Crucial Exams

Multistate Bar Examination Practice Question

A homeowner obtained a mortgage with a clause that allows the lender to demand full repayment if the homeowner sells the property. The homeowner later transferred the property via a quitclaim deed to their adult child without informing their lender. Upon discovering the transfer, the lender demanded full repayment of the mortgage. Which principle is most relevant in determining whether the lender’s demand is enforceable?

  • The covenant of marketable title, which ensures the property is free of encumbrances upon sale.

  • The doctrine of equitable subrogation, which permits substitution of one party for another in a debt obligation.

  • The rule against restraints on alienation, which voids unreasonable restrictions on transfers of property.

  • The due-on-sale clause, which allows the lender to demand repayment upon an unauthorized transfer.

Multistate Bar Examination
Real Property
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