may be possible for Maia to enforce her security by selling
Blackacre without complying with the procedures for a judicial sale.
a. True
b. False
Multiple Choice Questions
1) Nuala recently acquired an interest in a piece of land called Blackacre. A chain of title
a. is relevant only if she also wants to buy another piece of land that is located next to
Blackacre.
b. is relevant only if she is a mortgagee and there is at least one other mortgagee.
c. is one of the three principles that form the notion of indefeasibility.
d. was probably used by a surveyor to accurately measure the boundaries of Blackacre.
e. need not be proved if Blackacre is located west of Manitoba.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
2) Kiri bought a piece of land from Saul. Before doing so, she followed her lawyer's advice
and traced a chain of title back 10 years. Which of the following statements is most likely
TRUE?
a. The land is located somewhere in western Canada.
b. The land is held under a land titles system.
c. In the circumstances, there was no need for Kiri to have purchased title insurance.
d. The land is located in a deeds registration jurisdiction.
e. The land is subject to a life estate.
3) Ava is a scoundrel. She owned a piece of land called Blackacre, which is located in a
registry system jurisdiction. On Monday, she sold it to Marlon. Two days later, on
Wednesday, she sold it again to Frank. She had no right to do so. Which of the following
statements is TRUE?
a. Blackacre is now owned by whoever's name appears on the most recent certificate of
title.
b. Ava is entitled to compensation from the assurance fund.
c. Marlon can become the owner of Blackacre even if he registers his interest without
notice of Frank’s interest.
d. Because Ava already sold Blackacre to Marlon, Frank cannot acquire the fee simple as a
result of registration.
e. The doctrine of indefeasibility will protect Marlon.
4) Which of the following statements is TRUE?
a. A registry system is sometimes called a Torrens system.
b. Every province in Canada uses both a land titles system and a registry system.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
c. The rules that govern a land titles system were developed by judges, rather than
legislators.
d. The three principles of a land titles system are the mirror principle, the curtain principle,
and the indefeasibility principle.
e. An unregistered short-term lease may be enforceable under either a registry system or a
land titles system.
5) Kate believed that she owned a piece of land called Blackacre. She purportedly sold it to
Ben. The land titles office issued a new certificate of title that named Ben as the exclusive
owner of Blackacre. In fact, however, Kate was not really entitled to sell Blackacre.
Although none of the parties realized it at the time of the sale to Ben, Blackacre actually
belonged to Sam, and not to Kate. The official at the land titles office carelessly failed to
realize that fact when the new certificate of title was issued. Which of the following
statements is TRUE?
a. Sam is still the owner of Blackacre because the mirror principle states that the certificate
of title must reflect the actual facts.
b. Sam is still the owner of Blackacre because the curtain principle required Ben to "lift the
curtain" and determine the true owner of Blackacre before entering into the sale.
c. Sam is entitled to compensation from the assurance fund.
d. Ben is entitled to compensation from the assurance fund.
e. Ben is the owner of Blackacre because Sam could have avoided any difficulties by
tracing a good chain of title.
6) Which of the following statements provides the best definition for "the mirror
principle"?
a. The only valid interests in a piece of land are the ones that are listed in the certificate of
title.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
b. The terms of a subsequent mortgage must reflect the mortgagor's equity of redemption.
c. The interests listed in a certificate of title cannot be defeated.
d. All of the interests listed in a certificate of title reflect valid interests.
e. A contract for the purchase and sale of a piece of land must fully reflect the terms of the
parties' agreement.
7) Which of the following statements provides the best definition or description for "the
curtain principle"?
a. A subsequent mortgagee will lose its security if a prior mortgagee forecloses.
b. The sale of a residential property usually includes anything attached to the house, such as
curtain rods and dishwashers.
c. An interest in land may be obtained through adverse possession if the owner does not use
a "window of opportunity" to enforce its rights.
d. A purchaser of land should conduct a title search to ensure that there are no hidden
interests in the property.
e. There is no need to look behind a certificate of title in order to identify valid interests in
land.
