📜 Contracts, Land Titles, Condominiums, Registration and Default in Alberta

1. Which statement BEST describes a contract, as the term is used in Alberta contract law?

1. A written document that has no legal effect until it is registered at Land Titles
2. Any promise made in good faith, even if the parties did not intend legal effect
3. An agreement that binds the parties once each has had independent legal advice
4. A legally enforceable agreement in which the parties exchange promises or value

FMB Blueprint LO 3.6.1 asks candidates to define contract law: a contract is an agreement the courts will enforce because the parties intended to create legal relations and exchanged promises or value (consideration). A good-faith promise made without that intention is not enforceable, most contracts take effect without any registration, and independent legal advice is prudent but is not a condition of validity.

2. Where does most of the law of contract that applies in Alberta come from?

1. Common law principles drawn from past court decisions, supplemented by equity
2. The Real Estate Act, which sets out the essential elements of every contract
3. A single civil code adopted by the Legislature, as is the case in Quebec
4. Federal statutes, because contracts fall under Parliament's banking power

FMB Blueprint LO 3.6.2 covers the historical foundations of contract law. Alberta is a common law province: its contract rules come mainly from English and Canadian court decisions applied as precedent, with equity adding remedies such as specific performance and rescission, and statutes modifying particular points. A civil code governs contracts only in Quebec, and neither the Real Estate Act nor the federal banking power supplies the general law of contract.

3. Which of the following is NOT one of the five essential elements of a valid contract?

1. Consideration, meaning something of value given by each of the parties
2. A written document signed by both parties in front of an independent witness
3. Offer and acceptance, showing that the parties agreed on the same terms
4. Capacity of each party, and consent that is genuine and free of any duress

FMB Blueprint LO 3.6.6 lists the five essential elements of a contract: offer and acceptance, consideration, capacity, consent and lawful purpose. Writing is not one of them: most contracts are valid when made orally, although some, such as contracts for an interest in land, must be evidenced in writing before a court will enforce them (Statute of Frauds). A witness is not an element of contract validity.

4. A lender's commitment offers a 5.29% rate. The borrower crosses out the rate, writes in 5.09%, signs and returns the document. What is the legal position?

1. A binding contract at 5.29%, because the borrower signed the lender's commitment
2. No contract exists yet: the change is a counter-offer that rejects the commitment
3. A binding contract at 5.09%, because the borrower was the last party to sign it
4. A binding contract on every term except the rate, which the lawyer settles later

Under the offer-and-acceptance element (FMB Blueprint LO 3.6.6), acceptance must match the offer exactly. Changing the rate is a counter-offer: it rejects the lender's commitment, which can no longer be accepted, and no contract exists unless the lender accepts the new terms. Signing an altered document is not acceptance of the original 5.29% offer, and an essential term such as the rate cannot be left for the lawyer to settle.

5. In a residential mortgage loan, what is the consideration that supports the borrower's promise to repay?

1. The registration of the mortgage against the borrower's certificate of title
2. The appraisal report that confirms the value of the property to the lender
3. The lender's advance of the loan funds, paid to the borrower or on their behalf
4. The borrower's signature on the application and on the credit consent form

Consideration, one of the five essential elements (FMB Blueprint LO 3.6.6), is the value each party gives in exchange for the other's promise: the borrower promises to repay because the lender advances money. Registering the mortgage gives the lender security for that promise (Land Titles Act s. 103) but is not the bargained-for value, and an appraisal or a signed application are steps in the process, not consideration.

6. Parents ask a mortgage associate to add their child, who has not reached the age of majority, as a co-borrower to strengthen their application. What is the main contract-law concern?

1. The child lacks capacity, so the promise to repay is voidable by the child
2. The child may sign if both parents witness the signature on the mortgage documents
3. The child's promise is void and makes the whole mortgage an illegal contract
4. The child is bound like any adult, because co-borrowers are jointly liable

Capacity is one of the five essential elements (FMB Blueprint LO 3.6.6). A person under the age of majority generally lacks full contractual capacity, so a promise such as a covenant to repay a loan can be avoided by the minor, and the lender cannot rely on it to support the application. A parent's witness signature does not cure the lack of capacity, and the defect makes the minor's obligation voidable, not the mortgage illegal.

