Real Property

Question 1

A Mortgage indicates what?

Answer 1

the exsistence of a debt.

Question 2

Who is the Mortgagor?

Answer 2

the debtor

Question 3

Who is the mortgagee?

Answer 3

usuually is abank who lends money

Question 4

Who is libale if a mortgagor gives away her interest “subject” to the mortgage?

Answer 4

the original mortgagor is liable

Question 5

Who is liable if the new transferee “assumes” the interest

Answer 5

both the original mortgagor and the new transferee are liable

Question 6

Who is liable if there is a novation?

Answer 6

only the new transferee is liable

Question 7

What is the lien theory?

Answer 7

• where the mortgagee only has a lien on the land unless and until there is a foreclosure sale
• treats a mortgage as a lien that does not severe a joint tenancy

Question 8

What is the title theory?

Answer 8

• title is transferred to the bank right away upon loaning the money
  *mortgage does sever a joint tenancy and coverts it into a tenancy in commom

Question 9

When can a bank begin foreclosure?

Answer 9

upon default

Question 10

What is Intermediate Title

Answer 10

MTOR has legal equitable title until default on payment occurs

Question 11

What are the two kinds of mortgages?

Answer 11

• Purchase Money Mortgage - a person takes out a loan tp purchase property
• Future Advance Mortgate - a line of credit is used for home equity, constuction, business, and commerical loans

Future Advance Mortgage often referred to as a second mortgage

Question 12

Tenant Duty to Repair (Common Law)

Answer 12

Under common law estate theory, a landlord had no duty to repair the premises during the duration of the lease. This duty extended to repairs that kept the building wind and water tight.

Question 13

Tenant Duty and Waste (Common Law)

Answer 13

the tenant had a duty not to commit waste, which included within it a duty to repair the premises.

Question 14

What does not violate a lease if a tenant sublets, but has a anti-assignment agreement that prohibits subletting?

Answer 14

If someone uses the premisies for recreational use. A person cannot commit waste nor allow another to rest at the premesis

Question 15

A grantee who promises to pay value ** considered to be a subsequent purchaser for value under the recording act.

Answer 15

• is not
• and thus may not take advantage of the act to render invalid a prior unrecorded conveyance of which he has no other notice.

A mortg isnt protected if grantee only promises to pay

Question 16

If a jurisdiction recognizes both equitbale and statory rights of redemption, when can a mortgager not waive the right to redemtion?

Answer 16

when a mortgage is created
the clause purporting to waive the mortgagor’s right of redemption after a foreclosure sale is ineffective

*keep in mind some states, right to redeem expires with forclosuer sale

Question 17

When will a junior mortgage prevail over a senior mortgage’s modification a loan?

Answer 17

only to the extent that the modification materially prejudices the holder of the junior mortgage. However, rescheduling an installment payment generally does not materially prejudice the junior mortgage holder.

Question 18

Purchase Money Mortgage (PNM)

Answer 18

A mortgage that covers part or all of the purchase price (as oppoased to a mortgage obtained to remodel a kitchen). A PNM that is recorded has priority over other types of mortgages.

Question 19

Future Advance Mortgage

Answer 19

a future mortgage is any line of credit or home equity

Question 20

“subject to the mortgage”

Answer 20

the buyer has no responsibility to pay on it.
So as a seller, if you sell a mortgaged home to someone “subject to the mortgage,” and they default on the loan, the bank is going after you

Question 21

“assumes the mortgage”

Answer 21

the buyer becomes personally liable for it, along with the original borrower.
if the buyer “assumes the mortgage,” the bank has a choice, they can go after you or the person you sold it to.

Question 22

If a senior mortgage is modified, a junior mortgage can leapfrog and take priority in the payout of foreclosure proceeds if:

Answer 22

• The modification materially prejudices the holder of the junior mortgage
• Modifications that normally do not materially prejudice the holder of the junior mortgage include: (1) extension of the mortgage maturity date; and (2) rescheduling installment payments.

Question 23

What counts as material prejudice?

Answer 23

1. increasing the amount of principal; or
2. increasing the interest rate

Question 24

Equitable Right of Redemption

Answer 24

Right automatically exists in interest of equity.
* Exists any time up until there has been a foreclosure sale. Until that time, the debtor can redeem by paying off the debt or bringing the loan current, if allowed. As soon as the foreclosure sale occurs, there is no more equitable right of redemption.

Question 25

Statutory Right of Redemption

Answer 25

Debtor will have a limited time (up to 12 months) following the foreclosure sale to go to the buyer and force them to sell the property at the foreclosure price!

Question 26

Adverse Possession

Answer 26

Possession must be continuous, hostile, actual, open and notorious, it must go on for statutory period (20 years), and be exclusive. Tacking is permitted. Note: if the true owner has a disability (JIM: jail, insane, minor) at the time the adverse possessor enters, then the statutory time period is tolled until the disability is lifted.

Question 27

Can you give a general warranty deed by adverse possesion?

Answer 27

No, this is because a person does not have markatable title when aquiring land through adverse possesion.

Question 28

what are the two doctrines of risk of loss for land sale contracts?

Answer 28

1.Doctrine of Equitable Conversion - majority view where during the executory period (like escrow) the risk of loss is on the buyer.
2. Uniform Vendor and Purchase Risk Act - minority view where risk of loss is on seller.

Question 29

If in Uniform Vendor Jurisdiction, does ROL stay on seller if buyer takes possesion of the land?

Answer 29

No! ROL will now be on buyer

Question 30

What is the purpose of a recording act?

Answer 30

While a deed need not be recorded to be valid and convey good title, all states have enacted recording acts, which establish priorities among conflicting claims to real property interests and promote certainty of title.

Unless the recording act governs, the common law rule of “first in time, first in right” generally applies to determine priorities

Question 31

What are the three types of recording acts? (Acts that provide whether someone has taken posession of land)

Answer 31

1. notice - A purchaser need only purchase without notice of the prior interest to prevail under a notice statute.
2. race - purchaser who records first prevails, regardless of his knowledge of any prior conflicting interests.
3. race-notice - requires a subsequent purchaser to take the interest without notice of a prior conflicting interest and be the first to record.

Question 32

What is a subsequent bonafide purchaser?

Answer 32

One who purchases property interest, for value, and without notice of a prior interest

Land given as gift does not create bonafide purchaser

Question 33

What are types of notices under notice recording act?

Answer 33

1. Actual Notice - you’re own knowledge of whether someone posesses land
2. Constructive Notice - when someone records deed, this is constructive notice
3. Inquiry Noitce - learned info that would lead reasonble person to inquire further.

Question 34

Ways to Terminate Easments

Answer 34

Question 35

Subrogation

Answer 35

Lien priority is generally determined by who records first. However subrogation allows a third party to fully pay off a senior mortgage to take that senior mortgage as priority so long as the third party had no actual knowledge of the junior interests. This does not harm junior interests because they retain the same lien priority.