Debtor-Creditor Relationship Flashcards
What is the creditor’s right in a surety relationship?
Upon default can proceed against collateral or surety - creditor’s choice.
Describe a surety (or guaranty relationship).
Principal debtor owes money to creditor and surety or guarantor agrees to be back-up for debtor if debtor does not pay; promise to pay the debt of another in the event that “other” defaults.
Explain the requirements for creating a surety relationship.
Must be in writing; can be gratuitous.
What is the formula for the right of a co-surety to collect from another, i.e., the right of contribution?
Amount guaranteed by surety / Total agreed to be paid by all sureties.
Take this ratio times the amount to be paid to the creditor - that is the amount owed by this surety to the creditor or to any surety who had to pay the full amount.
Describe the right of contribution regarding sureties.
Cosureties have the right to collect from other sureties their pro rata share of the amount paid to the creditor.
Define “conditional guaranty.”
Surety or guarantor promises to pay only when certain conditions have been made, such as AFTER creditor has reduced debtor’s obligation to a judgment or AFTER the creditor has exhausted all collateral.
Define “absolute guaranty.”
Promise by surety or guarantor to pay no matter what happens or why debtor defaulted.
Describe the concept of reimbursement and indemnity of a guarantor.
Upon payment to the creditor, the guarantor has the right to seek reimbursement from the principal debtor.
Define fee simple estate.
A person has complete ownership for an unlimited duration to do with the property as he or she legally chooses.
Define tenancy at will.
A tenancy that simply continues with permission of the landlord. A tenancy at will can be terminated by either party without notice.
Define warranty deed.
This deed provides the highest level of protection. The grantor guarantees title and his right to transfer.
Define easement.
The right of a person to make limited use of another’s realty, usually without taking anything from it, or possession of it.
Define tenancy for years.
A lease for a specified duration. The lease agreement must name the parties, include identification of the property, and include any lease term that the parties wish to have.
List the requirements for a valid deed.
It must be in writing;
It must be signed by the grantor;
It must include a description of the land.
List the types of property that can be attached to bankruptcy.
Real and personal property as well as accounts and receivables.
