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REAL ESTATE OUTLINE Chapter 1: Opportunity costs: what you are foregoing by taking this route Sunk costs: will not get back; inspection Out-of-pocket: lawyer Chapter 2: Brokers v. Lawyers Usually a broker reps the seller Brokers Duties to clients: 1. Fiduciary 2. Loyalty a. Obtaining best terms for client b. Self dealing is a no no 3. Full Disclosure 4. Confidentiality a. Dual representation: i. Full disclosure is needed A. Commission a. Traditional: when he procures a ready willing and able buyer acceptable to seller b. New Rule: Sale must close c. Transaction fails because a condition in the K is not satisfied = no $ B. Broker’s claims against buyer a. Lack of privity b. Implied K theory c. Tort theory Brokers duty to non-clients 1. no fraud, misrepresentation, etc a. split on if liable for innocent misrep 2. Trend: duty to investigate property and disclose defects reasonably Brokers and Lawyers: 1. Brokers can prepare standard K for sale a. K v. conveyances test: i. No deeds or closing docs b. Simple-complex test c. Incidental test: d. Public interest test 2. Lawyers acting as Brokers a. Regulation of brokers (licensing) has exemption for attorneys i. Incidental test ii. Total exemption

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Chapter 3: Preparing to Contract 1. Precontract: initial investigation; offers/counteroffers 2. Executory Contact: after K signing; completion and satisfaction of conditions and obligations are worked towards 3. Closing: $ for deed/conveyance. All conditions and obligations have been met. 4. Post-closing: Docs get recorded; closing letters Precontract Activities: A. Information gathering about market choices and risks and values i. Latent defects should be disclosed B. Cost of information and Third party factors Contract Formation: Negotiations to legally enforceable promises 1. Consideration 2. offer 3. acceptance 4. legal purpose A. Statute of Frauds a. ID parties, describe property, indicate intent to sell and buy, signed by party resisting enforcement, names price or other consideration B. Writing v. K a. Part Performance i. Oral K is enforceable when they can show substantial reliance on that K. I. possession by the buyer II. change of position a. buyer made repairs or improvements b. buyer paid all or part of $ ii. performance gives evidence to a K, suffers injury b. Equitable Estoppel i. Focus on affirmative actions of the seller that misled the buyer C. Parole Evidence Rule a. 4 corners b. Ambiguity c. Contradiction: not allowed unless there is ambiguity d. Timing D. Integration Clauses E. Letters of Intent a. Agreement to Agree: to give purchaser some type of assurance that a deal is likely to go through before expending additional time and money b. Legal Effect: usually not binding i. Binds parties to move forward in good faith and agree to each other’s proposals of reasonable terms for the final agreement F. Options a. Pay a negotiated price to obtain the option, getting solid right to buy at a specific time, but no obligation to actually buy

warranties. Stated in the K to show materiality and relevance of the info. word b. Includes failure of conditions. allocating executory period risk A. Subsequent Agreements: must it also be written. Warranties: that something is as it was purported to be a. Seller has legal and buyer acquires equitable title. Equitable Conversion: A. etc 3. Representations: express disclosures or statements about important elements of the transaction. Lawyer’s role in explaining K a. 1. . closing date. action c.Downloaded From OutlineDepot. Remedies: states the consequences of particular events in advance a. Equitable Title: real owner of property prior to closing. Party getting it has reduced risk C. As a risk management device 1. Buyer agrees to apply for loan w/in 5 days b. how and when it is to be exercised. Duty to non-clients: A. just not right to possession. That is reflects their client’s interests i. Some say yes and some allow proof of parole modification b/c original K establishes a real agreement 2. Conditions: excuses parties from completion when a described event fails to occur B. Contract Modifications: 1. Seller agrees to not remove anything from house E. Covenants and Negative Covenants: express the actions or non actions the parties agree to take the risks i. Party making the rep takes on the risk D. a. Both have property rights and transfer their interests. and other terms Chapter 4: The Executory Contract I. Notify them that you do not represent them and are not protecting their interest and just explain material terms II. a. Legal Title: Seller has legal title only as Trustee as security for the payment to come 2. Estoppel: Party can be estopped from enforcing a term if the other side has reasonably and detrimentally relied on their action or inaction III. Waiver: Party can waive a condition by a. writing 3. Writing describes option price. Party giving it takes on the risk b. Split Title: Doctrine of Equitable Estoppel splits the title to the property between the seller and buyer when the K is signed. That it is enforceable and that all essential terms are in writing b.

Condition Precedent: avoid risks or duties under the K if condition not met 2. Knowledge: seller knows about it a. Mortgage Financing: must be able to get financing.Downloaded From OutlineDepot. Interstate land sales full disclosure Act: have to file a report on house -for 25 or more lots B. Statutory Duty to disclose: eliminates uncertainty 1. Intentional/Negligent Misrepresentation 2. C. Implied Warranties for new housing: of habitability: can even include water access G. Quality: A. Implied duty to disclose material defects: some states go further 1. Categories of Conditions: 1. Contract Alocation: parties can expressly do it: usually on the one with control E. Pro Buyer doctrines: 1. Simultaneous Condition: Perform at same time 4. Commercial: Mainly in home sales D. As is clause: all risk on buyer 3. some even say should have known 3. b/c implied condition that house will remain good…probable expectations D. list $ and interest a. Other Rules: 1. Concealment 3. Attorney Liability: provides false info and nonclient relies C.Caveat Emptor: buyer beware B. Materiality: significant effect on market value 2. Major Contract Conditions: A. Express Allocation of Risk of Quality: 1. Inspection Condition: 5. Quantity: in gross or by acre II. Implied Condition: On seller. Insurance: Both parties have an insurable interest. Right of Inspection: buyer contracts for this and establish standard 2. Express Warranties: set forth in formal K . Control: who has control of the property at the time 2. Uniform Vendor and Purchaser Risk Act: on seller until buyer takes possession or legal title 3. material impact on value or emotional impact or psyiological defect E. Stigma and nondisclosure statutes: nonphysical 1. Residential v. Traditional Risk of Loss Rule: Buyer has the risk of loss from fire and others from time the K is enforceable. Seller financing Chapter 5: Condition of the Property I. III. Condition Subsequent: relieved under K if expected event does not happen 3. Latent Dangerous Effects: affirmative duty to disclose 4.

