Ontario Barrister and Solicitor Practice Exam

Can a conveyance to Jones be valid if Smith mortgaged Parcel B to his bank with consent but then conveyed Parcel B to Jones without consent?

1. Yes, both transactions are valid

2. No, the conveyance to Jones is not valid

3. Only if Jones gets a subsequent consent

4. The question of validity depends on the bank's approval

The correct answer is: No, the conveyance to Jones is not valid

The conveyance to Jones is not valid because Smith did not have the legal right to transfer Parcel B to Jones without the bank's consent. Even though Smith did have the bank's consent to mortgage Parcel B, that does not give him the authority to then convey the property to someone else without their knowledge or consent. This would be considered a breach of his agreement with the bank and the conveyance to Jones would not have legal effect. Therefore, option B is the correct choice. Option A is incorrect because it suggests both transactions are valid, which is not the case. Option C is also incorrect because even if Jones were to obtain subsequent consent, the initial conveyance without consent would still be invalid. Lastly, option D is incorrect because the bank's approval does not determine the validity of the conveyance to Jones, as it was done without their knowledge or consent. Additionally, option D does not