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Lien, security interest, Black’s Law Dictionary (10th ed. 2014).
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1What is a lien?
What is a lien?2What is a mortgage?
What is a mortgage?3In the context of mortgages, what is a note?
In the context of mortgages, what is a note?4What is the relationship between a note and a mortgage?
What is the relationship between a note and a mortgage?5In a mortgage relationship, who are the mortgagor and the mortgagee?
In a mortgage relationship, who are the mortgagor and the mortgagee?6What is a default?
What is a default?7What is foreclosure?
What is foreclosure?8What does it mean for a mortgage to have priority over other mortgages?
What does it mean for a mortgage to have priority over other mortgages?9What is a deed of trust, when used as a method of financing real property?
What is a deed of trust, when used as a method of financing real property?10In modern property law, are deeds of trust generally treated as mortgages for purposes of foreclosure protections?
In modern property law, are deeds of trust generally treated as mortgages for purposes of foreclosure protections?11What is a power-of-sale clause in a mortgage or other security arrangement?
What is a power-of-sale clause in a mortgage or other security arrangement?12What is an equitable mortgage?
What is an equitable mortgage?13What are the major factors that a court will consider in determining whether a given transaction ought to be treated as an equitable mortgage?
What are the major factors that a court will consider in determining whether a given transaction ought to be treated as an equitable mortgage?14A teacher owned a property in fee simple absolute. The teacher needed $10,000 but did not have the money. The teacher called his friend and offered...
A teacher owned a property in fee simple absolute. The teacher needed $10,000 but did not have the money. The teacher called his friend and offered to convey the property to the friend for $10,000—even though it was worth $100,000. The teacher proposed that, after the sale, he and the friend would enter into a leasing arrangement for a 15-month term, during which the teacher would pay $1,000 per month to occupy and possess the property. Once the last lease payment was made, the teacher would have the option to repurchase the property for $1,000. The friend paid the teacher the $10,000, and the teacher gave the friend a deed. After making 14 monthly payments, the teacher defaulted.The friend initiated eviction proceedings. The teacher claimed the transaction was an equitable mortgage, and thus the friend should have to go through the foreclosure process. Will the teacher succeed?15In the law of real property, what is a sale-leaseback arrangement?
In the law of real property, what is a sale-leaseback arrangement?16A buyer purchased a property from a seller. The buyer’s friend loaned him the money for the purchase. Instead of conveying a mortgage as a security...
A buyer purchased a property from a seller. The buyer’s friend loaned him the money for the purchase. Instead of conveying a mortgage as a security interest for the note, the buyer (the trustor) executed a deed conveying the property in trust to his sister (the trustee), in exchange for the friend (the beneficiary) advancing the loan to the buyer. The sister had the power to foreclose on the land on the friend’s behalf if the buyer defaulted on the underlying debt. However, once the underlying debt was paid by the buyer, the sister was required to reconvey the property to the buyer. Is this arrangement a sale-leaseback?17What is a purchase-money mortgage?
What is a purchase-money mortgage?18In foreclosure, do holders of purchase-money mortgages have priority over other lien holders whose liens attach to the property through the mortgagor?
In foreclosure, do holders of purchase-money mortgages have priority over other lien holders whose liens attach to the property through the mortgagor?19What is a future-advance mortgage?
What is a future-advance mortgage?20What is the priority rule for future-advance mortgages?
What is the priority rule for future-advance mortgages?21What is an installment land contract?
What is an installment land contract?22At common law, under a land installment contract, what remedies could the seller pursue if the buyer defaulted on the payments?
At common law, under a land installment contract, what remedies could the seller pursue if the buyer defaulted on the payments?23Under modern property law, do buyers under installment land contracts generally receive foreclosure protections similar to those available to mortg...
Under modern property law, do buyers under installment land contracts generally receive foreclosure protections similar to those available to mortgagors?24Under modern property law, if the buyer defaults on an installment land contract, do some states place restrictions on the seller’s ability to reta...
Under modern property law, if the buyer defaults on an installment land contract, do some states place restrictions on the seller’s ability to retain all payments the buyer has made?25What is an absolute conveyance?
