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NY Bar 2014 > Real property > Flashcards

Flashcards in Real property Deck (195)
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151

Notice jurisdiction:

BFP always wins, regardless whether he records first
(enough to be BFP)

152

Race-notice jurisdiction:

BFP only wins if he records first
(Must be both BFP and to record first)

153

BFP is

Purchases for value
AND
Without notice someone purchased first

154

Purchaser "for value"

Discount OK. Any "substantial pecuniary consideration"

155

Do recording statutes protect: donees, heirs, devisees?

Nope.
EXC under Shelter Rule

156

Three forms of notice

Actual knowledge
Inquiry - examination of land would reveal, or if recorded instrument references unrecorded transaction
Record - if prev purchaser properly recorded deed.

157

Text of notice statute

"A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof,
unless the conveyance is recorded."

158

Text of race-notice statute

"Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof,
whose conveyance is first recorded."

159

Proper recording of title which always gives notice to subsequent buyers

"Properly recorded
within chain of title"

160

3 chain of title problems

Shelter Rule
Wild Deed
Estoppel by deed

161

Shelter Rule

Someone who buys from BFP steps into BFP's shoes.
"Takes shelter in the status of his transferor"
Including donees etc

162

Wild Deed

O-A transaction not recorded.
A-B transaction recorded - but not connected to title and a search wouldn't find it -- therefore a "nullity". Does not put anyone on notice.
O-C transaction prevails despite the wild deed.

163

Estoppel by deed

One who conveys realty in which he has no interest
is estopped from denying the validity of that conveyance.
(Even though it is a wild deed)

164

MORTGAGE
2 elements

Debt
Voluntary transfer of a security interest in debtor's land to secure debt.

165

Mortgage - SoF

Must be in writing.

166

Equitable mortgage

Giving a deed to the land.
Can use parol evidence to determine parties' intent.

167

If equitable mortgagee sells land to BFP?

Sale valid!

168

Transfer of mortgagee interest?

Indorsing note and delivering to transferee --> "holder in due course"
OR
By executing separate assignment doc

169

HIDC - conditions

Note must be negotiable.
Original note endorsed and signed by named mortgagee
Original note delivered.
Transferee takes note in good faith, no notice of illegality.
Transferee pays value for note - more than nominal.

170

Holder in due course - status

Free of any personal defenses that mortgagor could have raised against orig. mortgagee!
(eg. lack of consideration, fraud in inducement, unconscionability, waiver, estoppel)
(like an endorsed check)

171

HIDC still subject to real defenses:

MADFIFIIII
Material Alteration
Duress
Fraud in the factum (misrep re instrument)
Incapacity
Illegality
Infancy
Insolvency

172

When does lien remain on land through sale?

When mortgage instrument is properly recorded.
"All recording statutes apply to mortgages as well as deeds"

173

If mortgagee bank records after subsequent sale?

Notice jurisdiction: Buyer wins if BFP
Race-notice jurisdiction (NY): Bank wins since it won race to record.

174

Is buyer of mortgaged property liable for the debt?

Depends:
If B "assumed mortgage" - Buyer primarily liable; debtor secondarily liable.
If B "takes subject to mortgage" - Only debtor liable, but bank can still foreclose on the land.

175

Foreclosure - order of priority for use of proceeds

1. Attorney fees and foreclosure expenses.
2. Interest on 1st bank's mortgage.
3. Pay off mortgages in order of priority.

176

Personal claim against debtor for balance not covered by foreclosure is called?

"Deficiency judgment"

177

Those with interests subordinate to the foreclosing party are called ?

"Necessary parties to foreclosure action"
Foreclosure terminates interests junior to the mortgage being forclosed, but:
They must be joined to proceeding. If not, unjoined necessary party's mortgage remains on land after foreclosure sale!

178

If a junior mortgage forecloses?

The senior mortgage stays on the land through disclosure.
Foreclosure buyer should pay off 1st mortgage and deduct from purchase price

179

Priority among creditors determined by:

Recording. First in time (to record) first in right.

180

"Purchase money mortgage"

Superior to earlier collateral rights not relating to purchase (such as floating charge - "after acquired collateral clause".
Must be recorded.