7. An elderly widow who depends on her son for daily care agrees, after he pressures her at home, to guarantee his mortgage. She says she does not really understand the guarantee. What is the BEST course for the associate?

1. Proceed, as a guarantee signed by a competent adult cannot be set aside later
2. Ask the son to explain the guarantee to her, as he knows the transaction best
3. Proceed, as undue influence affects only the son's loan and not her guarantee
4. Pause and recommend that she obtain independent legal advice before signing

Consent must be genuine (FMB Blueprint LO 3.6.6-3.6.7): a guarantee obtained through undue influence by someone the guarantor depends on is voidable and can be set aside. The safe step is to stop and recommend independent legal advice, and Real Estate Act Rules s. 42(d) forbids discouraging a party from seeking legal counsel. Having the son, the person exerting the pressure, explain the document makes the problem worse.

8. A buyer signed a purchase contract relying on the seller's statement that the basement had never flooded. Before closing, the buyer learns it flooded twice. In contract law, what is the effect on the contract?

1. It stays fully binding because the statement was oral and not in the written contract
2. It is voidable: the buyer may rescind it, since a false statement induced consent
3. The buyer must close and may then claim a price reduction after taking possession
4. It is void from the outset, so neither party ever had rights under the contract

A misrepresentation that induces a party to contract undermines genuine consent, so the contract is voidable, not void (FMB Blueprint LO 3.6.7): it stays valid unless the misled buyer chooses to rescind, and rescission is still available before closing. Rescission aims to restore both parties to where they were before the contract; damages may also be available if the statement was fraudulent or negligent. An oral statement can still be a misrepresentation that induced the contract.

9. A buyer and seller sign a $540,000 purchase contract to show the lender, and a side deal under which the seller secretly returns $40,000 to the buyer after closing. How does contract law treat the side deal?

1. It is an illegal bargain to deceive the lender, and courts will not enforce it
2. It is voidable by the lender, which may rescind it once it discovers the rebate
3. It is enforceable if it is later shown on the lawyer's statement of adjustments
4. It is valid, since both parties consented and each received consideration

Lawful purpose is an essential element (FMB Blueprint LO 3.6.6-3.6.7): an agreement whose object is to mislead the lender about the real price is illegal, and courts will not help either party enforce it. A licensee who knowingly takes part breaches Real Estate Act Rules s. 42(b) (fraudulent or unlawful activities). Consent and consideration do not cure an unlawful purpose, and the lender is not a party to a side deal it never signed.

10. Which statement correctly distinguishes a void contract from a voidable contract?

1. A void contract binds until cancelled; a voidable one has no legal effect from the start
2. A void contract can be enforced only by the weaker party; a voidable one by either party
3. A void contract has an illegal purpose; a voidable one is one that lacks consideration
4. A void contract has no legal effect from the start; a voidable one binds until rescinded

FMB Blueprint LO 3.6.7 contrasts void, voidable and illegal contracts. A void contract never had legal effect, for example because an essential element is missing, so neither party can enforce it. A voidable contract is valid and binding until the party with the right (such as a person misled or pressured) chooses to rescind it. Illegality is a separate category, and a promise without consideration is unenforceable rather than voidable.

11. A private lender's mortgage on a borrower's home, on the lender's own form, contains a clause by which the borrower agrees to become the lender's tenant. Under the Law of Property Act, what is the effect of that clause?

1. It is valid if the rent charged does not exceed the fair annual rent for the home
2. It is valid because the borrower freely agreed to it in the signed mortgage
3. It is valid but takes effect only after the borrower misses three payments
4. It is void, as a private home mortgage is not one of the Act's listed exceptions

Law of Property Act s. 34(1) makes void any covenant in a mortgage by which the mortgagor agrees to become the tenant of the mortgagee (an attornment clause). The exceptions in s. 34(2) and s. 36 cover Farm Credit mortgages, mortgages securing National Housing Act loans, approved building-loan forms and certain business premises, not a private lender's mortgage on a home. The fair-annual-rent cap in s. 35(2) applies only where an exception allows the clause, and consent cannot save a term the statute declares void.

