V. Financing Real Property

Question 1

Slone v. Calhoun

Answer 1

An installment-land-contract provision stating the buyer forfeits her property interest upon default of payment is unenforceable.

Slone enters intallment land contract for puchase of mobile home, Calhoun executed a land contract with Sumner for Slone’s home by mistake. Slone leaves and later finds out the mistake, but forfeiture clause not allowed.

Question 2

Wansley v. First Nat’l Bank of Vicksburg

Answer 2

The sale of real estate by a trustee of a deed of trust will be upheld and accepted for deficiency judgment purposes if the sale is commercially reasonable in all respects.

Wansleys owned 4,200 acres of farmland, default on their loan to bank, bank buys land at foreclosure.

Question 3

Zaman v. Felton

Answer 3

To determine whether a purported land sale and subsequent leaseback are in fact an equitable mortgage, a trial court applies an eight-factor framework considering both the form of the transaction and the circumstances surrounding the parties.

Felton does a sale and leaseback to Zaman, with option for a buy back. Zaman refuses to return property after Felton gives back the $85,000 paid for the property.

Question 4

Eight considerations for an equitable mortgage (BESFDICC)

Answer 4

(1) Express statements - any express statements indicating that the seller intended to retain ownership;
(2) Substantial difference - a substantial difference between the purchase price and the actual value of the property;
(3) Buy Back - a buy-back option;
(4) Continued Possession - the seller’s continued possession of the property;
(5) Continued Obligations - the seller’s continuing homeowner obligations, such as paying property taxes;
(6) Disparity in bargaining - any disparity in the sophistication or bargaining position of the parties;
(7) Irregular purchase - an irregular purchase process; and
(8) Financial Distress - any financial distress the seller was in, including the imminence of foreclosure.