implied or informal representstion: dual rep may inadvertently occur b/c unrepresented party believes attorney is protecting him too. Multiple Representation: duty of loyalty to client a. iii. then it does not apply. Collateral Matters: IF the parties intended a particular undertaking to survive merger. The exchange: instrument of conveyance must: a. Home Owner Warranties: can be purchased with the new homes III. Id the grantor and grantee c. i.not unilateral mistake a. Duty to Nonclients: one party is not represented a. -risk is on buyer 1. Attorney’s Role at Closing: 1. ii. hard to show b. Lender Liability: A. Seller and Buyer: Dual rep at closing is allowed. Duty to not further client’s wrongful conduct: if your client is bad you have to warn C. Fraud: can’t use merger to get out of liability 3. Actual or constructive delivery of the instrument ro the grantee f. Adequately describe the property d. The Closing Process: review performance 1. Lender’s Knowledge of Seller’s Fraud: knows or should know the seller is committing fraud. Mutual Mistake: reformation is available despite the doctrine . voluntary act B. Be in writing b. Conflict and removal: lawyer must move in the event of litigation.Downloaded From OutlineDepot. informed consent by all parties i. Escrow: . unless they exercise joint venture as adverse party: bad news 2. -colateral to closing 2. Payment of Fees: can be paid by source other than client as long as there is consent and no impairment . Intent to convey e. Doctrine of Merger: Terms from the Executory K are merged into the deed at closing. he has confidential infor for each side and cannot participate in and adversarial proceeding. Exceptions: a. full disclosure to all parties b. Grantee must accept the grant i. Don’t have to record. Lender acting like a developer: normally not liable for their appraisals or inspections. but must withdraw if there is a dispute. buyer can use as defense to not pay debt Chapter 6: Closing the Contract A.

Income flow: net annual income 4. Specific Performance: land is unique. Time Value of $: discount future money for present value 5. insurance premiums. Equitable Remedies: only when damages are inadequate A. confirms 1. misrep. wants to ensure payment of these items to not jepordize security b. comparable sales b. Value: a. out-of-pocket costs. if reasonable D. Time of Breach: prices change often. Loan Escrow: lenders use to collect and hold $ from debtor for paying annual real prop taxes. Clearly id problem to be corrected b. Vendor Liens: secures any amount owed the seller or vendor. a. Forseeable to breaching party C. Resale by seller after buyer breach: traditionally seller is not entitled to collect the difference between the K price and the new price. Market: relevant to the type of property 3. If adter closing seller extended credit and fails to secure remaining . $. Fair: By the loss in property value 2. Expectancy Damages: upon breach. Closing Escrow: escrow agent gets deed. With abatement. mutual mistake only B. sets a cost constraint on action to remedy c. Contingency Escrow: used to resolve a problem that arises before or at closing…unperformed obligation of seller a.Downloaded From OutlineDepot. Reliance Damages: Lost profits. must be ready willing and able to buy -mutuality of remedy: traditional -must show need for SP as well: modern view 1. Lost Profits: potential profits. or unfulfilled condition…not just mistake C. replacement costs: cost of rebuilding or replacing building c. B. K price-FMV 1. Equitable Liens: 1. time period to be done in d. Reformation: K has an eorror and fails to reflect intent. id escrow agent and his duties and obligations Chapter 7: Contract Remedies I. FMV: 1. when and to whom $ in escrow will be paid g. burden to prove you would have earned it II. establish a right of inspection f. give benefit of her bargain. D. conditional deliveries done this way 3. It is at time of breach. earn interest 2. Rescission: right to terminate K due to material default. standard for evidence of proof of compliance e. how. Damages at Law: fungibility A. records a.

