Recording, Mortgages, and Zoning

Question 1

What is a BFP?

Answer 1

A bona fide purchaser is one who gives valuable consideration for property and who takes without notice (actual, inquiry, or record).

Question 2

Who wins in a notice jurisdiction?

Answer 2

The last BFP who takes.

Question 3

Who wins in a race notice jurisdiction?

Answer 3

The first BFP who records, placing deed in chain of title.

Question 4

What is the shelter rule?

Answer 4

A donee or one who otherwise does not pay valuable consideration who takes from a BFP will prevail against any previous grantee that the BFP would have prevailed against.

Question 5

What is inquiry notice?

Answer 5

Notice that would be obtained from a reasonable inquiry of the property

Question 6

What is record notice?

Answer 6

Notice that would be obtained from a search of publicly available documents, such as a title search

Question 7

What is a wild deed? Is it capable of giving record notice?

Answer 7

A recorded deed that is not in the chain of title, because a previous grantee failed to record it. A wild deed is incapable of giving record notice.

Question 8

If a grantor who does not have title conveys to A, and subsequently acquires title, and then conveys to B, who prevails assuming that both A and B promptly recorded? (majority view and minority view)

Answer 8

Majority view: B prevails because when A recorded, grantor did not have title. Thus, A’s deed was a wild deed and could not give record notice. A’s recording also not part of chain of title, so A would also lose in race notice jurisdiction.

Minority view: A would prevail because of estoppel by deed.

Question 9

True or false: as long as a BFP recorded his deed promptly, a BFP prevails over a party claiming title through adverse possession.

Answer 9

False. Recording statutes do not protect against interests arising by operation of law such as adverse possession. If the adverse possessor satisfied the requirements before BFP took, adverse possessor prevails.

Question 10

When is a mortgage transferable? (list 4 factors

Answer 10

1) when the note accompanying the mortgage is negotiable in form
2) when the note is indorsed and signed by named payee (party to be paid)
3) note is delivered to the transferee
4) transferee must pay value for the note and take in good faith

Question 11

What does a “negotiable in form” mortgage note mean?

Answer 11

The mortgage note is payable “to bearer” or “to the order of” the named payee.

Question 12

After a negotiable in form mortgage note has been transferred, will payments from the mortgagor to the original mortgagee be valid?

Answer 12

No. The mortgagor must pay the transferee, even if the mortgagor has no notice of the transfer.

Question 13

After a non-negotiable mortgage note has been transferred, will payments from the mortgagor to the original mortgagee be valid?

Answer 13

It depends. The mortgagor’s payments to the original mortgagee are effective until the mortgagor receives notice of the transfer.

Question 14

What is redemption in equity?

Answer 14

Any time before the foreclosure sale, the mortgagor may redeem the property by paying the amount due. If the note or mortgage contained an acceleration clause, the entire mortgage must be paid off.

Question 15

What is statutory redemption?

Answer 15

Some states allow the mortgagor to redeem the property for some fixed period (usually 6 months) after foreclosure.

Question 16

How are mortgage priorities determined at a foreclosure sale? (first in…?)

Answer 16

First in time, first in right

Question 17

What is a purchase money mortgage?

Answer 17

A PPM is a security interest in the property given in exchange for funds to purchase that property.

Question 18

When does a purchase money mortgage have priority over other mortgages?

Answer 18

A PPM has priority over all other mortgages that arise prior to the mortgagor’s acquisition of title. However, if the PPM is not recorded, then subsequent mortgage’s might have priority over the PPM under the recording acts.

Question 19

True or false: at foreclosure, all mortgage interests are extinguished.

Answer 19

False. Only junior interests are extinguished. That is why junior mortgagees must be named as party’s. Senior mortgages remain on the property.

Question 20

What is marshaling?

Answer 20

When a mortgagee’s interest covers multiple parcels and that mortgagee forecloses, the court may order the mortgagee to foreclose on the parcels that do not have any subordinate interests and to only foreclose on parcels with subordinate interests if the debt is not satisfied.

Question 21

True or false: a landowner is strictly liable for damage to adjacent land and buildings caused by his excavation of his land.

Answer 21

False. A landowner is strictly liable only if his excavation caused damage to adjacent land without any buildings on it. For a landowner to be liable for damage to land with buildings on it, the claimant must show that the land would have subsided in its natural state (without buildings) OR if the excavation was done negligently

Question 22

What is cumulative zoning?

Answer 22

Cumulative zoning is zoning where the land may be used for the stated purpose or for any higher use.

Question 23

What is noncumulative zoning?

Answer 23

Noncumulative zoning is zoning where the land may be used only for the stated purpose.

Question 24

True or false: nonconforming uses of land are eliminated immediately after a zoning change.

Answer 24

False. Owners can make reasonable changes and adjustments to their property. Owners often also have to receive just compensation under the doctrine of regulatory taking in constitutional law.

Question 25

True or false: When a mortgage is transferred, the note (IOU) and the mortgage (security interest) are automatically transferred together.

Answer 25

True. Unless the transferor expressly reserves the right to either the note or the mortgage, the note and the mortgage are transferred together.