MBE Real Property Flashcards
mortgagee vs. holder of security interest
The general rule is that when there is a conflict between the mortgagee of real property and the holder of a security interest in a fixture attached to the real property, the first to record has priority over the fixture. However, there is an exception if the security interest was given in connection with the purchase of the goods (i.e., a purchase money security interest). In that case, the secured party who records the security interest within 20 days after the goods become a fixture has priority over a prior recorded mortgage. Here, the secured party had failed to file its security interest 3 months after the stove was installed, so the first to file—the mortgagee—has priority.
Valid conveyance requires
ACTUAL transfer!
Rule re “right to reclaim”
After default but prior to foreclosure, a mortgagor retains the right to reclaim clear title to the property and prevent foreclosure; this right is known as the mortgagor’s “equity of redemption.” Courts routinely reject attempts by the mortgagee to deny the mortgagor this right (i.e., to “clog” the equity of redemption) prior to default, such as by the inclusion of a waiver clause in the mortgage. However, a mortgagor may waive the right to redeem after the mortgage has been executed in exchange for good and valuable consideration. Here, because the buyer agreed to waive her right of redemption in consideration of lower interest rates after the mortgage had already been executed, the court will likely enforce the waiver.
mortgagee’s right to make repairs, prevent waste etc.
In a title theory state, legal title is in the mortgagee (here, the credit union) until the mortgage has been fully satisfied. Thus, the mortgagee is entitled to take possession at any time and can certainly take possession as soon as default occurs. As such, the credit union can make repairs, take rent, prevent waste, and lease out vacant space.
intermedite theory state
intermediate theory state would allow the mortgagor to retain legal title until default, at which time legal title would vest in the mortgagee.
adeemed vs. lapsed
If a named beneficiary predeceases the testator, the gift to that beneficiary LAPSES. Meanwhile, ADEMPTION occurs when a specific gift of property in the will is no longer in the estate at the time of death of the testator
effect of modifying a senior mortgage
Generally, a properly recorded mortgage that precedes another mortgage has priority over the later mortgage. Modification of a senior mortgage subordinates the mortgage to a junior mortgage only to the extent that the modification of the senior mortgage makes it more burdensome. Here, since neither the interest rate nor the principal amount of the mortgage is increased, the modification has not made the bank’s prior recorded mortgage more burdensome, and the bank’s mortgage continues to have priority over the credit union’s mortgage
Rule of convenience limitation
the rule of convenience does not apply when the class is expressly defined to include individuals “whenever born;” the rule of convenience is only a rule of construction.
inquiry notice in notice statute
COUNTS: not a GF purchaser if someone else in possession.
Doctrine marshalling assets (mortgages)
Generally, upon default of an obligation, a mortgagee may foreclose on any and all parcels of real property of the mortgagor that serve as security for the obligation. If there are junior security interests with respect to some of those parcels of real property, however, those junior interests may petition the court for protection of their interests under the doctrine of marshaling of assets. Under this doctrine, the holder of a senior security interest must first proceed against the property on which there are not any junior security interests, and then against the property on which the junior interest was more recently created, before proceeding against property on which the junior interest was more remotely created.
Which standard should the court apply in determining whether the title is marketable?
The title must be free of an unreasonable risk of litigation at the time of closing. The marketable title requirement, which is implied in a real property contract unless it is specifically disclaimed, is sometimes characterized as one that protects the purchaser of real estate from buying a lawsuit.
T abandons lease early. According to majority rule, is the owner entitled to recover the full amount of this unpaid rent from the tenant if no attempts are made to re-let?
Under the majority rule today, a landlord who is aware that a tenant has abandoned her leasehold interest is under a duty to mitigate damages by making reasonable efforts to re-rent the premises. The failure of the owner of the apartment building to do so would reduce the owner’s amount of recovery.
BUT SEE NEW YORK!!!!!!!!
Which of the following would be the tenant’s best argument that she is not obligated to repair the damage to the building?
The lease was residential. . A residential lease generally cannot place the duty to make repairs on the tenant, and a provision to that effect is void. This would certainly be true if the need for the repairs did not arise from the tenant’s acts and the tenant promptly notified the landlord of the need for such repairs, as is the case here.
Argh. Point: no liability to pay the debt. Just subject to the mortgage if nonpayment.
An investor purchased a tract of land, financing a large part of the purchase price by a loan from a business partner that was secured by a mortgage. The investor made the installment payments on the mortgage regularly for several years. Then the investor persuaded a neighbor to buy the land, subject to the mortgage to his partner. They expressly agreed that the neighbor would not assume, but agreed to pay the investor’s debt to the partner. The investor’s mortgage to the partner contained a due-on-sale clause stating, “If Mortgagor transfers his/her interest without the written consent of Mortgagee first obtained, then at Mortgagee’s option the entire principal balance of the debt secured by this Mortgage shall become immediately due and payable.” However, without seeking his partner’s consent, the investor conveyed the land to the neighbor, the deed stating in pertinent part “…, subject to a mortgage to Partner,” and giving details and recording data related to the mortgage. The neighbor took possession of the land and made several mortgage payments, which the partner accepted. Now, however, neither the neighbor nor the investor has made the last three mortgage payments. The partner has sued the neighbor for the amount of the delinquent payments.
In this action, for whom should the court render judgment?
A. The neighbor, because she did not assume and agree to pay the investor’s mortgage debt.
B. The neighbor, because she is not in privity of estate with the partner.
C. The partner, because the investor’s deed to the neighbor violated the due-on-sale clause.
D. The partner, because the neighbor is in privity of estate with the partner.
A grantee that does not assume the mortgage, but rather takes subject to the mortgage, is not personally liable for the debt. In this case, there was no express assumption. In fact, the parties agreed that the neighbor was not assuming the mortgage debt. The investor is primarily liable as well as a surety for the debt.
READ ALL ANSWER CHOICES!
A. prevail, because he is the sole owner of Lawnacre.
B. prevail if, but only if, the co-tenancy created in the two grantees was a tenancy by the entirety.
C. not prevail if he had knowledge of the conveyance prior to the grantee’s death.
D. not prevail, because the friend and the other grantee own Lawnacre as tenants in common.
