SECURITY INTERESTS IN REAL PROPERTY Flashcards
3 Types of Security Interest
- mortgage
- deed of trust
- land sale contract
Equitable Mortgage (2)
- Absolute deed by BORROWER
2. with separate promise of reconveyance by LENDER
Sale Leaseback with Option to Purchase (2)
- BORROWER delivers deed to LENDER
2. then BORROWER leases back property with option to purchase
- Deed of Trust (definition)
2. what happens if not paid?
- given by the DEBTOR to a 3rd p TRUSTEE, who holds deed of trust until loan is paid in full
- (i) trustee can obtain court oder for a foreclosure sale
OR
(ii) trustee can sell property himself at public auction
RIGHT OF REDEMPTION
or
EQUITY OF REDEMPTION
debtor can redeem property AT ANY TIME right up until moment of foreclosure sale by paying (amount due plus interest) UNLESS mortgage includes “acceleration clause”
Acceleration Clause
If included, Debtor must pay off the ENTIRE BALANCE to redeem property
Land Sale Contract (installment)
refers to the arrangement where debtor signs promising to make payments to seller/lender
*seller keeps title until loan paid in full
Waiver (right of redemption: mortgage or deed of trust)
CANNOT BE WAIVE in ORIGINAL but later be waived if SEPARATE CONSIDERATION
Statutory Right of Redemption
1/2 states allow for AFTER foreclosure sale (6 mo-1 yr)
Priorities of Payment on Multiple mortgages
Allocated based on COMMON LAW rule of “first in time, first in right” UNLESS changed by recording statute
Voluntary Subordination
SR (earlier in time) may agree to subordinate to a JR (comes later in time)
Purchase Money Mortgage
mortgage taken to BUY property
-receives priority over other mortgages executed PRIOR to PMM, even if recorded first
Change in SR mortgage
M’or does anything to INCREASE a SR mortgage, the SR mortgage loses priority over JR to the extent of the change
Foreclosure (SR vs JR)
Foreclosure wipes out all JRs (that came later), but does NOT wipe out SR (SR continues in place and buyer takes subject to SR)
Protections to holders of JR mortgages
generally have the right to pay off any mortgage being foreclosed to keep their interest from being wiped out
- notice
- opportunity to bid
Distribution of Proceeds from Foreclosure (4)
- pay cost of foreclosure sale
- pay off mortgage foreclosed on
- pay JRs (in order of priority)
- pay remaining to M’or
Anti-Deficiency Statute
M’ee/C’or sue debtor personally for balance due on the note
Forfeiture clause (3)
if debtor misses payment the seller can:
(i) cancel the contract
(ii) keep all movies paid to date AND
(iii) retake property
*seller limited to this remedy, cannot get damages or specific performance
Due on Sales Clause
if the M’or transfer the property without M’ee consent, THE FULL AMOUNT OF LOAN becomes immediately due and payable
Lateral Support (defintion)
Landowner has the right to have her land supported by adjoining landowners and strict liability results if land not supported
- even with use of due care
- if structure on land that caves in, ONLY IF the land would have caved regardless of structure there
Subjacent Support (defintion) and (3)
surface owners have the right to have their land supported from the bottom and strict liability will result if the land not supported
- mineral rights
- legally severed
- from surface rights
Riparian rights (MAJORITY)
refers to property that borders lake or stream
DOMESTIC: may use ALL water for this purpose
NON(commercial/industrial): REASONABLE USE
Prior Appropriation (MINORITY rule to riparian rights)
first person to make beneficial use of water
Underground water (percolating or well water)
landowner entitled to reasonable use
use ON property, can’t export elsewhere
Surface water (runoff or flood)
NATURAL FLOW: no changes , except reasonable means
COMMON ENEMY: can do whatever with floodwater, reasonable or not