except the following do not impair title usually: 1. 1. Reasonable Amount: not a penalty IV. III. Can put lien on prop to get the $. Lis Pendens: is a notice filed in the public records for real estate that states that litigation if currently pending. not when you 1st find out B. but doesn’t impose obligations on land owner in addition to those otherwise required by law 4. protects value of property when character is maligned. Record title compared to marketable title: must have it to be marketable 1. Actual damages not easily ascertainable at time of contracting 1. may be a risk -some courts say ok…fact specific C. Buyer’s Knowledge: can object at anytime. Visible: buyer saw them (overhead cable lines) 3. Tort Remedies: non economic and punitive damages A. he impliedly promises this. No 3rd party claims 2. FMV in future B. the outcome of which may affect the status of the property. Adverse Possession Title: not record title. liquidity. B. De Minimis: does not have appreciable effect (common easement) 2. Timing: at closing. Vendor can bring an action for judicial forclosure and sell prop to satisfy debt. Punitive: for grossly negligent or purposeful conduct V. subject to no encumbrance not agreed upon by parties and free from reasonable doubt. Encumbrances: nonpossessory right in property held by a 3rd party that reduces value. Slander of Title: tort action. 2. Emotional Distress: D. Obsolete: time expires D. Liquidated Damages: prearranged K damages A. may have right to return of down payment of reliance damages. Buyer’s obligation to close is conditioned on of seller’s title being marketable. Person falsely disputes ownership. Implied term of marketable title: condition and promise. gives notice to any bona fide purchasers VI. To be marketable it should be free of encumbrances. Slander of Title and Lis Pendens: A. Other Remedies: injunction. Superfluous: written and recorded. Strict Liability: not usually C. Definition: Title that is food in fact. declaratory judgment Chapter 8: Allocating Risk by Contract and Deed I. Vendee’s Lien: obtain rescission. Title Under the Real Estate Contract A. restricts use. ejectment. or imposes obligation.Downloaded From purchase price. Seller’s improvements encroach: may go over boundary line and be relocated or have to pay damages . not earlier. -can only be filed if the claim has a conncetion with the status of title 1. Encroachments: 1. Must give seller reasonable time to cure 3. Negligence: causes foreseeable harm you can sue on negligence and not K law B.

Deed Covenants of Title: A. effective upon delivery III. English Rule: not expectancy. Buyer’s Remedies for Title Defect 1. Contract Title: parties can replace judicial standard of marketable title 2. summary of record of title 3. a. out of pocket. 1. Reformation: unambiguous deed has error. Execution: signed by grantor C. Acceptance: by grantee E. unless in bad faith 2. even expectancy II. General title warranties protect the grantee against any and all defects that may have arisen during the entire chain of title up to the time of delivery. . deposit. available for latent. Conflict between parts of deeds: 1.Downloaded From OutlineDepot. Deed Constructional Rules: courts use these rules of interpretation A. construed against grantor b/c he drafts it 2. original party can bring reformation but it will not affect any BFP who is present IV. but not against subsequent BFP V. but restitution a. SOF 1. Defective Deeds: A. Broad view: look at expectations concerning property use F. but not patent ambiguity D. Warranty Deeds: 1. interest i. is it still marketable 1. Acknowledgement and recordation: optional. Intent of Parties: get parties intent by looking at whole deed B. Extrinsic evidence of real intent: ambiguity 1. Lack of delivery: not valid ever B. Formal Requirements for Deeds: A. Narrow View of title: look at fee simple interest and encumbrances like liens 2. priority given to certain clauses (granting clause) C. Zoning and other public regulations: find out after closing. shoe intent to convey B. Express Contract Provisions: 1. Delivery: to grantee D. ID parties. Neighbor’s: lose of title through AP or equity principles E. Insurable Title: buyer must obtain G. Voidable Deeds: duress or incapacity. grantor has right to 2. Record Title: requires status of proof of title from deeds and other instruments recorded. Forgery: can get damages against the forger 2. ID land. Seller required to furnish abstracts of title i. American Rule: full range of choices. Void Deeds: no legal effect at all 1.

Covenant against encumbrances: promises there are none 2. Deed covenants now take over. Quitclaim Deed and Marketable Title: If k calls for delivery of quitclaim deed and is otherwise silent. not prior to. intent 1. specifc language controls 2. purchaser may raise title objection prior to closing based on implied right to marketable title. Covenant of Warrant: same scope as above c. negiligence Recovery: privity Legal Adequacy of Description: formalism v. covenant of seisin: grantor promises he is seized of the estate the deed purports to convey b. Breached by actual or constructive eviction of the grantee. breached if grantor or agent of him evicts grantee b. Relationships Between Title under Contract and Deed Covenants: A. monuments beat calls SOF: need ot have a legal description to be valid Buyer should obtain the survey . Grantee bears all risk associated with quality of title C. Further assurances gets specific relief VI. B. provided not breached at time of transfer of title to subsequent grantee. Present Covenants: do not run with land. natural monuments beat artificial. Right to convey: grantor promises he has this legal right c. Special or limited warranties protect against defects arising while grantor owned the property. incorporation is ok. B. Quitclaim Deeds: no covenants of title. Subdivision plats: Surveyor: locate boundary lines Liability: by certificate. Chapter 9: Land Description 1. none are implied at common law -now statutory form for deeds creates statutory implied title covenants 1. Doctrine of merger says executory K’s are extinguished when deed is delivered. Quiet enjoyment: grantor promises grantee may posses and quietly enjoy land i. Meets and Bounds: describes each boundary line by length and direction 2.Downloaded From OutlineDepot. Further assurances: promises to give whatever further assurances may be requires to vest in the future to grantee i. a. Remedies for breach of deed covenants: usually limited to purchase price received plus statutory interest from date of breach 1. Future Covenants: run subsequent to grantees. Government Survey System: sections and townships and grids therein 3. only breached at delivery of deed and then SOL runs a. Stricter in quality of land descriptions for deeds than other Ks Interpretation: to grantee. cure title by getting releases from 3rd parties 3. Types of Covenants: must be express.

