Humber/Ontario Real Estate Course 4 Exam Practice

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If Seller Amari is discharging the existing mortgage at closing, what is expected?

Be expected to pay off the existing mortgage from his own cash resources, prior to receiving the closing funds from Buyer Mustafa.
Ensure that a special clause was added to Schedule A to address this matter.
Not be responsible for any associated costs, as that responsibility falls to Buyer Mustafa.
Typically discharge the existing financing within a reasonable time after closing.

The correct answer is: Typically discharge the existing financing within a reasonable time after closing.

The correct choice highlights that typically, the discharge of the existing financing is expected to occur within a reasonable time after closing. This reflects standard practices in real estate transactions. When a seller is discharging an existing mortgage, it means they are paying off the remaining balance owed to the lender. This process usually involves the seller, or their legal representative, ensuring that the mortgage is officially released, allowing for the transfer of the property without encumbrances. This option captures the flow of transactions, where the seller’s mortgage is paid off during the closing process, utilizing the funds received from the buyer. The reason for the timing being after closing is that it often allows for the proper allocation of funds and ensures that all documents are correctly processed to clear the title, making it clear for the new buyer. The other options introduce various scenarios that may not align with standard practices or expectations in such transactions. For example, expecting the seller to use their own cash resources to pay off the mortgage before closing could create unnecessary complications and disrupt the flow of funds. Similarly, adding a special clause might not be standard practice, and not having the seller responsible for associated costs does not reflect the typical contractual obligations that the seller might have in regards to existing mortgages.