Humber/Ontario Real Estate Course 4 Exam Practice

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Humber Real Estate Course 4 Exam with a comprehensive quiz designed to test your knowledge through flashcards and multiple-choice questions. Enhance your understanding and boost your confidence before taking the exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.


What is the main difference between a foreclosure and a power of sale?

  1. Involves the type of property, where foreclosures are more common with residential properties.

  2. Is related to the distribution of surplus funds upon sale of the property.

  3. Is the fact that under foreclosure, the mortgagor loses title and any equity in the property, while under power of sale, surplus funds are returned to the mortgagor after the sale.

  4. Is that the foreclosure process is overseen by the Court, while power of sale does not involve judicial proceedings.

  5. Is the entire process, including the sale, being overseen by the bank for foreclosures.

  6. The type of sale, as only foreclosures involve commercial properties.

The correct answer is: Is the fact that under foreclosure, the mortgagor loses title and any equity in the property, while under power of sale, surplus funds are returned to the mortgagor after the sale.

The main difference between a foreclosure and a power of sale lies in how ownership and equity in the property are handled. In a foreclosure, the lender takes legal action that results in the mortgagor (borrower) losing both title to the property and any equity they might have built up. This means that the lender gains complete control over the property, and the mortgagor has no claim to any funds that might result from a sale of the property. In contrast, a power of sale allows the lender to sell the property without having to go through the courts, and importantly, the mortgagor retains the right to any surplus funds from the sale after the mortgage debt has been satisfied. This means if the property sells for more than what is owed on the mortgage, the excess amount will be returned to the mortgagor. This distinction highlights the different implications for the borrower regarding ownership and potential financial recovery after the sale of the property. Recognizing this difference is crucial for understanding the rights and outcomes for property owners and lenders in the event of default on a mortgage.