Real Estate Council of Alberta Fundamentals Practice Exam

What could be a potential outcome for a buyer involved in a debt consolidation scheme?

1. Ownership of property without further payments

2. Unexpected loss of property title

3. Increased equity in the property

4. Reduction of monthly mortgage payments

The correct answer is: Unexpected loss of property title

Involvement in a debt consolidation scheme can lead a buyer to experience an unexpected loss of property title. This can occur if the scheme involves transferring ownership of the property to a third party or an entity that claims to help manage or consolidate the debt. Often, buyers might be misled into signing agreements that they do not fully understand, which can result in them losing their legal rights to the property. In scenarios involving debt consolidation, the real implications of the agreements may not be clear. Buyers might believe they are simply consolidating their debts, but the fine print could disclose that the ownership of their property is being placed under someone else's name or that liens could be placed against the property due to unpaid debts. This scenario highlights the importance of understanding the terms and the potential risks associated with debt consolidation schemes before proceeding. Other potential outcomes, such as the reduction of monthly mortgage payments, may not necessarily align with what could happen in these schemes, and increases in equity typically would require positive market conditions or good financial management rather than the risks associated with debt consolidation.