Glossary of MBE Property 2
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- 5 Types of Security Interests
- 1. Mortgage
Mortagee= Creditor, Note holder
2. Deed of Trust. Debtor/Trustor gives deed 3p T'ee connected to Lender. If default, T'ee can foreclose deed by sale.
3. Installment Land Contract
4. Absolute Deed: Deed as collateral for loan. Ct can find "equitable" mortgage.
5. Sale-Leaseback: Owner sells land and leases it back from grantee.
- Transfer by Mortgagee (Lender)
- * endorse note *assigns mortgage
*MUST go to same person to effect complete transfer.
MTG w/o Note: (Split) Note auto follows Mtg or tx of Mtg w/o Note is void.
Note w/o MTG: Mtg auto follows properly tx Note (no written assign req'd)
- Methods of Note Transfer
- 1. Endorse and deliver original.
2. Separate document of assignment.
* Only method 1 creates a Holder in Due Course
- Requirement to be
Holder in Due Course
- 1. Negotiable note" payable to Bearer or Payee
2. Endorsed by name payee
3. Original delivered to transferee
4. Tr'ee takes in good faith and pays value
EFFECT: Takes note free of personal defenses maker could raise.
- Payment to former Mortgagee
- Because note embodies obligation, payments must be made to possessor of note OR they don't count and can be forced to pay twice.
- Transfer by Mortgagor (Debtor)
- Transfer by convey deed
1. Gr'EE takes subject to Mtg b/c it remains on the land.
2. Assumption: G'EE signs assumption agmt and then personally liable for mtg.
3. Rel'p of parties: G'EE primarily liable, Lender is 3PB, Original M'OR liable as surety. XX: If Lender and G'EE modify, original M'OR discharged of liability.
- Due-On-Sale Clause
- Mortgage clause requires full payment of loan if M'OR transfer any interest w/o Lender's consent
- Foreclosure (Junior Interest Rules)
- 1. FC wipes out all interests created after MTG being f/cl
Interests inc: jr mtg, liens, leases, easements.
2. Jr interests and have right to redeem to save interest - must have notice (be parties to FC action)
- Foreclosure (Senior Interest Rules)
- FC Action has NO EFFECT on interest senior to mtg being f/cl. Buyer at FC sale takes prop subject to interest, but is NOT personally liable for sr. interests.
- Priority of Mortgages as Foreclosure (General rule)
- Priority of mtgs determines by time place on property. When mtg FC, buyer takes title as it existed when THAT mtg place (that's why jr interests are terminated)
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