What is an absolute conveyance?26May a property owner mortgage the property to secure someone else’s debt?
May a property owner mortgage the property to secure someone else’s debt?27May one piece of land be encumbered by more than one mortgage?
May one piece of land be encumbered by more than one mortgage?28In legal terms, what happens to a mortgage if the underlying debt is paid?
In legal terms, what happens to a mortgage if the underlying debt is paid?29Is it possible to remove a mortgage from a piece of land while the underlying debt remains in effect?
Is it possible to remove a mortgage from a piece of land while the underlying debt remains in effect?30An engineer loaned $50,000 to a doctor without initially seeking security on the debt. The doctor had recently missed a few payments on the loan. T...
An engineer loaned $50,000 to a doctor without initially seeking security on the debt. The doctor had recently missed a few payments on the loan. The doctor’s friend decided to help the doctor by executing a mortgage of a property the friend owned to the engineer to securitize the doctor’s debt. Although the friend executed the mortgage, he did not execute a note or any legal document that would make him personally liable to the engineer. If the doctor continues to fail to make payments to the engineer, may the engineer foreclose on the property?31What is the lien theory of mortgages?
What is the lien theory of mortgages?32What is the title theory of mortgages?
What is the title theory of mortgages?33What is the intermediate theory of mortgages?
What is the intermediate theory of mortgages?34What are the three main theories of mortgages?
What are the three main theories of mortgages?35A landowner’s title was subject to a mortgage that secured a $200,000 loan. When the mortgage was conveyed, it vested legal title to the landowner’...
A landowner’s title was subject to a mortgage that secured a $200,000 loan. When the mortgage was conveyed, it vested legal title to the landowner’s property in the mortgagee, subject to defeasance in favor of the landowner upon payment of the underlying debt.Is the property in a state that follows the lien theory of mortgages?36In general, if a mortgagor ceases to make payments and abandons the property, may the mortgagee take possession of the mortgaged property before fo...
In general, if a mortgagor ceases to make payments and abandons the property, may the mortgagee take possession of the mortgaged property before foreclosure?37What three risks does a mortgagee face if the mortgagee takes possession of property subject to a mortgage held by the mortgagee before the foreclo...
What three risks does a mortgagee face if the mortgagee takes possession of property subject to a mortgage held by the mortgagee before the foreclosure process has concluded?38An architect was the rightful owner of a property. A bank held a note obliging the architect to pay the bank $300,000, which was secured by a mortg...
An architect was the rightful owner of a property. A bank held a note obliging the architect to pay the bank $300,000, which was secured by a mortgage executed by the architect. The architect lost her job and missed a few monthly mortgage payments, which placed the architect in default on the note. However, the bank had not yet commenced foreclosure proceedings. Assuming the property is in a lien-theory state, is the bank entitled to take possession of the property at this point?39A landowner gave a friend a purchase-money mortgage to secure a loan enabling the landowner to buy a property. After a few years, the landowner sto...
A landowner gave a friend a purchase-money mortgage to secure a loan enabling the landowner to buy a property. After a few years, the landowner stopped making monthly mortgage payments and abandoned the property. At the time the issue arose, the friend had not commenced foreclosure proceedings. Given the landowner’s abandonment of his property, may the friend take rightful possession of the realty?40What is the equity of redemption?
What is the equity of redemption?41What is an acceleration clause in a mortgage?
What is an acceleration clause in a mortgage?42Under an equity of redemption, what amount must the mortgagor pay to redeem the property, absent an acceleration clause?
Under an equity of redemption, what amount must the mortgagor pay to redeem the property, absent an acceleration clause?43If a mortgagee exercises its rights under an acceleration clause, what amount must the mortgagor pay to redeem the property in equity?
If a mortgagee exercises its rights under an acceleration clause, what amount must the mortgagor pay to redeem the property in equity?44May an equity of redemption be exercised after the foreclosure sale is complete?
May an equity of redemption be exercised after the foreclosure sale is complete?45What is the prohibition against clogging the equity of redemption?
What is the prohibition against clogging the equity of redemption?46Who else besides the mortgagor may exercise an equity of redemption?
