Real Estate Council of Alberta Fundamentals Practice Exam

What encumbrance is associated with leases exceeding three years?

1. Registered mortgage

2. Registered encumbrance

3. Registered lease

4. Registered title

The correct answer is: Registered lease

A lease that exceeds three years must be registered in order to be enforceable against a third party. When a lease is registered, it becomes a public record and creates a legal interest in the property. This registration protects the tenant’s rights by providing notice to any future buyers or lenders of the leased property about the tenant’s interest. This requirement arises from the principle that leases longer than three years can significantly impact property rights and interests. Thus, if a tenant signs a lease for a duration longer than three years, it is essential to register that lease to ensure it is recognized by anyone who may acquire an interest in the property later. This is crucial for maintaining the tenant's rights, as unregistered leases may not be enforceable against subsequent purchasers or lenders who are not aware of the lease. The other options refer to different types of interests or instruments in real estate that do not specifically pertain to leases or the requirements for leases exceeding three years. Registered mortgages relate to loan agreements secured by property, registered encumbrances are broader terms that cover various claims against the property, and registered titles pertain to ownership rather than specific lease agreements. Hence, the registration of longer leases is a distinct and necessary legal requirement that is captured in the correct answer.