Early Recorded: transfer before actually have title. Check Other Records: judgment liens. Types of Recording Acts: A. bankruptcy IV. Constructive Notice: of all recorded instruments a proper search shows 3. Off-Record Risks: A. Functions of Recording System: A. Date of signing does not matter B. He has shelter from BFD Chapter 10: The Public Land Records I. Race-Notice Statute: a subsequent purchaser who takes without notice and records first wins. Parties in possession of the actual land is a duty to inquire VI. Wild Deeds: deed into grantor is a missing link that was never recorded 2. Recorded Interests that are Difficult or Impossible to Find: A. Construct Chain of Title: B. Actual Notice: state of mind test 2. but if not then common law rules II. Most statutes change these. prescriptive easements. Unrecorded Interest: recording acts protect BFD only against off record interest that is capable of being recorded. the doctrine of estoppel by deed operates to transfer it back to the prior grantee . he can transfer good title to any grantee that does not have to qualify as a BFD. Notice Statute: a subsequent purchaser who takes without notice wins. Check for Adverse Recorded Transfers: by present owner and all previous owners of the property C. Study Recorded Instruments: D. Inquiry Notice: suggestive facts lead to a duty to inquire i. 3 states only B. Except when the BFD transfers title to the person who earlier created the prior unrecorded interest. Some are not 1. Exception for Prior Equitable Interest: if subsequent purchaser acquires legal title with notice of the prior equity C. Title Search Process: A. Priority Ranking: III.Downloaded From OutlineDepot. B. 1/2 C. Delivery: first in time. Once get title. Interests unable to be created by an instrument: AP. first in right. Late Recorded Deeds: gap between delivery and recording where in between another transfer happened 3. tax liens. Bona Fide Purchaser Status: in notice or race-notice state there are 2 requirements A. Race Statute: a subsequent purchaser who records first wins. Common Law Priority Rules: A. VIII. Instruments not eligible for recording: short-term leases VII. Without Notice: 1. Inquiry Notice: purchaser takes all risk of unrecorded interests B. Name Indexes: 1. marital property rights 2. Includes loan. Title Assurance: can go and find it B. ½ states V. Purchaser: must pay value for the interest. BFD Shelter Rule: once a BFD cuts off a prior unrecorded interest.

title commitment 3. exceptions: easements. real covenants. Title search 2.Downloaded From OutlineDepot. statute 3. Those in privity: most expand to 3rd party Beny 2. Updated: Once issued. Defective Recorded Instruments 1. no need to prove fault or negligence D. Title Insurance: Owner’s and Lenders’ Policies: alternative to abstracts or opinion. Off-record Risks: usually covered 1. Who may rely: same as above III. AP. Types of Abstracts 1. Warrantor’s coverage: if insured owner conveys by warranty deed. Usually not a guarantee A. Marketable title standard: duty to disclose items of cloud 2. Search and Disclosure: 2. A. servitudes. A. Tract Indexes: Easier C. Standard for Liability: based on negligence C. the policy usually protects the grantor if a title defect results in a claim against .com 4. they are kept by owner who bought it. Rick Spreading: B. Policy Exclusions: zoning. Absolute Liability: covered by the policy. D. Who may rely: owner of the policy 1. latent v. Who may rely on abstracts: 1. but some divide saying latent does. Partial: customary of 50-60 years. mortgages C. Title Abstracts: a summary of all deeds and other instruments for a tract of land found by searching public records. Mis-indexed Deed: Split Chapter 11: Title Products I. Primary Functions: 1. except things that would be found by survey only F. patent defect: most say all fail to impart constructive notice. Forged: void 3. continuation abstract B. etc E. They can now only search from the end of the last one. Process of issuing title insurance: 1. Complete: chain of title back to sovereign 2. title policy a. Attorney’s Title Opinions and Certificates: states as a professional. Non-delivered deeds: void 2. representation of scope of work: should be included B. Subsequent land buyers: negligent misrep theory II. Standard of Liability: negligence and common norms 1. Improper Acknowledgment: all states limit recordation to properly ones a. his opinion to the status and marketability of the title. Effect of late and early recorded deeds: split on if impart constructive notice B.

and reps a party 2. owner association 2. the unit III. III. Parties incorporation of standards: II..Downloaded From OutlineDepot. Time Share Housing . limited common elements. indemnity funds. legal structure determines property ownership 1. TORRENS SYSTEM: Title Registration: government issues certificate of ownership for each tract of land. zoning. 3. Period of Search: 50 years C. Non-fee ownership like mortgages are shown as memorials A. Tort Liability: usually as they are written 1. planned unit developments and owner associations II. Single Family Homes: 1. Ownership Interest in common elements. Title-Clearing Function: defeats stale interests in property B. etc. Title Standards: bar-approved consensus of what defects are significant enough to affect marketable title A. exceptions to conclusiveness of ownership Chapter 13: Housing Markets and Products I. Conflicts of Interest: attorney serves as agent of title co. Courts are split as to whether they have a duty to a reasonable search before issuing a policy I. certain defects are conclusively presumed valid after the passage of a certain number of years after recordation A. Root of Title: Extinguishes interests in 1st deed over 30 years old C. Title Curative Acts: for defective instruments. lack of delivery B. Legal Effect: they do not have force of law in court decision. Confidentiality: he learns of problem not known to co. Affected by Land use controls. Good faith and fair dealing: Chapter 12: Improving Efficiency of the Title System I. Ethical Problems: 1. Exceptions: railroads. but persuasive D. Modification of Boundary: undercuts recording system by preferring parties actual possession over legal description. unless really bad searching. US government. Recovery on policy: actual loss and amount in policy H. failure to pay recording fee. voluntary nature. other statutory exceptions V. Marketable Title Acts: A. covenants and G. Function: interest created prior to root of title no longer affects title 1. Types of Defects: missing/defect acknowledgment. Co-Op: IV. Preserving old interests: can rerecord D. Goals: limit time span of searched and render more marketable titles B. Period of Time: depends 3-12 years C. Legal Effect: state leg and binds court IV. Condos: common elements. Minor Variations in names: unlikely B. Adverse Possession: A. Affected by Declaration of condo statute. Not really in use because: B.