Who else besides the mortgagor may exercise an equity of redemption?47Two years ago, a doctor bought a property with the help of a bank, which extended a purchase-money mortgage to the doctor. The note associated with...
Two years ago, a doctor bought a property with the help of a bank, which extended a purchase-money mortgage to the doctor. The note associated with the mortgage included a provision stating that the doctor waived her equity of redemption. Later, the doctor was behind in her mortgage payments, and the bank had initiated foreclosure proceedings against her. The doctor’s aunt had recently passed away and left the doctor twice the principal owed on her mortgage. May the doctor discharge the mortgage by paying off the full, accrued balance of the mortgage, together with all interest and other charges that have accumulated?48In general, may a mortgagor sell or otherwise transfer the mortgaged property?
In general, may a mortgagor sell or otherwise transfer the mortgaged property?49What does it mean for a buyer to take property subject to an existing mortgage?
What does it mean for a buyer to take property subject to an existing mortgage?50In general, must a buyer of mortgaged property have notice of the mortgage in order to take subject to the mortgage?
In general, must a buyer of mortgaged property have notice of the mortgage in order to take subject to the mortgage?51What does it mean for a buyer to assume an existing mortgage?
What does it mean for a buyer to assume an existing mortgage?52If a buyer takes property subject to a preexisting mortgage, does the buyer automatically assume the underlying debt?
If a buyer takes property subject to a preexisting mortgage, does the buyer automatically assume the underlying debt?53An accountant owned a property that was valued at $200,000, though it was subject to a mortgage held by a bank, securing a $150,000 loan. The accou...
An accountant owned a property that was valued at $200,000, though it was subject to a mortgage held by a bank, securing a $150,000 loan. The accountant sold the property to a friend. After taking ownership of the property, the friend agreed to make the payments on the loan. After the friend failed to make any payments, the bank sued the friend and won a personal judgment against the friend for $150,000. Based on this result, when the friend bought the property did she take subject to the mortgage?54If a buyer of property takes subject to a mortgage but does not assume the mortgage debt, what is the buyer’s liability on the note?
If a buyer of property takes subject to a mortgage but does not assume the mortgage debt, what is the buyer’s liability on the note?55If a buyer of property takes subject to a mortgage but does not assume the mortgage debt, what is the original debtor’s liability on the note?
If a buyer of property takes subject to a mortgage but does not assume the mortgage debt, what is the original debtor’s liability on the note?56If a buyer of property assumes a mortgage debt as part of the sale, what are the buyer’s liabilities on the note?
If a buyer of property assumes a mortgage debt as part of the sale, what are the buyer’s liabilities on the note?57If a buyer of property assumes a mortgage debt as part of the sale, what are the original debtor’s liabilities on the note?
If a buyer of property assumes a mortgage debt as part of the sale, what are the original debtor’s liabilities on the note?58A baker owned a property valued at $800,000, though it was subject to a mortgage securing a $500,000 loan held by a bank. The baker decided to sell...
A baker owned a property valued at $800,000, though it was subject to a mortgage securing a $500,000 loan held by a bank. The baker decided to sell the property to a friend for $300,000. The friend took the property subject to the mortgage, instead of assuming the mortgage. If the baker defaults on repaying the bank, what are the bank’s two options to recoup its funds?59What is subrogation?
What is subrogation?60In general, will a secondary obligor who pays a mortgage debt be entitled to subrogation?
In general, will a secondary obligor who pays a mortgage debt be entitled to subrogation?61In general, will a joint obligor be entitled to subrogation if he pays more than his share of a joint mortgage debt?
In general, will a joint obligor be entitled to subrogation if he pays more than his share of a joint mortgage debt?62Why does subrogation typically require the payor to satisfy the entire mortgage debt, instead of some part of the debt?
Why does subrogation typically require the payor to satisfy the entire mortgage debt, instead of some part of the debt?63In general, may a payor obtain subrogation if the payor pays off the debt gratuitously, instead of doing so to protect his own interests?
In general, may a payor obtain subrogation if the payor pays off the debt gratuitously, instead of doing so to protect his own interests?64If a payor fails to satisfy the general requirements for subrogation, what are the two methods by which the payor may nevertheless obtain subrogation?
