Mortgage and Its Contemporary Applications — practice questions

Correct answer: A. Clauses 3/1/1 and 3/1/2: A mortgage contract is binding on the mortgagor once concluded, and he has no right to revoke it unilaterally, whereas the mortgagee has the right to do so, since the mortgage exists for his benefit. Possession follows the rules for possession of a sold asset and may be actual (seizure mortgage) or legal through registration and documentation (security or formal mortgage), both being subject to the same rulings.

Correct answer: C. Clauses 3/1/4, 3/2/9 and 3/4/2: The mortgagee may stipulate that the mortgagor appoint him or his representative as agent to sell the mortgaged asset and repay the debt from its value on default, without resort to the judiciary, and the mortgagor may not retreat from that agency. The mortgagee may not stipulate that he will own the asset on default, and he may not benefit from the asset free of charge, with or without the mortgagor’s permission.

Correct answer: B. Clauses 3/4/1, 3/4/2 and 3/1/4: The mortgagee may not stipulate that it will own the mortgaged asset in case of default. It may, however, purchase the mortgaged asset from the mortgagor at market value and take the portion of the value to which it is entitled. On sale, any surplus over the debt belongs to the mortgagor and any shortfall remains an ordinary debt; sale may be through a stipulated agency without the courts, and in bankruptcy the mortgagee has priority up to the sale value (Clause 3/5/3).