Unsecured: just a promise to pay by the borrower i. Equity of Redemption: A. but mortgagee has foreclosure. Strict Foreclosure: fail to file redemption by judicial date III. A. but allows more loans IV. mortgagee has only right to a lien until foreclosure 1. Intervention of equity court: right to pay late became equity of redemption C. Lien Theory: majority. Savers give to banks and they lend that to borrowers that will give them a good return on investment III. Hardship at Law: English common law is harsh B. voluntary or permissive waste . Lender can take the property the mortgage was used for -recording the mortgage gives priority of claim II. Security for the loan: Credit based on estimated future income 1. Intermediate Theory: hybrid. if not then mortgagee gets fee simple b. C. Possession by Mortgagor: A. Mortgagor has legal and equitable title. Doctrine of Waste: protects mortgagee. the Trustee is authorized to foreclose and conduct a private sale B.Downloaded From OutlineDepot. then mortgagee II. Mortgage Products: A. Secured: borrower signs promissory note and puts up specific collateral i. Secondary Mortgage Market: Basically it is more risky. mortgagor has title until default. duty not to destroy by permissive waste 1. Title: signing of mortgage transfers title to borrower from lender for duration of mortgage 1. but most have clause that mortgagor has right until default B. Balance: preserve economic value of property i. Trustee’s role: neutral person…but not really IV. Pay debt by law day and get possession. Late Payment and Foreclosure: puts cloud on mortgagee’s title 1. A. Lender hopes he can get to other assets in default 2. point (up front fees) Chapter 14: Possession and Use of Mortgaged Property I. Mortgage Theories A. FSA w/ promise to reconvey: if payments resume 2. Deed of Trust: like a mortgage A. Anti-Clogging Rule: stuck down mortgage clauses that waived equity of redemption D. conveyance of title to mortgagee Chapter 15: Residential Mortgage Markets and Products Each loan is an investment opportunity for a lender. Power of Sale: adds a 3rd party (Trustee) to the loan transaction. If borrower defaults. defeasible: mortgagor has future interest. Gives mortgagee right to posses. Primary Mortgage Market: interplay between savers and borrowers.

Getting preforeclosure protection in lien-theory states: since they would normally lack right to posses until foreclosure. Bargains for this right in case of default. Non-recourse: not liable under permissive waste. Given right notice. b. Can get them immediately or conditioned on specific events 3. Disadvantages: 1. Junior lease. this is their only protection from waste 4. Standard Care: reasonable prudent and careful manner 2. Judicial Appointment: mortgagee asks court to appoint one and is available in all states as an incident to foreclosure. B. Possession by Mortgagee: A. based on tort theory so even a non-personally liable loan holder may be liable here a. Lien: does not have this right. Assignment of Rents: Lender usually had clause that he gets them. Must take action to invoke it -must take possession or get a receiver 2. Absolute: passes title to the rents to the lender.Downloaded From OutlineDepot. Presumption of collateral assignment C. discharge in bankruptcy 2. now performs to ii. 2. but has a valid lien on the rents and can act on these after default and prior to foreclosure or can get a judicial receiver. Express assignment of specific lease: usually in separate document B. Courts decide C. A. Fiduciary Duties: 1. Advantages of receiver for lender: protect from misbehavior of mortgagor 1. duty to repair and avoid legal risk(failure to pay taxes on it) C. Lender is bound by prepayments VII. Collateral: creates a lien or security interest in the rent. Scope of Power: managerial usually. getting income from non-rental property: receiver can do that 3. lender has immediate right to posses even leased premesis and can evict a junior tenant. senior mortgage: depends on mortgage theory of state a. Receivers: person who takes possession of the mortgaged property for lender. losing control to the receiver . going to court 3. Paying receiver fees 2. Getting possession fast: foreclosure takes longer 2. Avoiding fiduciary duties: liabilities now on receiver D. 3rd parties: not usually in privity VI. Senior lease. Relationship of Waste to Underlying Debt: 1. Duty to Account: collect rents and stuff 3. junior mortgage: tenant’s rights are not affected. A. but liable for bad faith V. Title and intermediate: upon default. Effect on leases of mortgagee taking possession: 1. Types of assignments of rents: 1.

but the difference in price will not be construed as interest 5.. actually need a receiver or harm will happen -must be a default and one other risky factor (ie borrower insolvency) 1. preempts only 1st lien mortgages. Prepaid interest: sometimes you pay these points up front B. most have a time-price or credit-sale rule i. No further payments: relieved of duty to pay loan 6. makes the real property serve as collateral in case the debtor does not pay II. the lender forfeits the interest that exceeds the usury limit A. Market Customs: Installment loans. Standard for appointment: in equity. A. borrower has committed a serious default. etc A. Usury: limits amount of interest a lender can charge a borrower.Downloaded From OutlineDepot. mortgage just secures the debt. Remedies for usury violations: at minimum. some states apply usury B. 1. Simple interest: annually B. Generic Clause: parties do not intend to violate and borrower will not pay over the max -usually against PP b/c buts risk on borrower to find out the interest rate b. Form of Obligation: secures payment for performance of an obligation 1. can give a cash price and a higher credit price a. Lender Defenses: Very difficult 7. Interest cap rate: states the legal % and puts a life-of-theloan max rate equal to it 4. usually interest is when installment is due 3. Federal Preemption on single family E. courts may apply equal spreading of the interest if it goes above the max rate i. coop. not junior mortgage loans . Adjustable interest rate: if it goes to high. usually a debt owed to mortgagee 2. No interest: can collect only the principle C. usury savings clause: if subject to fixed limit a. normally a promissory note is separate from the mortgage for evidence and has all the details about the obligation to makes payments of principle and interest 3. Receivership clauses: some mortgage docs have this -courts are split Chapter 16: Mortgage Obligations I. Spreading interest over the loan term: not usually equally distributed -normally paid after it accrues A. Compounding of Interest: how often interest is calculated A. Traditional Fixed Limit: 10-12% no matter what 2. Statutory Damages: damages 2 or 3x the amount of excess interest B. apt. Time-Price Rule: seller of real estate extends financing to a buyer he usually takes back a promissory not secured by a purchase money mortgage.

