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mortgages/ foreclosure/ water rights/ zoning/ HOA Flashcards

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1
Q

what is a mortgage

A

mortgage is the conveyance of a security interest in LAND, intended by parties to be collateral for repayment of the debt

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2
Q

2 elements for mortgage

A

1) a debt and

2) voluntary transfer of a security interest in debtor’s land to secure or back-up the debt

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3
Q

who is debtor in mortgage situation

A

mortgagor

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4
Q

who is creditor in mortgage situation

A

mortgagee

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5
Q

what is a purchase money mortgage

A

mortgage given to secure loan that enables the debtor to acquire the NOW-ENCUMBERED LAND

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6
Q

what is a non purchase money mortgage

A

where person already owns land, and gives up land as collateral

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7
Q

does a mortgage typically need to be in writing

A

yes SOF. legal mortgage

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8
Q

other names for legal mortgage

A

1) note
2) mortgage deed
3) security interest in land
4) deed of trust or
5) sale lease back

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9
Q

what is equitable mortgage

A

when O hands creditor a deed to black acre that is absolute on its face

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10
Q

is parole evidence admissible to show intent in equitable mortgage

A

yes

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11
Q

whats O’s recourse if creditor sells equitable mortgage

A

sue creditor for fraud and sale proceeds

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12
Q

once a mortgage have been created what is debtors rights

A

title and right to possess

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13
Q

once a mortgage has been created what is creditors rights

A

lien (right to look to land in event debtors default on land)

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14
Q

can all parties to a mortgage transfer their interest

A

YES

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15
Q

what are the 2 ways where mortgagee can transfer their interest

A

1) ENDORSING note and delivery to transferee
(becomes HIDC)
OR
2) exciting separate document of assignment

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16
Q

what defenses does a HIDC not have to worry about

A

personal defenses

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17
Q

what are personal defenses for HIDC

A

lack of consideration, fraud inducement, unconsionability, waiver, estoppel

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18
Q

what defenses can a mortgagor hold even against a HIDC

A

real defenses

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19
Q

what are real defenses against HIDC (MAD FIFI4)

A

1) MATERIAL ALTERATION
2) DURESS
3) FRAUD IN FACTUM
4) INCAPACITY
5) ILLEGALITY
6) INFANCY
7) INSOLVENCY

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20
Q

to be a holder in due course what elements must be met

A

1) note must be NEGOTIABLE, made payable to mortgagee,
2) the ENDORSED must be indorsed, signed against the name mortgagee,
3) he original note must be DELIVERED to the transferee. a photo copy is not good
4) the transferee must take the note in good faith w/o notice of any illegality and
5) the transferee must pay VALUE for the note, meaning something more than nomial

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21
Q

does a lien remain on the land so long as the mortgage was properly recorded even if sold

A

YES

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22
Q

what can you record to put others on notice

A

1) deed or

2) note

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23
Q

who is personally liable on the debt if O, debtor mortgagor sells black acre to B and B has ASSUMED the mortgage

A

both O and B are PERSONALLY LIABLE

1) b is primary liable
2) O remains secondary liable

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24
Q

who is personally liable on the debt if O, debtor mortgagor sells black acre to B and B takes SUBJECT TO mortgage

A

B is NOT personally liable

  • only O is personally liable
  • But if recorded mortgage stays with land. Thus if O cannot pay mortgage, can be foreclosured
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25
Q

how must mortgagee foreclose by

A

PROPER JUDICIAL ACTION. At foreclosure, land is sold and sale proceeds go to satisfy the debt

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26
Q

what if the proceeds from the sale of collateral are less than amount owed

A

mortgagee can get a defencancy judgment against D for the amount still owed

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27
Q

what if there is a surplus of foreclosure

A

junior liens get paid in order of priority and any surplus goes back to debtor

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28
Q

sale of forclosure

A

sale proceeds are used to pay off mortgages in the order of their priority, each must be paid in FULL before a subordinated lienholder may take.

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29
Q

will a foreclosure terminate interests SENIOR to the mortgage being foreclosured

A

NO

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30
Q

will a foreclosure terminate interests JUNIOR to the mortgage being foreclosed

A

YES but not SENIOR interests

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31
Q

who are NECESSARY PARTIES to foreclosure

A

1) interests subordinate to those of the foreclosing party

2) debtor-mortgagor

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32
Q

what if a party is a NECESSARY PARTY and is not named in the foreclosure

A

results in preservation of that party’s claim, despite the foreclosure sale. Thus, if a necessary party is not joined, his mortgage remains on the land

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33
Q

although a senior mortgage is not discharged if there is a sale under junior mortgage what does this mean to new buyer

A

1) new B is NOT personally liable on that mortgage BUT

2) senior creditor can foreclose on land, so B better pay it off.

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34
Q

once again does foreclosure affect any interest SENIOR to the mortgage being foreclosed

A

NO

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35
Q

generally how is priority in mortgage

A

FIRST TO RECORD properly wins.

