Michael, a real estate licensee, is assisting his client Jane in purchasing a commercial property at 123 Main Street, Vancouver. Jane received the title search showing fee simple ownership by 'Main Street Holdings Ltd.' However, a Form C Charge outlining a first mortgage from 'EasyBank' for $1,500,000 was also registered on the title just last week. What impact does this recent mortgage registration have on Jane's impending purchase?

Question: Michael, a real estate licensee, is assisting his client Jane in purchasing a commercial property at 123 Main Street, Vancouver. Jane received the title search showing fee simple ownership by 'Main Street Holdings Ltd.' However, a Form C Charge outlining a first mortgage from 'EasyBank' for $1,500,000 was also registered on the title just last week. What impact does this recent mortgage registration have on Jane's impending purchase?

Answer options:

• It prevents Main Street Holdings Ltd. from selling the property until the mortgage is fully paid off.
• Jane will automatically assume the mortgage responsibility upon taking ownership. ✅ The mortgage must be discharged upon or before the transfer of title to Jane, or Jane will take title subject to the mortgage.
• Since the property is commercial, the mortgage will not affect Jane's ability to obtain her own financing.

Correct answer: The mortgage must be discharged upon or before the transfer of title to Jane, or Jane will take title subject to the mortgage.

Explanation: A registered mortgage is a charge on the land. For a new buyer to obtain clear title, or title free of the seller's mortgage, the seller's mortgage must be discharged on or before the transfer of title. Otherwise, Jane would purchase the property subject to the existing mortgage.