8) Which of the following statements provides the best definition for "the insurance
principle," as that phrase was used in the text?
a. Because of the difficulties associated with title searches in registry systems, it is often
prudent for the parties to a sale of land to purchase insurance that will provide a source of
compensation if the chain of title is not properly established.
b. The purchaser can sue the vendor for compensation if the vendor fails to provide clear
title to land.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
c. Because of the concept of indefeasibility, the land titles system includes a fund that will
compensate people who lose their interests in land by mistake of the land title system
registry.
d. A lawyer should be hired to help in the purchase of land, partly because the lawyer will
have insurance and therefore can be successfully sued if something goes wrong.
e. A purchaser of land should purchase property insurance that takes effect as soon as title
is transferred from the vendor.
9) Which of the following interests in land is most likely enforceable despite the lack of
registration?
a. private easement
b. licence
c. short-term lease
d. long-term lease
e. chattel mortgage
10) Salome owned a piece of land called Blackacre. She committed the tort of nuisance
against Prem by allowing noxious fumes to waft from Blackacre and onto his property. The
court held her liable for $100 000 in compensatory damages. Recently, Salome sold
Blackacre to Shandon for $250 000. Which of the following statements is most likely
TRUE?
a. Shandon's purchase of Blackacre cannot possibly be valid unless Salome has paid $100
000 to Prem.
b. If Salome has not yet paid $100 000 to Prem, Shandon"s purchase of Blackacre cannot
possibly be valid if Prem filed a writ of execution with the sheriff's office before the date of
the purported sale.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
c. Prem can use a vendor's lien to force the sale of Blackacre if he does not receive $100
000 from Salome within 24 months from the date of judgment in the nuisance action.
d. Prem can use a vendor's lien to force the sale of Blackacre if he does not receive $100
000 from Salome within 12 months from the date of judgment in the nuisance action.
e. Even though Shandon did nothing wrong and even though Prem does not have a
registered interest on title, Shandon may lose Blackacre if he refuses to pay $100 000 to
Prem if the jurisdiction where the land is located recognizes writs of execution that are filed
with the sheriff, before transfer, as creating interests in land.
11) Suneeta wants to buy a large commercial property called Blackacre from Horst. The
property contains various types of buildings. It is currently used as a television studio.
Suneeta wants to use it as an Internet telecommunications centre. Which of the following
statements is true as a matter of risk management?
a. Suneeta should hire an appraiser to determine whether or not Blackacre is, from a
technical perspective, suitable for her business purposes.
b. Suneeta should hire an inspector to ensure that the property, and buildings located on it
are safe and sound and should hire a lawyer to make sure the land is zoned for her intended
use.
c. Suneeta should hire an environmental auditor to ensure that the buildings are strong
enough to withstand the worst weather conditions that might reasonably be expected to
occur in the area.
d. Suneeta should hire a surveyor to search the marketplace in order to ensure that no other
suitable property is available.
e. Suneeta should hire a real estate agent to ensure that the land supposedly included within
Blackacre does not encroach upon a neighbouring property.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
12) Simeon owns a piece of land called Blackacre. He has accepted Lola's offer to buy that
property. The parties have created an agreement of purchase and sale. Which of the
following statements is TRUE?
a. Since the parties created an agreement of purchase and sale, Blackacre must be located in
a registry system jurisdiction.
b. Since the parties created an agreement of purchase and sale, Blackacre must be located in
a land titles jurisdiction.
c. As long as it includes all of the relevant terms, the agreement of purchase and sale is
enforceable even if it is oral.
d. Specific performance may be awarded with respect to Simeon's obligation to transfer
title but not Lola's obligation to pay the price.
e. Even if a contract for the sale of land is oral, it is effective as long as both parties are
willing to perform.