Prepayment: A. Total Prepayment: promissory note is cancelled and mortgage is released B. Usually specify a rate of interest B. State Statutory Limits: D. due on sale clause if transfer property E. enforceability: usually. Written description of obligation: expressly state what is secures 2. supplier of materials and labor: may secure purchase price or wages by getting and express mortgage .com -not businesses III. Express Prepayment provisions: parties can specify this in the K a. Voluntary Prepayment: borrower does on own accord D. prepayment penalty: compensate lender for loss of bargain b. Nondebt Obligations: A. A. Interest on Unpaid Sum: on the period of tardiness. Implied right to Prepay: minority or by judicial decision to go this way 3. but if not 1. obligation is gone i. Collateral promises: mortgagor usually makes other promises a. a. should comply with K terms b. State Usury laws: can’t be higher interest too high or borrower will have defense G. Partial Prepayment: C. Liquidated Damages: is what a late payment charge is kinda like. Effect on Mortgage: lender has right to reject prepayment then also has general right to insist the property remain as security for the debt. Perfect tender in time: traditional implied rule and majority says there is not a right to prepay unless there was an agreement not to. Definitely ascertainable amount: a. Federal Regulations: 15 days equal to 4% of installment E. May restrict borrower’s property rights 2. promise to insure your store B. It is usually also secured by the mortgage. Difficulty of measuring actual damages F. Borrower’s right to prepay: usually have it in K. Debt is obligation to pay a fixed amount of money 1. parties choose allocations of risks V. IV. Late Payment Charge: expressly provide for a fixed amount to be charged C. Amount of Charge 2. Only remedy unless not provides otherwise. Effect of statutes and regulations on common law liquidated damages rules and usury rule: usually if it complies with the law the courts will say its ok. Late Payment: mortgagor is owed compensation depending on terms of the mortgage. must be reasonable 1. Primary Obligation is not a debt: requirements of the mortgage: 1.Downloaded From OutlineDepot. Involuntary: lender compels it due to default or other event specified in K 1. when debt is paid.

direct contact between buyer and mortgagee: sometimes these 2 will have a K i. but judicially as support Chapter 17: Transfers by Borrowers and Lenders I. c. Sue the buyer: in most states for breach of the promise to assume. a. Support Mortgage: promises to provide financial support for the remainder of their life. the original seller becomes a subsurety.Downloaded From OutlineDepot. the seller is secondarily liable. 1st buyer is to bear the entire risk and cost of the 2nd buyer’s default 4. the seller can: i. Mortgagee’s Position: The assuming buyer is personally liable now. Further Transfer and Assumption: if the assuming buyer sells with her new buyer assuming the debt. Mortgagee may sue if he fails to do so. Seller’s Position: a. b. the seller can avoid continuing liability as a surety only if the lender agrees. Express release of liability: When the seller is personally liable on the mortgage debt. pay the debt: and through subrogation he now obtains the mortgagee’s rights to enforce the note against the buyer and to foreclose on the property. 3. 3 parties are now involved (BSM) 1. Primary Liability to pay the debt is now with the buyer. When there is no K between them. but because the buyer is primarily liable. 5. 2 rationales justify the mortgagee’s right to enforce the buyer’s assumption -3rd party beneficiary: consider the mortgagee to be 3rd party beny of the K between buyer and seller . ii. Seller is Surety: remains liable as the maker of the promissor note. This is the intent of assumption. Buyer’s Position: Buyer is personally liable to pay the debt. Transfers of Mortgaged Property: Either the debt is paid and the mortgage is released to no longer affect the title or it remains existing and the grantee will either assume or take title subject to the mortgage. Not quantified in $. He is a surety c. Need an express release of liability. Courts will not find an implied release or waiver or estoppel if the lender knew and consented to the assumption. Assumption of Mortgage Obligation: Buyer promises the seller that he will pay all the debt in accordance with the terms. reasonable 3. Surety’s Rights: If mortgagee sues the seller on the promissory note without foreclosing or threatens this. 2.

