Humber/Ontario Real Estate Course 2 Exam Practice

Which clause in a conditional mortgage requires lender approval and is written as a true condition precedent?

1. A conditional clause for a new first mortgage

2. A clause for renewing an existing mortgage

3. A clause for assuming a new second mortgage

4. A clause involving a mortgage to be assumed

The correct answer is: A clause involving a mortgage to be assumed

In a conditional mortgage, the clause that requires lender approval and is written as a true condition precedent is a clause involving a mortgage to be assumed. This means that before the mortgage can proceed, the lender must give their approval for the assumption to take place. Option A, a conditional clause for a new first mortgage, is not typically subject to the same level of lender approval as a clause involving a mortgage assumption. Option B, a clause for renewing an existing mortgage, usually entails a process of renewal rather than a conditional approval by the lender. Option C, a clause for assuming a new second mortgage, may involve some approval from the lender, but it is not the same level of required approval as in a clause involving a mortgage to be assumed.