Quizlet Mortgages

Question 1

The Land Sale Contract

Answer 1

Must, under Statute of Frauds: (1) be in writing; (2) be signed by party to be bound; (3) contain description of property; (4) state some consideration

Question 2

Doctrine to part performance in land contracts

Answer 2

exception to statute of frauds. requires 2 of 3: (1) B takes possession (2) B pays all or part of price (3) B makes substantial improvements

Question 3

Equitable Conversion

Answer 3

once contract is signed B owns the land and therefore has risk of loss

Question 4

Amount of land in contract > actual land

Answer 4

Buyer can demand performance w/ pro rata price reduction

Question 5

Implied promises in land contracts

Answer 5

(1) Implied Covenant of Marketable Title: seller promise to provide marketable title at closing. Free from reasonable doubt, lawsuits, threat of litigation.
- Title is not marketable if: (a) Obtained by adverse possession (MD - adverse possession title is marketable) (b) There are encumbrances (servitudes, mortgages, covenants, easements) (c) Zoning Violations
(2) Promise Not to Make False Statements of Material Fact: seller liable for (1) failure to disclose material latent defects (2) material lies (3) material omissions.
- general disclaimers of liability will not excuse seller of duty to disclose
(3) NO implied warranty of fitness or habitability: EXCEPTION - implied warranty of fitness and workmanlike construction applies to sale of new home by builder-vendor.

Question 6

The Closing

Answer 6

• Deed controls. Deed passes when (1) lawfully executed and (2) delivered.
• Lawful Execution: must be (1) in writing (2) signed by grantor (3) describe land
• Description of land must be unambiguous and provide a good lead (need not be perfect)

Question 7

Delivery of deeds

Answer 7

o Does not require physical delivery of deed itself.
o Test of present intent: Did grantor have a present intent to be bound, irrespective of whether deed was actually handed over?
o Recipient may reject delivery
o delivery with oral condition: oral condition not recognized (MD will enforce oral conditions, but burden is on grantor to prove existence)
o Presumption of intent to deliver when recorded

Question 8

Quitclaim deed

Answer 8

contains no covenants. Look to covenant of marketable title in contract.

Question 9

General Warranty Deed

Answer 9

contains 6 covenants –
o (1) Seisen: grantor owns this estate
o (2) Right to Convey: grantor has power to transfer (no disability or temporary restraint on alienation)
o (3) Against Encumbrances: No servitudes or liens
o (4) For Quiet Enjoyment: grantee will not be disturbed in possession by a 3rd party’s lawful claim of title
o (5) Of Warranty: grantor promises to defend grantee against lawful claims of title brought by others
o (6) For Further Assurances: grantor will do whatever is needed in future to perfect title

Question 10

Special Warranty Deed

Answer 10

contains 2 covenants grantor makes on only behalf of himself
o (1) Grantor has not conveyed to anyone other than grantee
o (2) Estate is free from encumbrances made by grantor

Question 11

BFP

Answer 11

(1) Gives value for real estate (2) Does not have notice of restriction or that someone else purchased first
o Buyer is charged with 3 types of notice: (1) Actual (2) Inquiry: B is on notice of whatever an exam of property would show and reasonable follow-up into references to unrecorded transactions (3) Record: B is on notice as to recorded deeds
o to give record notice a deed must be recorded properly within a chain of title as established by searching Grantor/Grantee Index (MD)

Question 12

Notice Statute

Answer 12

“A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.” If buyer is a BFP he wins

Question 13

Race-Notice Statute

Answer 13

“Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.” Buyer must: (1) be BFP (2) record before previous buyer

Question 14

Shelter Rule

Answer 14

One who takes form a BFP will prevail against any entity that the transferor-BFP would have prevailed against.

Question 15

Wild Deed

Answer 15

If a deed entered into records has a grantor unconnected to chain of title, the deed is a wild deed. It is incapable of giving record notice of its existence

Question 16

Estoppel by Deed

Answer 16

one who conveys realty in which he has no interest, is estopped from denying that conveyance if he later acquires previously transferred interest

Question 17

Mortgage

Answer 17

Is the conveyance of a security interest in land, intended by parties to be collateral for repayment of a debt. Must be in writing
-Equitable Mortgage: not in writing, when owner gives deed as collateral and parol evidence shows it was meant as collateral

Question 18

Transfer of Mortgages

Answer 18

All parties may transfer their interests. A mortgage automatically follows a properly transferred note.

• Creditor-Mortgagor may transfer by: (1) Endorsing negotiable note, payable to named mortgagee and delivering it to transferee for value - Allows transferee who takes the note in good faith without any notice of illegality, to become “Holder in Due Course”; (2) Executing a separate document of assignment.
• Debtor-Mortgagor Transfer: lien remains on land so long as mortgage was properly recorded. Recording system applies to mortgages

Question 19

Liability where Owner-Debtor sells to Buyer

Answer 19

o If B “assumes the mortgage” - B is primarily liable and O is secondarily liable
o If B takes “subject to the mortgage” - B has no personal liability, only O is personally liable. But if recorded, the mortgage sticks with the land and if O does not pay the mortgage may be foreclosed

Question 20

Holder in Due Course (Mortgages)

Answer 20

takes free of any personal defenses that could have been raised against original creditor, but still subject to real defenses: (1) Material Alteration (2) Duress (3) Fraud in the Factum (a lie about the instrument) (4) Incapability (5) Illegality (6) Infancy (7) Insolvency.

Question 21

Foreclosure of Mortgage

Answer 21

(1) Mortgagee must foreclose by proper judicial action.
- MD: Foreclosure may be non-judicial sale when mortgage allows it and proper notice is given to mortgagor and any junior creditors
(2) Mortgage < debt. mortgagee may bring deficiency action
(3) foreclosure does not effect senior interests which continue to burden the land.
(4) Necessary parties: junior creditors and mortgagor

Question 22

Purchase Money Mortgage

Answer 22

secures a loan that enables the debtor to acquire the encumbered land. Has super-priority on land it finances

Question 23

Mortgage Redemption

Answer 23

(1) Equitable Redemption: recognized up until date of sale. At any time prior to sale mortgagor can redeem the land by paying missed payments, interest, costs. Acceleration clause can require full balance to be paid + interest + costs
(2) Statutory Redemption: recognized in ½ of states (not MD). Give mortgagor right to redeem for some fixed period after foreclosure sale. Amount to be paid is foreclosure sale price. Mortgagor can possess property during statutory period.