13) Albert owns a piece of land called Blackacre. He has accepted Dawn's offer to buy it
for $200 000. That agreement of purchase and sale is, however, conditional on Dawn's
ability to sell Whiteacre, a property that she currently owns. Which of the following
statements is most likely TRUE?
a. The parties' agreement is subject to a condition subsequent.
b. If Dawn changes her mind, she is fully entitled to avoid purchasing Blackacre simply by
refusing to seek a purchaser for Whiteacre.
c. Albert can waive the condition and insist upon performance of the sale if Dawn is unable
to find a purchaser for Whiteacre.
d. Although the contract is subject to a condition, Dawn has obligations that must be
performed immediately, in particular to in good faith attempt to sell Whiteacre.
e. The existence of the condition means that the parties will not have a contract unless and
until Dawn sells Whiteacre.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
14) Letitia contractually agreed to sell a piece of land called Blackacre to Rocco for $250
000. Closing was scheduled to occur on June 1. On May 15, however, Letitia told Rocco
that she did not intend to transfer title to him. Which of the following statements is TRUE?
a. If Blackacre is really worth $300 000, and if Rocco has not paid any part of the purchase
price, he will be entitled to damages of $50 000.
b. A court will not order specific performance if Blackacre is really worth $300 000.
c. As a matter of fairness, if Blackacre is really worth $300 000, a court will order specific
performance only if Rocco agrees to increase the purchase price by $50 000.
d. Canadian courts no longer order specific performance of contracts for the sale of land.
e. If Rocco already paid the purchase price, and if Blackacre is really worth $300 000,
Letitia will be required to pay a total of $50 000 in compensatory damages.
15) Halle agreed to sell a piece of land called Blackacre to Justin for $200 000. The sale
was scheduled to close on June 1. Under the terms of the contract, Justin paid $10 000 to
Halle on May 1. On May 15, however, Halle told Justin that she had changed her mind and
that she intended to keep Blackacre for herself. She did so even though the market value of
Blackacre had dropped to $150 000. Which of the following statements is TRUE?
a. Specific performance is not available to Justin because the value of the property has
decreased.
b. Taking into account the money that he previously paid, Justin is entitled to compensatory
damages worth $140 000.
c. Taking into account the money that he previously paid, Justin is entitled to compensatory
damages worth $190 000.
d. If Halle refuses to repay the $10 000, Justin can use a vendor's lien to force the sale of
Blackacre and to take $10 000 from the sale proceeds.
e. Because he has entered into a bad bargain, Justin should sue for unjust enrichment, rather
than breach of contract.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
16) A registry system and a land titles system are different because
a. a mortgage creates a charge under a registry system, but a conveyance of title under a
land titles system.
b. after the terms of a mortgage have been fulfilled, the mortgagee enjoys the benefit of a
re-conveyance of title under a registry system, but a cessation of charge under a land titles
system.
c. the remedy of judicial sale is available under a registry system but not under a land titles
system.
d. the mirror principle applies under a land titles system but not under a registry system.
e. unregistered interests may exist in a land titles system but not a registry system.
17) Herschel borrowed $500 000 from Minah. As security for the repayment of that loan, a
mortgage was created over a piece of land called Blackacre. Which of the following
statements is TRUE?
a. Herschel is necessarily required to pay interest on the primary debt.
b. Herschel must have owned Blackacre at the outset.
c. If the mortgage created a charge on Blackacre, that piece of land must have been located
in a land titles system.
d. Herschel must have borrowed the $500 000 from Minah for the purpose of buying
Blackacre.
e. If Blackacre is located in a registry system, then the mortgage should be registered only
if there is a possibility that it will not be repaid within three years.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
18) In order to purchase an interest in piece of land called Blackacre, Rhiannon borrowed
$100 000 from Nick. As security for the repayment of that loan, she entered into a
mortgage over a piece of property. Which of the following statements is TRUE?
a. Blackacre must be the property that is subject to the mortgage.
b. The transaction must have occurred in a registry system.
c. Rhiannon must have purchased Blackacre from Nick.
d. Rhiannon must have purchased the fee simple in Blackacre.
e. If Rhiannon purchased a life estate in Blackacre, then it is possible that she gave a
mortgage over a diamond ring that she owned.