If a payor fails to satisfy the general requirements for subrogation, what are the two methods by which the payor may nevertheless obtain subrogation?65A landowner had a mortgage on a property in which she held a life estate. The landowner’s son was the remainderman and had an interest inferior to ...
A landowner had a mortgage on a property in which she held a life estate. The landowner’s son was the remainderman and had an interest inferior to that of the mortgagee. The landowner started to fall behind on her mortgage payments, so the son unilaterally paid the amount of the landowner’s late mortgage payments to protect his future interest in the property. Is the son entitled to subrogation?66If a mortgagor sells a property in violation of a provision in the mortgage documents expressly prohibiting the mortgagor from selling the property...
If a mortgagor sells a property in violation of a provision in the mortgage documents expressly prohibiting the mortgagor from selling the property, does this affect the buyer’s interest in the property?67What is a due-on-sale clause in mortgage documents?
What is a due-on-sale clause in mortgage documents?68In general, are a mortgagee’s rights under the note and the mortgage assignable?
In general, are a mortgagee’s rights under the note and the mortgage assignable?69In most states, if a mortgagee assigns a note, is the mortgage automatically assigned with it?
In most states, if a mortgagee assigns a note, is the mortgage automatically assigned with it?70In most states, may a mortgagee assign the mortgage without the corresponding note?
In most states, may a mortgagee assign the mortgage without the corresponding note?71If a mortgage note is payable in installments, does the debtor have a common-law right to pay off the note early?
If a mortgage note is payable in installments, does the debtor have a common-law right to pay off the note early?72In relation to mortgages, what is a prepayment penalty?
In relation to mortgages, what is a prepayment penalty?73In terms of residential mortgages, what seven requirements must be met for a prepayment penalty to be permissible on a newly issued mortgage?
In terms of residential mortgages, what seven requirements must be met for a prepayment penalty to be permissible on a newly issued mortgage?74What is a deed in lieu of foreclosure?
What is a deed in lieu of foreclosure?75May mortgage and note documents require the mortgagor to promise to resolve a default by assigning the property to the mortgagee through a deed in ...
May mortgage and note documents require the mortgagor to promise to resolve a default by assigning the property to the mortgagee through a deed in lieu of foreclosure?76What is foreclosure?
What is foreclosure?77What are the three main types of foreclosure?
What are the three main types of foreclosure?78What is strict foreclosure?
What is strict foreclosure?79What is foreclosure under power of sale?
What is foreclosure under power of sale?80Do states often impose procedural requirements on power-of-sale foreclosures to protect mortgagors?
Do states often impose procedural requirements on power-of-sale foreclosures to protect mortgagors?81What is foreclosure by judicial sale?
What is foreclosure by judicial sale?82A landowner owned a property that was encumbered by a purchase-money mortgage held by a bank. The landowner began to run significantly behind on he...
A landowner owned a property that was encumbered by a purchase-money mortgage held by a bank. The landowner began to run significantly behind on her monthly mortgage payments. In response, the bank brought a suit seeking an order of the court to fix a time by which the landowner must redeem. The judge set the period at six months. The landowner did not end up redeeming within this period, and thus her equity of redemption was cut off. The court then proceeded to transfer title outright to the bank. Is this an example of a foreclosure under power of sale?83In lieu of foreclosure, are the parties free to renegotiate the underlying debt?
In lieu of foreclosure, are the parties free to renegotiate the underlying debt?84What is an acceleration clause in a mortgage?
What is an acceleration clause in a mortgage?85A landowner borrowed money from a bank to buy a property. The purchase-money mortgage was for $100,000. The bank forgot to include an acceleration ...
A landowner borrowed money from a bank to buy a property. The purchase-money mortgage was for $100,000. The bank forgot to include an acceleration clause in the mortgage. The landowner lost her job and fell behind eight months on her $500 monthly mortgage payments. The bank initiated foreclosure proceedings. Afterward, the landowner got a new job that provided her a $20,000 signing bonus. The landowner wanted to use the bonus to exercise her right to the equity of redemption. Does the landowner have enough money to do so?86What is the first-in-time rule for determining the priority of mortgages and other liens upon foreclosure?
