Real Property Flashcards
What is mortgage
Mortgage is a security interest in land, where the debtor-borrower becomes mortgagor, and lender mortgagee. Upon foreclosure, the lender can force a judicial sale to satify the debt.
what is effect of deed of trust
A debtor gives a deed of trust to a third party who holds it so that in the event of foreclosure the lender can instruct the trustee to sell it.
When does title to land transfer in the context of the installment contract?
Installment purchase obtain title to land only when all installments have been fully paid. Until the, the lender retains an interest.
When does title to land transfer in the context of the mortgagee?
the title to land transfer only after note and mortgage are transferred to the same person. A new lender has then an interest in the property.
When does title to land transfer in the context of the mortgagor?
Unless the mortgagor satisfies the debt prior to conveyance, the grantee takes the property subject to the mortgage. If the grantee assumes the mortgage, he will be personally and primarily liable for the mortgage. If not, he will be secondarily liable behind the debtor/grantor. However, modernly due-on-sale clause requires debtor to satisfy the debt before conveyance.
What is lien theory of property ownership?
Jurisdictions following lien theory of property ownership consider the mortgagor to be the owner and mortgagee to merely hold a security interest in the property.
What is title theory of property ownership?
Jurisdiction following title theory of property ownership consider the mortgagor to transfer title to the mortgagee.
What is foreclosure?
When a debtor defaults on mortgage loan, the mortgaged property is sold to satisfy the debt.
What is redemption in the contest of mortgage foreclosure?
Redemption occurs when a mortgagor redeems mortgaged property by paying the entire amount due on mortgage prior to foreclosure sale. If an acceleration clause exists, the mortgagor may be required to pay the entire amount of the debt in order to redeem the mortgage.
How is the priority of competing mortgages determined?
After a foreclosure sale, a mortgage’s priority is generally determined by the time the mortgage was placed on the property. except when the mortgagee fails to record his interest; a purchase money mortgage exists; There was a modification of senior mortgage after a junior mortgage was recorded.
How are the proceeds of mortgage foreclosure distributed?
Proceeds are used first to pay the cost, then to pay attorney’s fees and court fees, then to pay the principal plus interest on the foreclosed loan, and any remaining proceeds are used to pay other loans. The mortgagor will retain the remaining proceeds, if any, which are left after payment of the aforementioned expenses.
When a may a court treat a sale of land by absolute deed as an equitable mortgage and require buyer/creditor to foreclose by judicial action?
When a debtor sells a property to a creditor by absolute deed instead of mortgage, a court may treat the sale as equitable mortgage by looking at factors such as : a debt or promise to pay by the deed’s grantor. - The grantee’s promise to return the land to the grantor after the debt is paid
- If the amount paid to the grantor/debtor is much lower than the property’s value
- The grantor’s financial distress
- Prior negotiations between the parties
