Humber/Ontario Real Estate Course 2 Exam Practice

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Prepare for the Ontario Real Estate Exam with our comprehensive Humber Course 2 Exam Practice quiz. Engage with multiple choice questions and detailed explanations, designed to help you excel.

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If a buyer's offer includes assuming an existing first mortgage with a waiver provision for the mortgage clause, what is correct?

The mortgagee must agree to the assumption, regardless of the fact that a waiver has been included in the agreement. The waiver has no legal effect.
The waiver provision is the best way to approach this situation, as it provides the buyer with the ability to acquire the property even if the mortgagee does not agree to the assumption.
Salesperson Walker cannot include a waiver, as the mortgage clause cannot be waived at the buyer's option.
Salesperson Walker has protected the interest of his client by ensuring that the condition can be waived even if the mortgage clause is not fulfilled as agreed.

The correct answer is: The mortgagee must agree to the assumption, regardless of the fact that a waiver has been included in the agreement. The waiver has no legal effect.

In the context of a buyer's offer to assume an existing first mortgage, including a waiver provision for the mortgage clause carries specific implications regarding the relationship between the buyer, seller, and mortgage lender. The correct choice emphasizes that the mortgagee, or lender, must agree to the assumption of the mortgage, regardless of any waiver stipulated in the buyer's offer. This is rooted in the fact that most mortgages contain a "due-on-sale" clause or similar provisions that require the lender's consent for any assumption to take place. The presence of a waiver provision in the offer does not alter the lender's right to approve or deny the assumption. In legal terms, a waiver may serve to relieve one party of a responsibility within a contract, but it cannot circumvent legal requirements or the need for external party consent. Thus, the lender's right to approve the assumption remains intact, and the waiver has no effect on that obligation. This underscores the importance of ensuring that all parties involved—namely, the buyer, seller, and lender—are aware that the financial institution maintains a critical role in the transaction. The buyer's ability to proceed with the assumption is contingent upon the lender's agreement, which protects the lender's interests and financial exposure.