What is the first-in-time rule for determining the priority of mortgages and other liens upon foreclosure?87May a senior mortgagee agree to give up its priority in favor of a junior mortgage?
May a senior mortgagee agree to give up its priority in favor of a junior mortgage?88If a mortgagor takes out one mortgage to pay off another mortgage, what priority will the new mortgage have?
If a mortgagor takes out one mortgage to pay off another mortgage, what priority will the new mortgage have?89What are the effects of a foreclosure on a junior interest holder?
What are the effects of a foreclosure on a junior interest holder?90Is an interest senior to a foreclosing mortgage legally affected by the foreclosure proceedings?
Is an interest senior to a foreclosing mortgage legally affected by the foreclosure proceedings?91In general, what interests does a foreclosure buyer obtain in the property and in the mortgage that is being foreclosed?
In general, what interests does a foreclosure buyer obtain in the property and in the mortgage that is being foreclosed?92A buyer wanted to purchase a property from its owner for $400,000. Not having sufficient funds, the buyer turned to a bank, which extended $250,000...
A buyer wanted to purchase a property from its owner for $400,000. Not having sufficient funds, the buyer turned to a bank, which extended $250,000 to the buyer in exchange for a purchase-money mortgage. Two days later, the owner agreed to loan the buyer an additional $100,000 in exchange for a purchase-money mortgage. Five years later, the buyer lost the property through foreclosure by judicial sale. If the sale proceeds are not enough to cover the debt owed to both the owner and the bank, which of the two lenders has priority?93In general, if the proceeds of foreclosure are inadequate to satisfy all the outstanding debt secured by the foreclosing mortgage, may the mortgage...
In general, if the proceeds of foreclosure are inadequate to satisfy all the outstanding debt secured by the foreclosing mortgage, may the mortgagee bring suit against the mortgagor for payment of the remaining debt?94How will the proceeds of a foreclosure sale be applied in terms of priority?
How will the proceeds of a foreclosure sale be applied in terms of priority?95In the context of mortgages, what is a statutory right of redemption?
In the context of mortgages, what is a statutory right of redemption?96To exercise the statutory right of redemption, must the mortgagor generally pay the amount of the outstanding debt?
To exercise the statutory right of redemption, must the mortgagor generally pay the amount of the outstanding debt?97To whom must the mortgagor pay the foreclosure sale price to exercise the statutory right of redemption?
To whom must the mortgagor pay the foreclosure sale price to exercise the statutory right of redemption?98A landowner bought a property with the assistance of a bank, which extended a loan to the landowner. The property was located in a state that provi...
A landowner bought a property with the assistance of a bank, which extended a loan to the landowner. The property was located in a state that provided a statutory right of redemption. The landower began to run behind on mortgage payments, and the bank initiated foreclosure proceedings. Ultimately, the property was sold through foreclosure by judicial sale. Three days after the foreclosure sale, the landowner received an unexpected windfall from the lottery. May the landowner use his right of equity of redemption to get his property back?99In terms of priority, how is a purchase-money mortgage treated in relation to other mortgages and liens on real property?
In terms of priority, how is a purchase-money mortgage treated in relation to other mortgages and liens on real property?100If a buyer takes a property subject to a mortgage without assuming the underlying debt, what is the seller’s and buyer’s liability for the debt?
If a buyer takes a property subject to a mortgage without assuming the underlying debt, what is the seller’s and buyer’s liability for the debt?101If a buyer takes a property subject to a mortgage and assumes the underlying debt, what is the seller’s and buyer’s liability for the debt?
If a buyer takes a property subject to a mortgage and assumes the underlying debt, what is the seller’s and buyer’s liability for the debt?102Is a mortgagee (creditor) required to accept a mortgagor’s (borrower’s) offer of a deed in lieu of foreclosure?
Is a mortgagee (creditor) required to accept a mortgagor’s (borrower’s) offer of a deed in lieu of foreclosure?103What is the function of an acceleration clause in a mortgage?
What is the function of an acceleration clause in a mortgage?104A foreclosure on real property extinguishes liens junior to the foreclosing mortgage if ________.
A foreclosure on real property extinguishes liens junior to the foreclosing mortgage if ________.