No Discharge: she remains fully liable for the unpaid portion of the original debt c. Taking subject to Debt: 3 approaches a. General rule is that mortgage has free alienability no matter what. a. because this new term adds to the surety’s risk -Derivative Rights: against the assuming buyer. enforced. Restrictions on transfer by Mortgagor: 1. only if it impaired his security -new guy not creditworthy -likely to commit waste E. By subrogation. 2. Prior State Law Approaches: a. Germain Act: 1. Garn-St. is the seller still personally liable? Depends on what the buyer does: 1. they have the option to accelerate the loan 3. but agrees that the mortgage is permitted as an exception to good title and that the seller is not responsible for paying the debt 1. Garn-St. Reservation of rights clause: Promissory notes and mortgages often have these saying a mortgagee and a successor owner may extend or modify the debt without discharging the mortgagor. Partial Discharge: to the extent of the value of the real property at the time the mortgagee grants an extension or price change to the non-assuming buyer 4. but strictly construed D. Makes the clause automatically enforceable 4. automatic enforceability b. Impairment test: lender act reasonably in exercise of rights i. Negotiable instruments with the UCC: when these are assumed there are different rules 3. a. Taking Subject to the Mortgage Obligation: The buyer does not promise to pay the debt. Germain Act: preempts state laws that protects mortgagors from lender’s enforcing due on sale clauses. Automatic Enforceability: lender has complete discretion 2. but usually does so he will not loose the property to the mortgagee C. Due-on-sale clause: parties can K to restrict the alienability. Assumption: Discharge of Surety: when a debt is modified or extended. Lender’s conditions to transfers: lender can voluntarily withhold consent and impose any condition on the proposed transfer . the surety is discharged unless he agreed to the new terms. Total Discharge: like assumptions b. it steps into seller’s shoes and enforces the promise to pay the debt B. Nonrecourse Financing: Buyer has no personal liability to pay the debt. Modification and Extension of Mortgage Debt: When the mortgagor coveys property to a 3rd party who assumes or takes subject to the debt and subsequently the mortgagee and buyer modify or extend the debt w/o including the seller in the agreement. this one says that is you sell without lender approval.Downloaded From OutlineDepot.

Scope: applies ot every real property loan “mortgage. trust. (second one is recordable) 2. the priority starts at that date and transferor steps into shoes of transferee 2. To perfect the security in the note you must give notice E. if not. Seller-buyer avoidance of Due on Sale Clause: Silent Sale 1. If original mortgage is recorded. Buyer’s risk: liable for interference with lender’s K rights. very broad view 2. Lawyer’s risk: ethics. but are allowed to do this if it is not a crime 4. Failure to Record assignment of mortgage: 1. borrow money and grant to that lender a security interest in the note and mortgage i. Security Interest: mortgagee can pledge the promissory note a. Types of assignments: 1. (some states say they must notify) The can also sue and get expectation damages. etc) . due on sale clause definition: gives the option 6. Assignee of nonnegotiable debt: takes subject to any defense the mortgagor has against mortgagee 2. 1. loan. 3. no consideration. Assignment: lender executes and delivers a written Assignment of the Note and Mortgage. Fraud: some instances 5. Office of Thrift Supervision: has authority to issue rules about the act. advance. Exemption for residential borrowers: nonsubstantive transfers a. Confidentiality: lawyer cannot reveal w/out consent II. Assignee of negotiable debt: risk is reduce when they have a negotiable instrument and the assignee is a holder in due course b/c takes free of personal defenses. Outright Sale: whole interest in promissory note and mortgage 2. difference in yield of interest rates at K time and transfer time 2. Assignment: transfer of a mortgage loan.Downloaded From OutlineDepot. Negotiable Instruments: writings that evidence a mortgage 1. Mortgage follows obligation: must have note C. Lender sells entire interest in a loan 1. Transfer of Mortgage Debt A. Delivery: lender delivers the original promissory note and mortgage to assignee 4. Automatic Clause: ruled by state law b/c OTS says Act doesn’t cover it 7. this preempts any state rules about these transfers 3. then must record to have any priority D. a. Borrower can bargain to have an express standard for the lender to use to be put in as a clause and it is enforceable 4. shorter leases. Seller’s risk: potential liability to lender for breach of K and can accelerate whenever they like. Endorsement: Lender endorses the original promissory note 3.whether for real or personal property 5. transfers by joint tenancy. Recordation: Assignee records assignment of mortgage B. (fraud in the inducement. credit sale secured by a lien…. family…etc b.

Default Clauses: A. Federal Trade Commission Regulation: i. b. duress. must have possession of the instrument b. knows seller arranges for extension of credit by lender for a fee ii. Who is a holder in due course: assignee of negotiable instrument a. fraud in face 3. and the note cannot contain additional undertakings of the maker. Lender takes subject to them if lender i. To be negotiable the maker must have an unconditional obligation to pay a fixed amount of $. mandatory notice of the intent to sale must be given to the consumer Chapter 18: Default and Acceleration I.. lender is related to seller iii. minority view is that mortgages are not negotiable 4. Consumer loan: mortgage loan under 25k and a. Lender makes consumer loan to enable a consumer to buy property or services is sometime subject to real defenses. assignee must pay value for the instrument d. Usually set forth in promissory note and mortgage instrument . Purposes: allow the mortgagee to exercise one or more remedies provided for by the mortgage. including foreclosure 1. …. but what if he tries to foreclose mortgage. w/out notice of any defenses or claims that the instrument is overdue/dishonored 6. holder must that the instrument in good faith. seller guarantees the loan or assumes risk of loss by lender upon the loan iv. consumer credit sale: prohibits the sale of an interest in land when price is <25grand and interest rate >12% -take subject to all defense b. Majority view is that the mortgage follows the instrument i. but still takes to real defenses asserted by mortgagor -incapacity. consumer purchases: includes for acquiring goods and services for personal. no personal defenses b. Laws sometime protect mortgagor from the normal consequences of assignments of negotiable instruments to holders in due course a. transfer must be by negotiation c. Most states limit in consumer mortgage loans: UCCC i. family and household use -non-negotiable ii. 5. is it also negotiable a. Negotiation of Mortgage: when negotiable instrument is assigned to a holder in due course no personal defenses are allowed when he sues for payment.Downloaded From OutlineDepot.

