Property Cards from MCQs 1 Flashcards
How do you determine priority of a future-advances mortgage?
If a future-advances mortgage is optional, then the future-advances mortgagee has priority with respect to amounts loaned before receiving notice of a subsequent mortgage. But if the advance is obligatory, then the future-advances mortgagee has priority with respect to amounts loaned before and after receiving notice.
How is lien priority determined on real property?
Lien priority is determined by the “first in time, first in right” rule unless a recording act applies. Since recording acts protect purchasers for value, they offer protection to mortgage interests but not necessarily judgment liens.
What are a lender’s options upon default on a loan obligation?
Upon default on a loan obligation, a lender may elect to proceed against the debtor personally OR foreclose on the mortgage.
What is a “due on sale” clause?
A “due on sale” clause allows a lender to demand full payment of the remaining mortgage debt if the debtor transfers the mortgaged property without the lender’s permission.
What is condemnation?
Condemnation is the taking of land for public use or because it is unfit for use.
What is partial condemnation?
Happens where only a portion of the leased property is taken, so the tenant must continue to pay rent but is entitled to compensation for the portion that was taken
What is complete condemnation?
Happens when the entire leased property is taken, so the tenant is discharged from his/her rent obligation and is entitled to compensation for the taking.
What happens when a lender releases or impairs the mortgaged property?
A debtor remains personally liable for the mortgage debt even after the mortgaged property is transferred to another. But the debtor will be relieved of personal liability if the lender releases or impairs the mortgaged property.
What is a seller’s duty to disclose in a sale for residential property?
A seller of residential property must disclose any KNOWN, material physical defects that cannot be reasonably discovered by the buyer. A defect is material if it (1) substantially affects the value of the residence, (2) impacts the health or safety of a resident, or (3) affects the desirability of the residence to the buyer.
What is the doctrine of equitable conversion?
Under the doctrine of equitable conversion, equitable title passes to the buyer upon entering the land-sales contract, but the seller retains legal title during the pendency of the contract.
Performance deadlines for real estate contracts
When time is not of the essence in a land-sales contract, a party need not perform until closing or a reasonable time thereafter. And so long as the party can perform within a reasonable time, the other party cannot rescind the contract and must perform.
To what extent is a mortgage enforceable?
A mortgage is generally enforceable only to the extent that the underlying obligation is enforceable. Therefore, a mortgage is subject to the same defenses as the underlying obligation secured by the mortgage—e.g., mistake, duress, lack of capacity, statute of limitations.
What is a deed and what does it need to be valid?
A deed is a legal instrument that transfers ownership of real property from the grantor (old owner) to the grantee (new owner).
To be valid, a deed must:
1) be in writing and signed by the grantor
2) unambiguously identify the grantor and the grantee
3) unambiguously describe the land and
4) include words of transfer.
What is a liquidated damages clause?
A liquidated damages clause allows the seller to retain the buyer’s deposit if the buyer breaches the real-estate contract. The clause is enforceable so long as the amount of liquidated damages is reasonable—e.g., no more than 10 percent of the purchase price. But it may not be enforced if the seller suffered no actual loss.
What is the effect of a lifetime transfer & death on a joint tenancy?
A lifetime transfer of a joint tenant’s interest severs that interest from the joint tenancy and converts it into a tenancy in common. If two or more joint tenants remain after the transfer, then they retain a joint tenancy with respect to each other.