19) Pavla is the victim of mortgage fraud in connection with a piece of land called
Blackacre. Blackacre is located in a jurisdiction that uses a land titles system. Which of the
following statements is TRUE?
a. Pavla cannot possibly lose title to Blackacre unless she carelessly allowed the fraud to
occur.
b. Pavla is entitled to compensation from the assurance fund as soon as she proves that she
is the victim of fraud.
c. Fraud is a general exception to the traditional doctrine of indefeasibility.
d. The courts usually respond to mortgage fraud by ordering the victim and the mortgagee
to hold the affected property as joint tenants.
e. Lawrence v Wright created the concept of deferred indefeasibility, which delays the
creation of an indefeasible title until an interest is registered by a person who did not deal
with the rogue.
20) Alisa successfully used the remedy of foreclosure against Ivan. Which of the following
statements is TRUE?
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
a. Alisa was the mortgagor.
b. Ivan was the mortgagor.
c. Alisa was the borrower.
d. Ivan was the lender.
e. Ivan was guilty of fraud.
21) Hristo created a mortgage, in favour of Tippi, over a piece of land called Blackacre.
Which of the following statements is TRUE?
a. If the mortgage created a charge, Blackacre must be located in a land titles system
jurisdiction.
b. If Hristo is entitled to create a subsequent mortgage, Blackacre must be located in a land
titles system jurisdiction.
c. If the mortgage is enforceable against a subsequent purchaser of Blackacre, Blackacre
must be located in a registry system jurisdiction.
d. If the mortgage was indicated on a certificate of title, Blackacre must be located in a
registry system jurisdiction.
e. Hristo must have purchased Blackacre from Tippi.
22) Which of the following statements is TRUE?
a. The word "foreclosure" is derived from words that mean "end before payment" in Latin.
b. The word "nisi" is derived from the words that mean "unless" in Latin.
c. The word "mortgage" is derived from the words that mean "dead land" in Latin.
d. The phrase "Torrens system" is named after an Australian who created the registry
system.
e. The word "mortgagor" is derived from the words that mean "money lender" in Latin.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
23) A court has said that Pedrag holds the equity of redemption in a piece of land called
Blackacre. The other party involved in the mortgage is Clarissa. Which of the following
statements is most likely TRUE?
a. If the equity of redemption is the only interest that Pedrag holds in Blackacre, that piece
of property is located in a land titles system jurisdiction.
b. The equity of redemption is relevant only if Clarissa has obtained a final order for
foreclosure.
c. The concept of equity of redemption is crucial to the creation of subsequent mortgages.
d. Pedrag is the mortgagee.
e. The "equity" involved in the equity of redemption has the same value as the debt that has
yet to repaid between Pedrag and Clarissa.
24) Randall initially owned a piece of land called Blackacre that was worth $400 000. He
borrowed $200 000 from Keir and created a mortgage over Blackacre in favour of Keir.
Randall then borrowed $100 000 from Ian and created a mortgage over Blackacre in favour
of Ian. Randall has not repaid any part of either debt. Because of a recession, the value of
Blackacre has dropped to $90 000. Which of the following statements is TRUE?
a. It is possible that Ian will be treated as the initial mortgagee and that Keir will be treated
as the subsequent mortgagee if the mortgagees entered into a priority agreement or if they
registered in the sequence of Ian then Keir in a land title system.
b. Keir must be treated as the initial mortgagor and Ian may be treated as the subsequent
mortgagor.
c. If Blackacre is sold for $90 000 because Randall is in default under the mortgages, Keir
will receive $60 000 and Ian will receive $30 000, because Randall owes Keir twice as
much as Ian.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
d. Ian still has some equity in his property so he should be able to find another mortgage
lender to lend as a third mortgagee.
e. By granting two mortgages over the same property, Randall has committed mortgage
fraud.
