Humber/Ontario Real Estate Course 4 Exam Practice

How should a clause requiring mortgagee approval for mortgage assumption be categorized?

1. Condition precedent

2. Condition subsequent

3. True condition precedent

4. True condition subsequent

5. Mortgage clause

6. Preemptive condition

The correct answer is: True condition precedent

A clause requiring mortgagee approval for mortgage assumption should be categorized as a "True condition precedent" because it is a condition that must be fulfilled before a particular obligation in the contract becomes effective. In this case, the approval of the mortgagee is a necessary condition that must be met before the mortgage assumption can proceed. This differs from a "True condition subsequent," which is a condition that, once occurring, may terminate a contract or a right that has already been established. The other options are not as appropriate for this scenario: - "Condition precedent" is a broad term and does not specify whether it is a true condition precedent or not. - "Condition subsequent" is not the best choice as the clause is more accurately described as a true condition precedent. - "Mortgage clause" is too general and does not specifically define the type of condition embedded in the clause. - "Preemptive condition" does not accurately describe the clause that requires mortgagee approval for mortgage assumption.