Express Easements and Termination and Extinguishments

Question 1

mortgages

Answer 1

two approaches to getting repayment

1. mortgage
2. instalment sale contract

Question 2

two documents part of every mortgage

Answer 2

1. the promissory note
2. the mortgage itself

Question 3

sale or transfer of mortgaged premises

Answer 3

the mortgage is paid off at closing

unless the purchaser takes subject to, or assumes the mortgage

Question 4

subject to mortgage

Answer 4

he is NOT personally liable for payment

if mortgage forecloses and property does not bring enough in foreclosure sale to pay outstanding mortgage,

the mortgage can not sue the purchaser for the balance

• mortgagee can sue original person who took mortgage for the balance,

Question 5

due on sale

Answer 5

does not mean one who purchases property subject to mortgage becomes personally liable

a due on sale provides if mortgagor sells the mortgage property , the mortagee can require that the debt be immediately paid

Question 6

assumption of mortgage

Answer 6

usually in mortgagor interest to persuade new purchaser to assume the payment

makes purchaser liable for the payment , both to original mortgagor and the mortgagee,

If someone takes over a mortgage (assuming purchaser) and the property is later foreclosed, the lender may try to get money from them first (deficiency judgment) before going after the original borrower.

If the lender does get money from the original borrower, that person can then try to get that money back from the assuming purchaser by suing them.

Question 7

novation

Answer 7

mortgagor may get mortgagee to substitute the new purchaser for the original mortgagors own personal liability.

means new purchaser personally liable for mortgage, but original mortgage is completely off the hook

Question 8

assignment of mortgage

Answer 8

will often liquidate interest by selling the mortgage to someone else

Question 9

no right to prepay

Answer 9

mortgagor does not automatically have the right to prepay the full amount before the maturity date

mortgagee has right to have his money earning interest

• mortgagor should insert a clause in the mortgage that gives him a right of prepayment

some states, mortgager is required to given the right to prepay after a certain period,, sometimes may be a prepayment penalty

Question 10

mortgage to secure someones debt

Answer 10

person may grant mortgage on their own property to secure repayment of someone else’s debt

Question 11

absolute deed as substitute for mortgage

Answer 11

sometimes even through it looks like a sale, its actually a loan with a buyback option for the borrow

An absolute deed as a substitute for a mortgage is a legal arrangement where a property owner transfers ownership of their property to a lender as security for a loan, but with an agreement that the lender will transfer the property back to the owner once the loan is repaid. This arrangement is often used when a traditional mortgage is not feasible or desired by either party.

ezz–> - The property owner gives the property to the lender as collateral for a loan.
- Once the loan is paid off, the lender gives the property back to the owner.
- It’s like a mortgage but structured differently, using the property deed as security.

courts see and treat this like it is a mortgage, meaning the lender has to follow foreclosure rules if the borrower defaults

Question 12

redemption of mortgage

Answer 12

when mortgage is paid off, property has been redeemed from mortgage

Question 13

equity of redemption

Answer 13

before mortgage has been paid off

up until. the moment when foreclosure sale is completed if mortgagor doesn’t pay mortgage

mortgagor is said to have an equity of redemption, e.g. the right to pay off the mortgage and own the property outright

Question 14

how can a mortgagee be entitled to take possession of the property before the mortgage is paid off or the property foreclosed on IMEDIATELY

Answer 14

abandonment,
missing payment not enough
duties of mortgagee in possession (e.g.. maintain the property in reasonable condition)
foreclosure

Question 15

types of foreclosure

Answer 15

modern day foreclosure - by sale

judicial foreclosure sale - sale must be conducted under judicial supervision, requires costly, time consuming, lawsuit

private foreclosure sale - may conduct private foreclosure sale, without need for formal lawsuit or judicial supervision
- mortgagees obligation - to prevent lender from conducting private sale that is unfairly low price , so that borrower has to pay a deficiency or loses some or all of his equity
- use good faith and due diligence, to get highest possible price at sale

Question 16

deed in lieu of foreclosure

Answer 16

when mortgagor can’t or doesn’t want to continue making payments, and the outstanding balance is there, they can just give the entire title of property back to lender, and lender in return agrees not to pursue a deficiency judgement against the mortgagor.

Question 17

what happens if junior creditor forecloses

Answer 17

the foreclosure proceeding can only wipe out the equity and any interest junior to that of the foreclosing creditor,

does not terminate interest in the foreclosed real estate that are senior to the mortgage being foreclosed

Question 18

order of priority for allocation of foreclosure proceeds/funds

Answer 18

1. foreclosure costs
2. property taxes
3. senior lien/mortgage
4. junior liens / mortgages
5. unsecured debts
6. if any funds left , go back to property owner or whomever with interest in property