Humber/Ontario Real Estate Course 3 Exam Practice

What should Seller Amari do regarding existing mortgage discharge costs?

1. Amari must pay them from personal funds before closing

2. Amari typically handles them after closing

3. The costs fall on Buyer Mustafa

4. A special clause must be added to Schedule A

5. Costs are split between buyer and seller

6. Amari needs legal counsel to pay costs

The correct answer is: Amari typically handles them after closing

The selected answer indicates that Amari typically handles the existing mortgage discharge costs after the closing of the transaction. This is a common practice in real estate transactions. The responsibility for the discharge of a mortgage and associated costs usually arises from the seller's obligation to clear any encumbrances on the property before handing over ownership to the buyer. In most cases, sellers arrange the payment of any outstanding mortgage discharge costs at or shortly after the closing. This ensures that the buyer receives clear title to the property without any related financial burdens from the seller's previous debts. Other options suggest different scenarios regarding the payment of these costs. For example, stating that Amari must pay them before closing assumes that all costs must be settled upfront, which is not always the case in standard practice. Additionally, suggesting these costs fall on the buyer misrepresents the typical responsibilities in a transaction since the seller usually remains accountable for clearing their mortgage. Likewise, splitting the costs between buyer and seller or requiring a special clause in Schedule A would complicate the process unnecessarily, deviating from standard practices that ensure sellers address their mortgage obligations before the sale is finalized. Legal counsel may assist in the process, but it is not a necessary condition for addressing the discharge costs typically.