12. In a residential purchase contract, how is the buyer's financing condition BEST described?

1. A lender term: the lender must approve the buyer once the seller accepts the offer
2. A condition precedent: the deal is firm only once it has been met or waived in time
3. A warranty: if financing fails, the buyer must still close and pay the seller damages
4. A condition subsequent: the sale closes, then is undone if the buyer later defaults

FMB Blueprint LO 3.6.13 asks candidates to differentiate contractual conditions from contract terms. A financing condition is a condition precedent: the obligations to complete do not become firm until it is satisfied or waived by the stated date, and if it is not, the agreement ends under its own wording. Terms are the promises the parties perform once the deal is firm, such as price and possession date; the lender is not a party to the purchase contract.

13. A borrower accepted a commitment that requires an appraisal supporting a value of at least $650,000. The appraisal comes in at $610,000 and the lender declines to fund. Is the lender in breach?

1. Yes, as acceptance of the commitment obliged the lender to fund the full amount
2. Yes, unless the lender refunds the appraisal fee and the borrower's legal costs
3. No, because the borrower failed to order a second appraisal before funding
4. No, as the duty to fund depended on an appraised value that was not reached

A commitment's conditions operate as conditions precedent to the lender's duty to advance (FMB Blueprint LO 3.6.13). The value condition was not met, so the lender's obligation to fund never became due and refusing to advance is not a breach. Accepting the commitment created a contract subject to its conditions, not an unconditional promise to lend, and refunding fees has nothing to do with whether a breach occurred.

14. In the classic common law sense, what is the key difference between breaching a condition and breaching a warranty?

1. A warranty breach lets the other party end the contract; a condition breach gives damages only
2. A condition breach gives no remedy before closing; a warranty breach gives an injunction
3. A condition breach lets the other party end the contract; a warranty breach gives damages only
4. Either breach lets the other party end the contract, but only a warranty breach gives damages

Here 'condition' means an essential term of the contract (FMB Blueprint LO 3.6.13). Breach of a condition goes to the root of the contract, so the innocent party may treat it as ended and claim damages; breach of a warranty, a minor or collateral term, gives a right to damages only and the contract continues. Reversing the two is the classic trap. This sense of 'condition' differs from a condition precedent, such as a financing condition.

15. Which list sets out the five common methods by which a contract is terminated or discharged?

1. Performance, agreement, frustration, breach and ratification
2. Offer, acceptance, frustration, breach and operation of law
3. Performance, agreement, frustration, breach and operation of law
4. Performance, agreement, registration, breach and operation of law

FMB Blueprint LO 3.6.8 and 3.6.14 cover the five common ways a contract ends: performance (both sides do what they promised), agreement (the parties mutually release or replace it), frustration (an unforeseen event makes performance impossible or radically different), breach (a serious breach lets the innocent party end it) and operation of law (for example, bankruptcy). Offer and acceptance form a contract rather than end it, ratification confirms one, and registration concerns title, not discharge.

16. A brokerage books a hotel ballroom for a client seminar. A week before the event, a fire that is no one's fault destroys the ballroom, and the booking contract does not deal with this risk. What is the effect on the booking contract?

1. The hotel is in breach and must pay the brokerage damages for the lost event
2. It is suspended until the hotel rebuilds, and the seminar must then go ahead
3. It is frustrated, and both parties are released from their future obligations
4. It stays binding, so the brokerage must still pay the full fee for the room

Frustration (FMB Blueprint LO 3.6.8, 3.6.14) discharges a contract when, after it is made, an event beyond either party's control and not provided for in the contract makes performance impossible or radically different. The contract ends automatically and both parties are released from obligations not yet due. A frustrating event is not a breach, so the hotel owes no damages, and the doctrine ends the contract rather than suspending it until the venue is rebuilt.

