In order to buy new office equipment Allen borrowed $150,000 from a local bank. As security for the debt, the bank took a mortgage (lien) on the equipment. At a time when the amount of the debt was $125,000 Allen defaulted, and the bank repossessed the equipment. The debtor was notified that the property would be sold at a public auction, but did not bother to attend the auction. The net proceeds resulting from the repossession and auction (ie, after all expenses were paid) was $100,000. Which of the following is correct?
A. The auction was invalid since the highest bid was less than the amount of the debt
B. The buyer of the equipment at the auction is responsible to Allen for $25,000
C. The sale of the equipment, as it was made in good faith, fully satisfies Allen’s obligation to the bank
D. The bank can get a deficiency judgment against Allen for the $25,000 remaining on the debt.
E. The buyer of the equipment must return the property (receiving back the amount he paid at auction)
Answer: D. The bank can get a deficiency judgment against Allen for the $25,000 remaining on the debt.
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Indicate whether the statement is true or false
Which of the following statements is true with respect to the land titles system in Canada?
A) the order of registration determines the order of priority of interests in land B) title has to be searched back 40 years C) the government guarantees the person shown on the register as owner is the owner D) A and C E) All of the above are true