Shortly before settlement, the buyer's solicitor finds a second registered mortgage on the title, and that lender has not joined the settlement to discharge it. What should happen?
Correct Answer
B) Settlement is deferred until a discharge of that mortgage is arranged
A buyer is entitled to title free of the vendor's mortgages unless the contract provides otherwise. If a registered mortgage will not be discharged at settlement, because its lender has not joined the settlement, the buyer should not complete. Settlement is deferred until the vendor arranges for that lender to provide a discharge that can be lodged with the transfer.
Why This Is the Correct Answer
Every registered mortgage the vendor has must be discharged at settlement so the buyer receives clear title. If one lender has not joined the settlement to provide its discharge, completing would leave the buyer with an encumbered title. Deferring settlement until the discharge is arranged protects the buyer, and the vendor bears responsibility for the delay.
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