17. A borrower accepted a private lender's commitment. Three weeks before the agreed funding date, the lender emails the borrower that it will not advance the funds. How is this BEST described, and what may the borrower do?

1. A breach of warranty only; the borrower must wait until funding day to claim
2. A frustrating event; both parties are released and neither may claim damages
3. An anticipatory breach; the borrower may accept it, end the contract and sue now
4. A valid revocation of an offer; the borrower has no claim as nothing was advanced

A clear statement, before performance is due, that a party will not perform is an anticipatory breach (FMB Blueprint LO 3.6.3, 3.6.14). The borrower may accept the repudiation, treat the contract as ended, arrange other financing and claim damages immediately, or keep the contract alive and wait. Once the commitment was accepted there was a contract, so this is not the revocation of an offer, and a lender's change of mind is not frustration.

18. A seller refuses to close the sale of a heritage lakefront property after the buyer met every condition. The buyer wants the property itself, not money. Which remedy should the buyer's lawyer seek?

1. Rescission, putting both parties back where they were before the contract
2. An injunction ordering the seller to pay the buyer's expected resale profit
3. Quantum meruit, paying the buyer the value of the work done on the transaction
4. Specific performance, an order that the seller complete the sale as agreed

FMB Blueprint LO 3.6.3 covers remedies for breach. Specific performance is an equitable, discretionary order compelling a party to perform; courts grant it when damages would not be adequate, typically because the land is unique, as a heritage lakefront property may be. Rescission would undo the deal the buyer wants, an injunction restrains conduct rather than paying money, and quantum meruit pays for services rendered.

19. A buyer fails to close a $612,000 purchase of a home listed at $629,900. Acting reasonably, the seller resells three months later for $585,000 and pays $4,350 in extra carrying costs caused by the delay. Ignoring the deposit, what are the seller's damages?

1. $22,650 in damages, before applying the deposit
2. $27,000 in damages, before applying the deposit
3. $49,250 in damages, before applying the deposit
4. $31,350 in damages, before applying the deposit

Damages for breach aim to put the innocent party where it would have been had the contract been performed (FMB Blueprint LO 3.6.3): the shortfall against the contract price plus losses caused by the breach, provided the seller mitigated reasonably. $612,000 - $585,000 = $27,000, plus $4,350 in carrying costs = $31,350. $27,000 omits the carrying costs, $22,650 subtracts them, and $49,250 wrongly measures from the $629,900 list price instead of the agreed price.

20. A lender learns that a borrower in default is stripping cabinets and fixtures from the mortgaged house before moving out. Which remedy is designed to stop this conduct quickly?

1. An injunction from the Court restraining the threatened waste of the property
2. Damages for breach of covenant, assessed after the house has been sold
3. Rescission of the mortgage, so that the lender recovers its advance at once
4. Specific performance, requiring the borrower to keep making the monthly payments

An injunction is a court order restraining a party from doing something (FMB Blueprint LO 3.6.3). Law of Property Act s. 72 allows the Court to grant an injunction to prevent threatened or apprehended waste or trespass, whether or not the person is in possession. Specific performance compels performance of a contract, rescission would unwind the loan, and damages after the fact do not stop the stripping.

21. A seller and buyer shake hands on the sale of an Edmonton house for $455,000 and put nothing in writing. Under the Statute of Frauds, how is this agreement treated?

1. It cannot be enforced in court, as no signed writing evidences the agreement
2. It is illegal, and both parties may be fined for agreeing to sell land orally
3. It is enforceable, since an oral contract binds once the price is agreed on
4. It becomes enforceable as soon as the buyer's lender issues a commitment

FMB Blueprint LO 3.6.19 asks how the Statute of Frauds affects real estate. Under s. 4 of the English Statute of Frauds (1677), which forms part of Alberta law, no action may be brought on a contract for the sale of an interest in land unless the agreement, or a note or memorandum of it, is in writing and signed by the party to be charged. The oral deal is not illegal or void; it is unenforceable, and a lender's commitment does not supply the writing.