- First in time is first in right

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36
Q

x/c to the first in time is first in right for prority of mortgages by recording

A

PURCHASE MONEY mortgage: mortgage given to secure a loan that enables the debtor to acquire that encumbered land beats even first in time mortgage records

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37
Q

are subordination agreements valid

A

YES

- senior creditors may subordinate their priority with junior creditors

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38
Q

2 different types of redemption

A

1) redemption in equity

2) statutory redemption

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39
Q

redemption in equity

A

up to date of sale. At any time BEFORE foreclosure sale, D can try to redeem land

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40
Q

what happens once a valid foreclosure happens and redemption in equity

A

right to equitable redeemption is gone

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41
Q

how is equitable redemption exercised

A

by paying off mispayments plus interests and costs

42
Q

are acceleration clause valid

A

yes. if mortgage contains one, full balance plus accrued interest plus costs must be paid

43
Q

may a debtor/mortgagor WAIVE right to redeem in mortgage itself

A

NO

44
Q

what is it called when creditor tries to get debtor to waive right to redeem

A

CLOGGING EQUITY IN REDEMPTION, not allowed

45
Q

statutory redemption

A

debtor-mortgagor has fixed period after the foreclosure occurs to stay on land. After foreclosure sale

46
Q

dodd frank act protects only whom

A

CONSUMERS

47
Q

DODD-FRANK ACT

A

residential mortgage lenders to determine mortgagors ability to pay before making the loan. Terms of loan must be understandable and not unfair, deceptive, or abusive. if in violation debtor has defense in foreclosure

48
Q

what are consumer rights during foreclosure process

A

the morgagee msut in good faith consider a request made by the mortgagor for LOAN MODIFICATION. cannot file foreclosure action in court while such a request is pending.

49
Q

lateral support: if land is IMPROVED by buildings and an adjacent landowners excavation causes that improved land to cave, the excavator will be liable ONLY FOR

A

negligence, not strict liability. In other words, for strict liability to apply P must show that the improvements on his land did not contribute to his land’s collapse

50
Q

what are the 2 water rights for streams, rivers and lakes

A

1) riparian doctrine

2) prior approriation doctrine

51
Q

what is the riparian doctrine

A

for water such as streams, rivers and lakes

1) water belongs to those who own land bordering water course
2) these people are known as RIPARIANT, who share share the right of reasonable water use
3) thus one riparian will be liable if his use UNREASONABLY INTERVERS WITH OTHERS USE

52
Q

prior appropriation doctrine (streams, rivers and lakes)

A

1) water belongs initally to state, but the right to divert it and use it can be acquired by AN INDIVIDUAL, regardless of w/e or not he happens to be reparian
2) rights are determined by PRIORITY OF BENEFICAL USE. the norm is 1st in time is 1st in right.

53
Q

what is the rule for groundwater, also known as percolating water,

A

Water benath the surface of the earth that is not confined to a known channel
1) the surface owner is entitled to make REASONABLE USE OF GROUND WATER. However, may not be WASTEFUL

54
Q

What is surface waters:

A

those which come from rain, springs, or melting snow, and which have not yet reached a natural watercourse or basin

55
Q

what is the rule for surface water (nemesis)

A

COMMON ENEMY RULE

-landowner may change drainage or make any other changes/improvements on his land to combat the flow of surface water.

56
Q

what have many courts modified common enemy rule to prohibit

A

unnecessary harm to others land

57
Q

what is trespass

A

invasion of land by PHYSICAL OBJECT.

58
Q

how to remove a trespasser

A

bring an action for ejectment

59
Q

what is the private nuisance rule

A

the SUBSTANTIAL and UNREASONABLE interference with anothers land

60
Q

does private nusiance need PHYSICAL invasion like trespass

A

NO. thus orders, and noise could give rise to it.

61
Q

what must a person in variance of zoning achieve

A

must show UNDUE HARDSHIP and that the grant of the variance will not work to diminution of neighborhood property values

62
Q

nonconforming use, one lawful and now unlaw means what?

A

it CANNOT eliminate ALL at once, unless JUST COMPENSATION, otherwise unconstitutional taking

63
Q

2 types of cumulative zoning

A

1) cumulative and

2) noncumulative

64
Q

under a cumulative zoning ordinance, land that is zoned for a particular use may be used for that particular use or for what

A

ANY HIGHER USE

ex: factor could be used for single home now

65
Q

noncumulative zoning ordinance

A

land may be used ONLY for the purpose for which it is zoned

66
Q

what is unconstitutional exactions

A

exactions are those amenities government seeks in exchange for granting permission to build.
-ex: will let you build if you install new street lamps

67
Q

rule to pass constitutional scrutiny for exactions

A

these exactions MUST be REASONABLY related, nature and scope to impact of proposed development

68
Q

what must a condo owner pay

A

regular dues or fees to maintain the common elements

69
Q

who elects the board for homeowners association

A

the members of the HOA

70
Q

what are declaration of covenants, conditions and restrictions or CC&R

A

made by HOA that prescribe what owners can and cannot do with their property

71
Q

can the HOA impose an additional 1 time or special assessment to each owner?

