DEBTOR-CREDITOR RELATIONSHIPS

Question 1

What is a surety?

Answer 1

a contract that MUST be in writing to be enforaceable
someone who agrees to be liable for someone elses debt; liable when the debtor has defaulted
“co-signor”

Question 2

A surety CANNOT compel the creditor to:

Answer 2

1. collect from the debtor

2. proceed against the debtor’s collateral

Question 3

3 types of estates & describe them

Answer 3

1. Fee Simple - complete ownership for unlimited duration
2. Fee simple defeasible - ownership terminates upon happening of certain event
3. Life estate - ownership granted by grantor; subject to life of tenant or another party

Question 4

Easements

Answer 4

Building a road across another’s property to get to the main road without taking possession of that person’s realty

Question 5

What makes a deed valid?

Answer 5

Description of the property

Price does NOT need to be included

Question 6

What gives a deed the BEST protection of title?

Answer 6

general warranty

Question 7

How does one transfer property?

Answer 7

1. Adverse possession
2. Will/inheritance
3. Gift
4. Sale

Question 8

What is a fixture?

Answer 8

Personal property
Once it attaches to realty it becomes part of the realty unless the person who attached it intends for it to be a fixture

Question 9

Purchase Money Security Interest

Answer 9

Special type that has priority over other types of interests in the same collateral if properly perfected

i.e. creditor sells asset to debtor on credit and retains security interest in collateral for purchase price
OR creditor advances funds used by debtor to purchase the collateral and retains interest in collateral

Question 10

Types of Collateral

Answer 10

Consumer goods (personal use)
Inventory (goods held for sale)
Equipment (other goods used in business)

Question 11

Fraud by the Creditor

Answer 11

surety may use this defense that they were induced into agreement by fraud

cannot use against debtor unless creditor is aware of fraud

Question 12

Personal Defenses against Debtor

Answer 12

Surety cannot use personal defenses (infancy, illegality or insanity) of the debtor

can only use their own

Question 13

Writ of garnishment vs Writ of attachment

Answer 13

WOG - debtor owes creditor and property is in hands of 3rd party i.e. wages owed by employers, bank account, debts owed to debtor

WOA - seizing property belonging to the debtor by a sheriff