120. When the mortgagee is put on inquiry.

A mortgagee is put on inquiry if the relationship between surety and debtor is known to the mortgagee and raises a legal presumption of undue influence1. A mortgagee is also put on inquiry if:

  1.  

    (1)     the transaction is not on its face advantageous to the surety; and

  2.  

    (2)     the mortgagee knows that the surety and debtor are married or cohabiting, or that the surety places trust and confidence in the debtor in relation to the management of his or her financial affairs2.

The effect of this is that a mortgagee is on inquiry whenever he wishes to obtain a guarantee