A

yes

72
Q

Title theory of mortgage

A

title is in the mortgagee (lender) until the mortgage has been satisfied or foreclosed

73
Q

Lien theory of mortgage

A

title remains in the mortgagor and the mortgagee holds a SI in property

74
Q

what doctrines (2) apply to rivers, lakes and NOT streams

A

1) riparian and

2) prior appropriation doctrines

75
Q

is the common enemy theory for surface what

A

surface water is a common enemy and any owner can change its course to get rid of it.

76
Q

if the original mortgagee transfer possession of a NONnegotiable notice w.o giving notice of the transfer to the mortgage, the mortgagor’s payment to the original mortgagee is effective even though it is not made to the person entitled to enforce the instrument?

A

Yes

77
Q

what are the elements of an equitable mortgage

A

1) the existence of a debt or promise of payment by the deed’s grantor,
2) grantee’s promise to return the land if the debt is paid,
3) the facts that the amount advanced to the grantor/debtor was MUCH LOWER than the value of the property
4) the degree of the grantor’s financial distress; an d
5) the parties’ prior negotiations

78
Q

what is is an equitable mortgage

A

where a landowner raises money and gives the deed to the creditor. The court can conclude that the deed was really given for security purposes, requires creditor to do foreclosure proceedings.

79
Q

difference b/w statutory right of redemption and equity of redemption rights

A

1) statutory redemption gives borrow a right to redeem for the foreclosure AFTER the foreclosure sale
2) equity in redemption rights: gives borrow the right t free the land off the mortgage by paying off the amount due, plus any accrued interest at any time BEFORE the foreclosure sale

80
Q

2 different types of law doctrines for water rights

A

1) riprarian (majority)

2) prior approbation:

81
Q

what is the general rule for riprarian water rights

A

domestic use (natural use) trumps commercial or agriculture use

82
Q

what wins under riprarian water rights, commercial, agricultural use or domestic (natural) use

A

DOMESTIC use wins (natural use)

83
Q

what is the rule for prior approtation for water rights

A

1st in time is 1st in right

84
Q

what does failure to include a necessary party in a foreclosure mean

A

results in preservation of that party’s interest despite the foreclosure and sale

85
Q

under CL was the rule for sale of land K for warranties

A

carry no implied warranties of quality of fitness for the purpose intended

86
Q

what is the implied warranty of fitness for contracts for builders sale

A

there is an implied warranty of fitness or quality applies to contracts for a builder’s sale of any new residential building under construction or to be constructed.

  • The warranty implied is that the new house is designed and constructed in a REASONABLY WORKMANLIKE manner and suitable for human habituation.
87
Q

what is the implied warranty of fitness for builders of new residential construction

A

The warranty implied is that the new house is designed and constructed in a REASONABLY WORKMANLIKE manner and suitable for human habituation.

88
Q

does IL allow the later owner of a house to recover from the original builder for a latent defect despite lack of privily

A

YES.
- IL extends the implied warranty of fitness for builders of a new residential construction to later owners of the house.

89
Q

IL rule for assumption of mortgage

A

a grantee who pays the seller of real property an amount equal to the value of the property minus the outstanding balance on the mortgage might be deemed to have assumed the mortgage by implication

90
Q

what is the general rule where a stream is a boundary, abutting owners

A

abutting owners each one 1/2 of the stream bed

91
Q

Surface waters:

A

Those which come from rain, springs, or melting snow, and which have not yet reached a natural watercourse basin

92
Q

What is the rule for surface waters used for

A

COMMON ENEMY RULE: a landowner may change drainage on his land to combat the flow of surface water

93
Q

Modification to surface waters (common enemy rule)

A

many courts have modified the rule to prohibit unnecessary harm to others land

94
Q

2 main systems to determining allocation of water in water courses

A

1) riparian doctrine
2) prior appropriation doctrine
Ex: streams, rivers, and lakes

95
Q

ground water rule

A

AKA as percolating water: water beneath the surface of the earth that has not confined to a known channel.
- Surface owner is entitled to make REASONABLE USE of ground water. Must not be wasteful

96
Q

General rule for mortgages

A

the priority of a mortgage is determined by when it was placed on the property

97
Q

What is the rule where the mortgage obligates the lender to make further advances of funds after the mortgage is executed?

A

If a mortgage obligates the lender to make future advances of funds after the mortgage is executed, those FUTURE ADVANCES will have the same priority as the original mortgage

98
Q

if the original mortgage had future advances on the mortgage will those future advances have the same priority as the original mortgage

A

yes, x/c to GR that mortgage is created when it is placed on the property.

99
Q

what happens when senior mortgage modifies mortgage with mortgagor?

A

Where the mortgagor enters into a modification with the senior mortgaee, raising its interest rate or otherwise more burdensome, the junior mortgage will be given priority over the MODIFICATION

100
Q

what happens with senior mortgage where modifies agreement and purposes of priory with junior mortgagee?

A

junior mortgagee will b given priority over the MODIFICATION only!
- Does not nullify its original senior status, only given priority with the modification

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