DE Mortgages

Question 1

Formation of a Mortgage

Answer 1

For a mortgage to be legally valid, mortgage must be:
1. in writing;
2. describe the property specifically;
3. signed by the borrower;
4. be sealed;
5. delivered;
6. acknowledged; and
7. recorded
If the mortgage is not sealed, it can only be enforced through equity and not through law.

Defective acknowledgment can be cured.

If a mortgage is not recorded, there is no valid mortgage created.

Question 2

Lien Status of Mortgage

Answer 2

a. title remains with the mortgagor (borrower) and such title will pass to successors subject to the lien.
b. a mortgage only becomes a lien or security interest when it is recorded.

Question 3

Purchase Money Mortgage

Answer 3

a. A mortgage given for the purpose of securing all or part of the purchase money for a property.
b. Has priority lien status over any judgment against the mortgagor or any other lien created by the mortgagor even if it predates the purchase money mortgage.
c. To have priority, the PMM must be recorded within 10 days after the deed transferring the mortgaged property is recorded.
d. In DE, the seller of property and an institutional lender (such as a bank) can hold a PMM.
If there are 2 PMM, the first to record has priority

Question 4

Mechanic’s Lien (relation back)

Answer 4

A mechanic’s lien relates back to the date upon which labor is first provided or materials are first supplied to the property.

Question 5

Mechanic’s Lien (Recording)

Answer 5

General Contractor
a. Have 180 days from the completion work to record a mechanics lien to receive priority.
Subcontractor
b. Have 120 days from completion of work to record a mechanic’s lien to receive priority.

**filed with prothonotary and accompanied by a verified affidavit of truth but not necessarily notarized

***Mechanics lien does not have priority over a PMM (any loan secured for 50% of more which is used for payment of the labor or materials).

Question 6

Assignment of Mortgage Seal Requirement

Answer 6

An assignment of a mortgage does not need to be under seal to be valid.

Question 7

Release of Lien

Answer 7

If full payment of the loan is made, mortgagee must release the lien. Releases must be:
a. signed;
b. sealed;
c. acknowledged; and
d. delivered

Mortgagee must provide documents to satisfy the mortgage of records so record reflects mortgage does not exist anymore.

Such effect is the same as if there was never a mortgage in the first place.