(Ontario)
Question:
When a seller take back exists the mortgage clause on the first mortgage should state not more than rather than not less then. So if there is a seller take back mortgage does the mortgage clause on the first mortgage always say “not more than” in order to protect the second mortgage.
Answer:
Yes, this is what is referred to as an Oklahoma Offer. It’s more theoretical than real.
The Vendor should modify the first mortgage reference from “not less than”, to “not more than” to protect himself against the possibility that the Buyer might have given away 95% of the property equity to the first mortgagee, only to find that the second mortgage is another 25%. That mean that 5% is secured and 20% is unsecured.
Brian Madigan LL.B., Broker