mortgages/ foreclosure/ water rights/ zoning/ HOA Flashcards
what is a mortgage
mortgage is the conveyance of a security interest in LAND, intended by parties to be collateral for repayment of the debt
2 elements for mortgage
1) a debt and
2) voluntary transfer of a security interest in debtor’s land to secure or back-up the debt
who is debtor in mortgage situation
mortgagor
who is creditor in mortgage situation
mortgagee
what is a purchase money mortgage
mortgage given to secure loan that enables the debtor to acquire the NOW-ENCUMBERED LAND
what is a non purchase money mortgage
where person already owns land, and gives up land as collateral
does a mortgage typically need to be in writing
yes SOF. legal mortgage
other names for legal mortgage
1) note
2) mortgage deed
3) security interest in land
4) deed of trust or
5) sale lease back
what is equitable mortgage
when O hands creditor a deed to black acre that is absolute on its face
is parole evidence admissible to show intent in equitable mortgage
yes
whats O’s recourse if creditor sells equitable mortgage
sue creditor for fraud and sale proceeds
once a mortgage have been created what is debtors rights
title and right to possess
once a mortgage has been created what is creditors rights
lien (right to look to land in event debtors default on land)
can all parties to a mortgage transfer their interest
YES
what are the 2 ways where mortgagee can transfer their interest
1) ENDORSING note and delivery to transferee
(becomes HIDC)
OR
2) exciting separate document of assignment
what defenses does a HIDC not have to worry about
personal defenses
what are personal defenses for HIDC
lack of consideration, fraud inducement, unconsionability, waiver, estoppel
what defenses can a mortgagor hold even against a HIDC
real defenses
what are real defenses against HIDC (MAD FIFI4)
1) MATERIAL ALTERATION
2) DURESS
3) FRAUD IN FACTUM
4) INCAPACITY
5) ILLEGALITY
6) INFANCY
7) INSOLVENCY
to be a holder in due course what elements must be met
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
does a lien remain on the land so long as the mortgage was properly recorded even if sold
YES
what can you record to put others on notice
1) deed or
2) note
who is personally liable on the debt if O, debtor mortgagor sells black acre to B and B has ASSUMED the mortgage
both O and B are PERSONALLY LIABLE
1) b is primary liable
2) O remains secondary liable
who is personally liable on the debt if O, debtor mortgagor sells black acre to B and B takes SUBJECT TO mortgage
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
how must mortgagee foreclose by
PROPER JUDICIAL ACTION. At foreclosure, land is sold and sale proceeds go to satisfy the debt
what if the proceeds from the sale of collateral are less than amount owed
mortgagee can get a defencancy judgment against D for the amount still owed
what if there is a surplus of foreclosure
junior liens get paid in order of priority and any surplus goes back to debtor
sale of forclosure
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.
will a foreclosure terminate interests SENIOR to the mortgage being foreclosured
NO
will a foreclosure terminate interests JUNIOR to the mortgage being foreclosed
YES but not SENIOR interests
who are NECESSARY PARTIES to foreclosure
1) interests subordinate to those of the foreclosing party
2) debtor-mortgagor
what if a party is a NECESSARY PARTY and is not named in the foreclosure
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
although a senior mortgage is not discharged if there is a sale under junior mortgage what does this mean to new buyer
1) new B is NOT personally liable on that mortgage BUT
2) senior creditor can foreclose on land, so B better pay it off.
once again does foreclosure affect any interest SENIOR to the mortgage being foreclosed
NO
generally how is priority in mortgage
FIRST TO RECORD properly wins.
- First in time is first in right
x/c to the first in time is first in right for prority of mortgages by recording
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
are subordination agreements valid
YES
- senior creditors may subordinate their priority with junior creditors
2 different types of redemption
1) redemption in equity
2) statutory redemption
redemption in equity
up to date of sale. At any time BEFORE foreclosure sale, D can try to redeem land
what happens once a valid foreclosure happens and redemption in equity
right to equitable redeemption is gone
how is equitable redemption exercised
by paying off mispayments plus interests and costs
are acceleration clause valid
yes. if mortgage contains one, full balance plus accrued interest plus costs must be paid
may a debtor/mortgagor WAIVE right to redeem in mortgage itself
NO
what is it called when creditor tries to get debtor to waive right to redeem
CLOGGING EQUITY IN REDEMPTION, not allowed
statutory redemption
debtor-mortgagor has fixed period after the foreclosure occurs to stay on land. After foreclosure sale
dodd frank act protects only whom
CONSUMERS
DODD-FRANK ACT
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
what are consumer rights during foreclosure process
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.
