Humber/Ontario Real Estate Course 2 Exam Practice

Which of the following statements is correct regarding financing clauses involving mortgages to be assumed and requiring lender approval?

1. A conditional clause involving a mortgage to be assumed, which requires lender approval, is written as a true condition precedent

2. All conditional clauses for a new first mortgage must be written in a condition subsequent format

3. If a mortgage is being assumed, then the mortgagor will typically require that the mortgagee meet current qualifying requirements

4. The minimum acceptable mortgage terms must always be identified in a conditional clause for a new first mortgage

The correct answer is: A conditional clause involving a mortgage to be assumed, which requires lender approval, is written as a true condition precedent

In real estate transactions involving financing clauses with mortgages to be assumed that require lender approval, it is crucial to understand the different ways these clauses can be structured. In this context, the statement in option A is correct. A conditional clause involving a mortgage to be assumed, which requires lender approval, is typically written as a true condition precedent. This means that the assumption of the mortgage is a condition that must be met before the transaction can proceed. This clause ensures that the buyer's obligation to assume the mortgage is subject to the lender's approval, providing protection for all parties involved. Options B, C, and D are not correct in this scenario. Option B is incorrect because not all conditional clauses for a new first mortgage must be written in a condition subsequent format. Option C is incorrect because it is not always the case that the mortgagor will require the mortgagee to meet current qualifying requirements when a mortgage is being assumed. Option D is incorrect because it is not necessary for the minimum acceptable mortgage terms to always be identified in a conditional clause for a new first mortgage.