Foreclosure and Mortgage Default Quiz

Chapter 19: Real Property

• Real property refers to land, including interests like mineral rights and leases

• Real property law has constitutional, statutory, and common law features

• It is impacted by various statutes, such as environmental protection or zoning laws

• Private ownership includes the surface, everything above, and below the land.

• Structures and items attached are considered real estate

• Fixtures include heating, plumbing, and lights

• Fee simple is the highest level of land ownership, closest to absolute ownership

• A life estate lasts only for the duration of a person's life with ownership reverting later

• Condominium ownership is part ownership of a unit and shared ownership of common areas

• Mineral rights can be owned separately from surface rights

• Quiz Question 19.1: Fee simple

• Division of Ownership: As co-owners, each has an undivided interest and each co-owner is a tenant

• Quiz Question 19.2: A tenancy in common is when one tenant's interest passes to the heir upon death, a joint tenancy is when one tenant's interest passes automatically to the other tenant upon death

Registration of Interests in Land

• Each province has a registration system
• Enables investigating ownership and identifying if an interest is subject to certain interests, easements, or mortgages for example
• The registry system allows searching land records to evaluate ownership
• A land titles system evaluates each document registered and maintains a record of all documents related to property
• Land titles systems have an insurance fund to compensate for errors
• The certificate of title is sufficient for investigating ownership
• The priority of claims is determined by registration date.

Purchasing Land

• Caveat Emptor: A buyer-beware situation where the risk of purchasing land is significant

• Title search: Examining interests registered in the land registry or land titles system

• Investigating the “chain of title”: This process confirms ownership and identifies any known claims against the land preventing a clear title

• Environmental contamination should be investigated

• Prior agreements on a property, such as leases, can affect the new owners

• Environmental hazards, such as contaminated wells or land, should be investigated

• Investigating the possibility of squatters on the property

• Legal investigation of the physical characteristics of the property, such as location, size, and boundaries

• Obtaining legal counsel from experienced professionals

Financing Land

• Mortgages: Borrowing money to purchase land.
• Mortgagor: The borrower
• Mortgagee: The Lender A mortgage is used as security for repayment
• Mortgages are often registered to give notice to other creditors or potential purchasers of the mortgage-holder's prior claim on the land
• Under the land titles system, mortgage registration creates a legal charge on the land.

Obligations of Sellers

• Sellers must disclose significant latent defects
• Sellers should be honest when answering buyer questions
• Misrepresentations may be oral or written and also may include concealment of defects

Landlord-Tenant Relationship

• Lease: A contract between a landlord and tenant, an interest in land.
• Residential leases are heavily regulated by legislation
• Commercial leases are negotiated by both parties
• Key features of a lease include: identification of the parties, description of the premises, permitted alterations, ownership of improvements, calculation of rent, responsibility for repairs, responsibility for utilities, security, and damage deposits, tenant's hours of operation, limits on landlord's ability to lease to competitors time period, and remedies

Retail Leases in Changing Marketplaces

• The power balance between landlords and tenants has shifted with the rise of e-commerce
• E-commerce is increasing
• Co-tenancy agreements are more common for landlords and tenants, allowing retail tenants to get out of their lease or pay lower rents if another tenant leaves
• Retail leases are becoming shorter-term and more flexible.

Termination of the Lease

• Leases can end by natural expiration
• A lease can be terminated early due to a cause such as a breach of contract from either the tenant or landlord or if the property has a supervening event, like a major natural disaster.

Critical Legal Issues

• There are risks to both landlords and tenants from a pandemic.
• The court may be able to enforce an agreement if there's a significant impact
• Property rights are an important aspect of business

Test your knowledge on the implications of defaulting on a mortgage and the foreclosure process. This quiz covers key concepts such as acceleration clauses, lender rights, and mortgage documents. Perfect for finance students or anyone looking to understand real estate laws.