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
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
what are the 2 water rights for streams, rivers and lakes
1) riparian doctrine
2) prior approriation doctrine
what is the riparian doctrine
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
prior appropriation doctrine (streams, rivers and lakes)
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.
what is the rule for groundwater, also known as percolating water,
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
What is surface waters:
those which come from rain, springs, or melting snow, and which have not yet reached a natural watercourse or basin
what is the rule for surface water (nemesis)
COMMON ENEMY RULE
-landowner may change drainage or make any other changes/improvements on his land to combat the flow of surface water.
what have many courts modified common enemy rule to prohibit
unnecessary harm to others land
what is trespass
invasion of land by PHYSICAL OBJECT.
how to remove a trespasser
bring an action for ejectment
what is the private nuisance rule
the SUBSTANTIAL and UNREASONABLE interference with anothers land
does private nusiance need PHYSICAL invasion like trespass
NO. thus orders, and noise could give rise to it.
what must a person in variance of zoning achieve
must show UNDUE HARDSHIP and that the grant of the variance will not work to diminution of neighborhood property values
nonconforming use, one lawful and now unlaw means what?
it CANNOT eliminate ALL at once, unless JUST COMPENSATION, otherwise unconstitutional taking
2 types of cumulative zoning
1) cumulative and
2) noncumulative
under a cumulative zoning ordinance, land that is zoned for a particular use may be used for that particular use or for what
ANY HIGHER USE
ex: factor could be used for single home now
noncumulative zoning ordinance
land may be used ONLY for the purpose for which it is zoned
what is unconstitutional exactions
exactions are those amenities government seeks in exchange for granting permission to build.
-ex: will let you build if you install new street lamps
rule to pass constitutional scrutiny for exactions
these exactions MUST be REASONABLY related, nature and scope to impact of proposed development
what must a condo owner pay
regular dues or fees to maintain the common elements
who elects the board for homeowners association
the members of the HOA
what are declaration of covenants, conditions and restrictions or CC&R
made by HOA that prescribe what owners can and cannot do with their property
can the HOA impose an additional 1 time or special assessment to each owner?
yes
Title theory of mortgage
title is in the mortgagee (lender) until the mortgage has been satisfied or foreclosed
Lien theory of mortgage
title remains in the mortgagor and the mortgagee holds a SI in property
what doctrines (2) apply to rivers, lakes and NOT streams
1) riparian and
2) prior appropriation doctrines
is the common enemy theory for surface what
surface water is a common enemy and any owner can change its course to get rid of it.
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?
Yes
what are the elements of an equitable mortgage
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
what is is an equitable mortgage
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.
difference b/w statutory right of redemption and equity of redemption rights
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
2 different types of law doctrines for water rights
1) riprarian (majority)
2) prior approbation:
what is the general rule for riprarian water rights
domestic use (natural use) trumps commercial or agriculture use
what wins under riprarian water rights, commercial, agricultural use or domestic (natural) use
DOMESTIC use wins (natural use)
what is the rule for prior approtation for water rights
1st in time is 1st in right
what does failure to include a necessary party in a foreclosure mean
results in preservation of that party’s interest despite the foreclosure and sale
under CL was the rule for sale of land K for warranties
carry no implied warranties of quality of fitness for the purpose intended
what is the implied warranty of fitness for contracts for builders sale
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.
what is the implied warranty of fitness for builders of new residential construction
The warranty implied is that the new house is designed and constructed in a REASONABLY WORKMANLIKE manner and suitable for human habituation.
does IL allow the later owner of a house to recover from the original builder for a latent defect despite lack of privily
YES.
- IL extends the implied warranty of fitness for builders of a new residential construction to later owners of the house.
IL rule for assumption of mortgage
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
what is the general rule where a stream is a boundary, abutting owners
abutting owners each one 1/2 of the stream bed
Surface waters:
Those which come from rain, springs, or melting snow, and which have not yet reached a natural watercourse basin
What is the rule for surface waters used for
COMMON ENEMY RULE: a landowner may change drainage on his land to combat the flow of surface water
Modification to surface waters (common enemy rule)
many courts have modified the rule to prohibit unnecessary harm to others land
2 main systems to determining allocation of water in water courses
1) riparian doctrine
2) prior appropriation doctrine
Ex: streams, rivers, and lakes
ground water rule
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
General rule for mortgages
the priority of a mortgage is determined by when it was placed on the property
What is the rule where the mortgage obligates the lender to make further advances of funds after the mortgage is executed?
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
if the original mortgage had future advances on the mortgage will those future advances have the same priority as the original mortgage
yes, x/c to GR that mortgage is created when it is placed on the property.
what happens when senior mortgage modifies mortgage with mortgagor?
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
what happens with senior mortgage where modifies agreement and purposes of priory with junior mortgagee?
junior mortgagee will b given priority over the MODIFICATION only!
- Does not nullify its original senior status, only given priority with the modification