22. Under an oral deal to buy an acreage, a buyer moved in with the owner's consent, paid most of the price and built a garage while the owner watched. The owner now refuses to transfer, pointing out that nothing was signed. What is the buyer's BEST argument?

1. Frustration: the owner's change of mind removed the need for a writing
2. Part performance: acts that point to the agreement let a court enforce it
3. Capacity: the owner lacked capacity, so the writing rule does not apply
4. Consideration: paying money satisfies the Statute of Frauds by itself

The equitable doctrine of part performance is the main exception to the Statute of Frauds (FMB Blueprint LO 3.6.19): where the buyer's acts, such as taking possession and making permanent improvements with the owner's knowledge, point to a contract concerning the land, a court may enforce the oral agreement despite the missing writing. Payment of money alone is usually not enough, and an owner's change of mind is not frustration.

23. A borrower orally agreed to pay a mortgage brokerage a $2,500 fee; nothing was signed. The borrower obtained the loan through the brokerage but now refuses to pay. Can the brokerage sue for the fee?

1. Yes, as obtaining the loan through the brokerage alone meets the Act's test
2. No, as the Act requires a written agreement or memo signed by the borrower
3. No, as brokerages are barred from charging a fee for arranging a mortgage
4. Yes, as an oral fee agreement binds once the lender has advanced the funds

Real Estate Act s. 22 bars an action for remuneration in connection with a transaction unless the service agreement, or a note or memorandum of it, is in writing and signed by the party to be charged (s. 22(a)), and, for a mortgage, the person obtained the loan through the broker's services (s. 22(c)). Both requirements apply, so obtaining the loan is not enough. Fees are not banned outright: Rules s. 71 controls when a brokerage may collect one, and Rules s. 43(1) already required a written service agreement.

24. An associate carelessly keys a borrower's income as $9,500 a month instead of $5,900. The underwriter spots the error, approves the loan on the correct figure, and the borrower loses nothing. Can the borrower succeed in negligence against the associate?

1. Yes, as a careless breach of the standard of care is actionable without any loss
2. Yes, but for nominal damages only, as the associate owed the borrower a duty
3. No, as an associate owes a duty of care to the lender alone, not the borrower
4. No, as negligence is actionable only where the breach has caused actual loss

Damage is an essential element of negligence (FMB Blueprint LO 3.6.10, 3.6.17): the plaintiff must prove a duty of care, a breach of the standard of care, and a loss caused by that breach. The keying error was a breach, but it was caught and caused no loss, so the civil claim fails; unlike trespass, negligence is not actionable without damage, so nominal damages are not available. The associate does owe the borrower client a duty of care, and RECA may still review the error as a competence issue under Real Estate Act Rules s. 41(b).

25. To speed an approval, an associate enters a self-employed borrower's income from a verbal estimate, checks no documents, and the lender relies on it. The borrower defaults and the lender loses $48,000. On what basis is the associate MOST exposed?

1. Negligent misrepresentation to the lender, which reasonably relied on the figure
2. Breach of contract with the lender, under the application the borrower signed
3. None, as the associate's duty of care was owed to the borrower client alone
4. None personally, as the borrower alone signed and is liable for the application

FMB Blueprint LO 3.6.4 and 3.6.17 flag the liabilities built into the mortgage application process. A licensee who carelessly passes on an unverified income figure that a lender is expected to rely on can be liable in negligent misrepresentation, even though the lender is not the associate's client. Real Estate Act Rules s. 72(1) requires the brokerage to disclose in writing what verification steps it took, and s. 42(a) prohibits reckless representations that mislead. The borrower's own liability does not shield the associate.

26. A lender sues an associate whose careless file summary hid a borrower's arrears. The lender's own underwriter ignored an obvious red flag in the same file. If both were negligent, what is the likely result?

