Priorities Flashcards

1
Q

What must a creditor do in order to have priority with regard to a mortgage?

A

Record, until you properly record your mortgage you have no priority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How is priority on a mortgage determined once a creditor has recorded?

A

The norm is First in time first in right - Bright line streamlined rule

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a purchase money mortgage?

A

A mortgage given to secure a loan that enables the debtor to acquire the encumbered land.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

HYPO: C lends O $100,000 so that O can purchase Blackacre. C takes as collateral a security interest in Blackacre, the very parcel that C’s extension of value enabled O to acquire.

  1. C is what?
  2. Assuming that C records properly, he has what?
A
  1. A Purchase money mortgagee

2. He has first priority in the parcel he financed (The purchase money mortgagee’s “super priority”)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

C1 lends $200,000 to O, taking a security interest in all of O’s real estate holdings, “whether now owned or hereafter acquired.”

  1. What is this called?
  2. Is this permissible?
A
  1. An after acquired collateral clause

2. Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

HYPO: C1 records the mortgage note. Six months later, C2 lends O $50,000 to enable O to acquire a parcel known as Blueacre, taking back a security interest in Blueacre and recording that interest. Subsequently, O defaults on all outstanding obligations. All that he has left is Blueacre. Who has first priority in Blueacre, C1 or C2?

A

C2 - The purcahse money mortgagee has first priority in Blue Acre, the parcel after all that it financed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Are Subordination agreements permissible?

A

Yes, they are permissible - a senior creditor may agree to subordinate its credit priority to a junior partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly