Class 8: Mortgage Substitute: Deeds of Trust and Installment Land Contracts & Mortgage Priorities - Feb. 5 Flashcards
What is a deed of trust? (Emanuel)
In some states, the deed of trust is used to secure real estate loans. The deed of trust and the mortgage both serve the same purpose. (148)
Who has the power of sale in a deed of trust? (Emanuel)
In a deed of trust, the trustee has the power of sale. (148)
What is the trustee’s role in a deed of trust? (Emanuel)
In principle, the trustee is neutral, but the lender selects a trustee who is likely to serve its interest. (148)
What happened in In re Bisbee (Bisbee v. Security National Bank) (1988)? (Q/TB)
The failure to designate a trustee does not invalidate a deed of trust.
What is an installment land contract? (Emanuel)
Under an installment land contract (contract for deed), buyer takes possession and pays the price in installments over a lengthy period of time. Seller conveys title upon final payment. (229)
When does the buyer go into possession in an installment land contract? (Emanuel)
Buyer goes into possession immediately upon signing the contract.
When does the buyer get the deed in an installment land contract? (Emanuel)
Seller retains title until buyer makes the final payment. Sometimes seller signs the deed at the outset and puts it in escrow.
What are land contracts primarily used for? (Emanuel)
Land contracts are primarily used for sales when buyers do not qualify for standard mortgage financing and for sales of vacation property. (229)
What are the three types of recording acts? (Emanuel)
The three types of recording acts are the race statute, notice statute, and race-notice statute. (105)
What do race statutes say? (Emanuel)
A subsequent purchaser who records first wins. (105)
What do notice statutes say? (Emanuel)
A subsequent purchaser who takes without notice wins. (105)
What do race-notice statutes say? (Emanuel)
A subsequent purchaser who takes without notice and who records first wins. (105)
How is mortgage subordination achieved? (Emanuel)
Subordination is achieved either by the sequence of recording (automatic subordination) or by express agreement, in which a party expressly subordinates her mortgage to a superior mortgage. (239)
What is an attornment agreement? (Emanuel)
The tenant agrees to attorn to or recognize the lender as the new landlord in the event the lender takes over this position. Thus, the tenant cannot use the occasion to escape from an undesirable lease or to renegotiate a more favorable rent. (249)
What is a nondisturbance agreement? (Emanuel)
The nondisturbance agreement obligates the lender, upon taking over the property, to leave the tenant in peaceful possession in accordance with the original lease terms. (249)