1. The lender recovers in full, since the associate's negligence happened first
2. The associate's E&O insurer pays the full loss, whatever the lender's own fault
3. The claim fails entirely, since any fault by the lender bars all recovery
4. Fault is apportioned, so the lender's damages are reduced by its own share

FMB Blueprint LO 3.6.17 asks for the sources of, and defences to, tort liability in the mortgage application process. Contributory negligence is a partial defence: where the plaintiff's own carelessness contributed to the loss, the court apportions fault and reduces the damages by the plaintiff's share. The old rule that any plaintiff fault barred all recovery has been replaced by apportionment, and E&O insurance responds only to the licensee's own share of the liability, not to the lender's share.

27. A borrower and the mortgage associate handling the file agree by phone to extend the borrower's written service agreement with the brokerage by 60 days. Under the Real Estate Act Rules, what does the extension require?

1. A dated note of the call in the client file, since both parties agreed to it
2. The brokerage's signature alone, since the agreement is on the brokerage's form
3. Nothing further, as a change in duration is not an amendment to the agreement
4. It must be put in writing and signed by the relevant parties to the agreement

Real Estate Act Rules s. 43(2)(c) requires every written service agreement to provide that any amendment or addition to its terms be in writing and signed by the relevant parties, and the duration is itself one of the required terms (s. 43(2)(b)(iv)). A note of an oral agreement in the file does not meet the rule, and the brokerage cannot amend a two-party agreement by signing alone. Once signed, the amendment is copied to the client under s. 43(3).

28. A draft borrower service agreement names the parties and property, gives the start date and duration, lists the services and each party's duties, covers personal information and sets the fee. Which of the following must it also include under s. 43 of the Rules?

1. Provisions setting out how and when either party may end the agreement
2. The name of the lawyer who will register the mortgage at Land Titles
3. A statement of the associate's commission split with the brokerage
4. The borrower's credit score and the debt service ratios used for approval

Real Estate Act Rules s. 43(2)(b) lists what every written service agreement must show: the parties' names, the property where applicable, the effective date, duration, services, each party's responsibilities, the use and distribution of personal information, the remuneration, and, in (ix), provisions for termination of the agreement; s. 43(2)(c) adds the written-amendment clause. FMB Blueprint LO 3.6.18 asks candidates to critique agreements for this kind of compliance. Credit data, internal commission splits and the lawyer's name are not required contents.

29. Under Alberta's Land Titles Act, how does a registered mortgage differ in effect from a purchase contract that closes with a transfer?

1. A mortgage transfers ownership to the lender until the loan is fully repaid
2. A mortgage charges the land as security and does not transfer it to the lender
3. Both transfer title once registered, but a mortgage can later be discharged
4. A purchase contract charges the land as security until the buyer pays in full

FMB Blueprint LO 3.6.15 compares real estate and mortgage contracts. Land Titles Act s. 103 provides that a mortgage under the Act has effect as security but does not operate as a transfer of the land charged by it: the borrower stays the registered owner and the lender holds a registered charge. A purchase contract, by contrast, leads to a transfer of title to the buyer at closing. The older idea of a mortgage conveying title to the lender does not describe Alberta's Torrens system.

30. In a brokered home purchase, an associate deals with several contracts. Which of them is the associate's mortgage brokerage itself a party to?

1. The purchase contract between the buyer and the seller of the home being financed
2. The mortgage, in which the brokerage is named as a chargee alongside the lender
3. The written service agreement that the brokerage signs with its borrower client
4. The lender's commitment, which the brokerage signs as guarantor of the borrower

Real Estate Act Rules s. 43(1) requires a licensee who establishes a client relationship when dealing in mortgages to enter into a written service agreement, and s. 43(2)(b)(v) has it set out the services the brokerage will provide: the brokerage is a party to that contract. FMB Blueprint LO 3.6.5 and 3.6.15 ask candidates to tell apart the contracts a licensee meets: the purchase contract binds buyer and seller, while the commitment and the mortgage bind borrower and lender. The brokerage arranges the loan; it neither holds the security nor guarantees the borrower.

31. Alberta registers land under the Torrens system. Which three principles are traditionally used to describe that system?

