Ontario Mortgage Agent Practice Exam

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How do encumbrances affect property ownership?

  1. Encumbrances provide full property ownership

  2. Encumbrances have no impact on property rights

  3. Encumbrances limit fee simple ownership rights

  4. Encumbrances grant exclusive property use rights

The correct answer is: Encumbrances limit fee simple ownership rights

Encumbrances are legal limitations or restrictions on property ownership, typically in the form of liens, mortgages, easements, or encroachments. These can affect the rights of the property owner, including the ability to transfer or sell the property. Options A and D are incorrect because encumbrances do not provide full property ownership or grant exclusive use rights. Option B is also incorrect because encumbrances do have an impact on property rights, limiting them in certain ways. Option C is the most accurate because it recognizes that encumbrances can limit the owner's fee simple ownership rights to the property.

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