25) Astrid borrowed $500 000 from Bartholomew. As security for the repayment of that
loan, she created a mortgage over a piece of land called Blackacre. That mortgage was
immediately registered. Which of the following statements is TRUE?
a. Another party can acquire all of Bartholomew's rights if Bartholomew simply creates a
contractual assignment.
b. Because of the rules regarding the equity of redemption, Bartholomew is entitled to
assign to a third party the contractual right to demand repayment of the loan from Astrid,
but Bartholomew cannot transfer to a third party the proprietary rights that the mortgage
created with respect to Blackacre.
c. If Astrid sells Blackacre to Elsa, Bartholomew will no longer be able to demand
repayment of the loan from Astrid.
d. If Astrid sells Blackacre to Elsa, Bartholomew will no longer be able to enforce any
proprietary rights against the land, but he will still be able to demand repayment of the loan
from Astrid.
e. If Astrid defaults on the mortgage, and Bartholomew uses the remedy of judicial sale to
sell Blackacre for $750 000, then the amount that he is entitled to receive will be the
mortgage debt, plus interest and costs including the costs of sale.
26) 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?
a. Nadia borrowed money from Aidan.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
b. The parties' contract is subject to a condition precedent that requires Aidan to do
something (such as arrange financing for the purchase) within a certain period of time.
c. Nadia is concerned that Aidan may fall into a habit of failing to make loan payments on
schedule so if a payment is made late Nadia has a right to accelerate the entire debt as being
due.
d. Aidan is indebted to Nadia, but he cannot possibly be a mortgagor.
e. Nadia is entitled to repay a debt to Aidan more quickly than their contract contemplates.
27) 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?
a. The prepayment privilege indicates that Lucius borrowed money from Zoe.
b. The prepayment privilege was intended to compensate Zoe for the loss of interest on a
loan.
c. The prepayment privilege was intended to allow Zoe to demand repayment of a loan
earlier than expected if interest rates decrease.
d. If Zoe did not enjoy the benefit of a prepayment privilege, she might be liable to pay
compensation for the lender’s loss of interest over the term, if she tried to repay a loan to
Lucius more quickly than initially agreed.
e. The prepayment privilege indicates that Zoe has agreed to sell a piece of land to Lucius
and that she is entitled to receive payment even before she transfers title to him.
28) 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?
a. As long as Wilhelm has registered the mortgage, he has no reason to care if Ramla does
not pay the property taxes on Blackacre.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 16: Real Property: Sales and Mortgages
b. In normal circumstances, Wilhelm will take possession of Blackacre immediately in
order to protect the value of the security.
c. Because he has both personal and property rights, Wilhelm has no reason to care if
Ramla does not insure Blackacre.
d. In normal circumstances, Wilhelm has the primary duty to refrain from committing an
act of waste.
e. If the mortgage contract contains a bonus clause, then Ramla will have to pay a financial
penalty if she repays the loan quicker than agreed.
29) 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?
a. Under normal circumstances, Blossom has the right to take possession of Blackacre, but
only if the land is located in a land titles system jurisdiction.
b. Because the parties have both a loan contract and a mortgage, Blossom has an absolute
right to sue Horace personally for $40 000, regardless of the province or territory in which
Blackacre is located.
c. If Blossom exercises a right to take possession of Blackacre, she cannot later use the
remedy of foreclosure.
d. If Blossom exercises a right to take possession of Blackacre, Horace's equity of
redemption will necessarily be terminated.
e. If the mortgage contract contains an acceleration clause, then Horace may be liable to
immediately pay $40 000, even if the parties originally expected that he would pay half of
that amount next year.