1. The mirror, curtain and insurance principles, all reflected in the Land Titles Act
2. The notice, recording and chain-of-deeds principles used by deed registry systems
3. The offer, acceptance and consideration principles that create a binding agreement
4. The fee simple, leasehold and life estate principles that define what can be owned

FMB Blueprint LO 3.7.7 asks for the three key principles of the Torrens system, and each appears in the Land Titles Act: the mirror principle (the certificate of title reflects the registered interests, s. 60(1) and 62(1)), the curtain principle (no need to look behind the register, s. 203) and the insurance principle (compensation for loss caused by the system, s. 168). Notice and chain-of-deeds rules describe the older deed registry approach that Torrens replaced.

32. A buyer colluded with a forger to obtain a transfer of a house and was then registered as owner. How does the buyer's new certificate of title protect the buyer?

1. It gives the buyer no protection, because the buyer took part in the fraud
2. It is conclusive proof of ownership as soon as the transfer has been registered
3. It protects the buyer unless the true owner files a caveat within 60 days
4. It protects the buyer if the price paid to the forger was fair market value

Under Land Titles Act s. 60(1) and 62(1), a certificate of title is conclusive proof of ownership except in case of fraud in which the owner has participated or colluded. A buyer who took part in the forgery cannot rely on the register, whatever price was paid. The 60-day period belongs to the lapse of caveats under s. 138, not to fraud by the registered owner.

33. A lender hears informally that the registered owner of a duplex holds it partly in trust for a sibling, but no caveat or instrument records that trust. If the lender takes and registers a mortgage in good faith, what is the effect of the trust?

1. The lender takes free of it; knowing of an unregistered interest is not, by itself, fraud
2. The mortgage is void, because the lender had actual notice of the sibling's beneficial claim
3. The mortgage ranks behind the trust, because the earlier equitable interest comes first
4. The lender needs the sibling's written consent, or the Registrar will refuse the mortgage

Under Land Titles Act s. 203(2)(b), a person taking a mortgage from a registered owner is not affected by notice, direct or implied, of a trust or other interest that is not registered by instrument or caveat, and s. 203(3) adds that knowledge of such an interest is not by itself fraud. This is the curtain principle. Older equitable-priority rules do not override the register, and the Registrar does not require a beneficiary's consent.

34. A homeowner loses her registered title when a forged transfer is registered and the land is then sold to a bona fide purchaser who made reasonable efforts to confirm ownership. What remedy does the Land Titles Act give her?

1. An order cancelling the purchaser's title, since a forged transfer passes no interest at all
2. A new caveat claiming the land, ranking ahead of the purchaser because her title came first
3. A claim on RECA's Real Estate Assurance Fund for the full value of the lost property
4. An action against the Registrar for damages, since she is barred from recovering the land

Land Titles Act s. 168(1)(b)(ii) lets a person deprived of land by the registration of another person as owner, and barred from recovering it, sue the Registrar for damages: this is the insurance principle. Because the loss comes from another person's fraud, s. 171(2) requires the forger to be sued together with the Registrar. Section 170(1) protects a bona fide purchaser for value who made all reasonable efforts to confirm the transferor was the registered owner, so the title is not cancelled. The Real Estate Assurance Fund under the Real Estate Act deals with licensee conduct, not Land Titles losses.

35. A private lender advanced funds against a signed mortgage, but the brokerage file shows it was never registered at Land Titles. Under the Land Titles Act, what is the status of the land as security?

1. The land does not become liable as security until the mortgage is registered on title
2. The land is security from the day the borrower signed, since signing creates the charge
3. The land is security from the day of the advance, once the lender has sent the funds
4. The land is security once the lender's lawyer delivers a reporting letter on the deal

Land Titles Act s. 53 provides that, once a certificate of title exists, no instrument renders land liable as security for money unless it is registered under the Act; s. 54 adds that an instrument becomes operative on registration. Signing, advancing funds or receiving a lawyer's report does not create the charge on title. Until registration, a caveat under s. 130 is the usual way to protect the lender's claim.