RES exam question on Torts, Mortgages & Co-ownership: A salesperson tells a buyer the unit 'never leaks', repeating the seller's word without…
Case study: A salesperson tells a buyer the unit 'never leaks', repeating the seller's word without checking; it later floods. Separately, the seller defaults on the mortgage and the mortgagee exercises its power of sale. Which is/are correct? (i) Passing on the seller's unverified 'never leaks' claim can amount to misrepresentation; 'I only relayed it' is not a defence (ii) A mortgagee's power of sale on default generally does not require a court order (iii) Any surplus from the mortgagee's sale, after discharging the debt and costs, belongs to the mortgagee (iv) A shortfall after the mortgagee's sale remains the borrower's debt
- A(i) and (ii) only
- B(i), (ii) and (iv) only
- C(i), (ii) and (iii) only
- DAll of the above
Show answer & explanation
Answer
B. (i), (ii) and (iv) only
Explanation
Issue: Is relaying an unverified claim actionable, and how do mortgagee-sale proceeds fall? Rule: Relaying an unverified representation can be (negligent/innocent) misrepresentation — merely passing it on is no defence. A mortgagee's power of sale on default generally needs no court order; after discharging the secured debt and costs, any SURPLUS is held for the borrower, and a shortfall remains the borrower's personal debt. Application: The 'never leaks' claim can expose the salesperson (i); the mortgagee can sell without a court order (ii); a shortfall stays the borrower's debt (iv). Conclusion: (i), (ii) and (iv) are correct.
Why the other options are wrong
- The trap is (iii): the surplus belongs to the BORROWER, not the mortgagee.
Study the concept behind this question: Property Torts, Mortgages & Co-ownership (Singapore)
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