not material or substantial. History of Late Payments: Waiver or estoppel a. Lender’s Decision: try and evaluate behavior to decide: 1. Lender can reinstate a duty to make punctual payments i. technical default. notify borrower of this intent 2. good prospect C. advantages: more flexibility and control B. Lack of Acceleration Clause: 1. c. accepting late payments in the past 3. Optional: a. b.Downloaded From OutlineDepot. Borrower’s Statutory rights to cure default: a. Lender’s notice to borrower of intent to accelerate followed by an act evidencing acceleration is often required b. threatens value of security. Optional: must tale some affirmative action that demonstrates intent to accelerate. No acceleration is what most courts say 2. a. takes away the defense. A. Automatic: when certain events happen 2. anti-waiver clause: acceptance of 1 or more late payments is not a waiver. After Acceleration: allowed to pay arrearages and reinstate the installment loan E. Amount Payable upon Acceleration: principle . mailbox rule does not apply II. Workout Potential: hardship. Materiality of Default: most courts safeguard borrowers if it is a a. Types of Acceleration Clauses: 1. d. some courts accept it and some say that by accepting late a. the lender waives the anti-waive clause b. i. with all accrued interest is made immediately due and payable. a. equity principles permit it e. or refer to a collateral instrument. Interpretation of Default Clauses: promissory note mortgage. Procedure for acceleration: 1. willing to pay. Foreclosure: move quickly if intentional default. Standard principle of K law 1. Defenses to Acceleration 1. and other instruments almost always have them. before the borrower cures or tenders to cure the default D. Acceleration: entire principle balance of loan. cross-default B. Automatic: just tell the borrower acceleration has occurred 2. has not impaired security. no realistic hope of payment 2. Payment is made upon actual receipt of by the lender. Anticipatory Repudiation: few accept idea that failure to pay a series of installments justifies their request for asking for full payment C. Prior to Acceleration: must give notice and give reasonable time b.

and other mortgage charges. Judicial Foreclosure: gives purchaser same title the mortgagor had A. deficiency judgment by bringing an action D. Court orders the debt to be paid by a certain date and if they fail the mortgagee’s title becomes absolute. 1. this can cut off their interest II. Action on debt can be brought 1st without foreclosing. Strict Foreclosure: Action brought by motrgagee after mortgagor has defaulted. Paid to mortgagor if no other parties have better claim to it. W/ power of sale its extrajudicial C. a. if clause if broadly worded 2. Junior Rights: still has property rights. so there is no obligation to pay installments on certain dates. Key Concepts: A. some courts say ok i. Action on the Debt: ME sues to get a judgment for damages that are equal to the principal. Foreclosure Action: ME seeks to change ownership of the property by erasing mortgagor’s equity of redemption. Simultaneous: can do this III. 1. Lender’s drafting of docs: can change this Chapter 19: Foreclosure I. the mortgagor has equity. B. if others are shut out by foreclosure they are entitled to the $ before the mortgagor ranked by priority E. a. A. Revives 1st mortgage. then can bring an action 3. Election of Remedies: can elect to bring an action on the debt or foreclose 1. Action in equity. Usually seek judgment for the shortfall. Late Payment Charges: Acceleration means entire debt is due. they are not bound by it a. which is now held by foreclosure purchaser ii. If a junior liener i. if deficiency. can bring subsequent foreclosure if J not satisfied 2. Surplus: value is more.Downloaded From OutlineDepot. If they are omitted from the foreclosure action. Forces payment or cuts off mortgagors equity in redemption. Only 2 states use this as primary foreclosure B. Specialized Application: if foreclosure omits a 3rd party. decision to really no 1. Foreclosure First: w/out seeking judgment on debt. Deficiency: value of prop is less than debt. Redeem the property: by paying the forclosure purchaser the amount of the 1st mortgage debt . Prepayment Premiums: usually one or the other and not both b/c he decided to accelerate and it is not the mortgagor’s voluntary end the loan transaction by prepaying the debt a.purchase transaction . foreclose the junior lien. Necessary Parties: Junior interest holders are necessary parties and must be joined as defendants to really transfer the title. Except when the default is intentional. so there is late payments a. a.

Cheap and Fast: ½ states have it. Harm presumed from statutory violation: set aside the nonjudicial sale. Re-foreclose the senior mortgage: and join the other party ii. Proper Parties: person who has rights or duties to property. Redeem the property: pay off the junior lien -priority over Junior lien rights and can buy them out 1st iii. Nonjudicial Foreclosures: people can sue at any time= weaker title VI. but not a necessary party. the borrower voluntarily conveys the property to the lender - . Form Relief: given to the refinancing mortgagee a. Use strict foreclosure: in some jurisdictions he can bring an action of strict foreclosure against junior lienor. A. -no injury need be shown C. the courts may revive the senior debt B. Judicial Foreclosure: once decree is issued and time for appeal passes the title is safe 2. -doctrine of equitable subrogation protects refinancing mortgagee who did not know of the junior claims at the time of refinancing 1. Record Priority Prevails: few states VII. forcing them to redeem C. Refinancing mortgagee has right to Re-foreclosure the senior mortgage junior gains fee title in exchange for price of the first debt b. Title Risk: 1. Foreclose Purchaser Rights: that finds there is an omitted Junior i. Statutory Procedure: specify notice. Strict Compliance: protect mortgagors from risks that no unbiased 3rd party is supervising the foreclosure process (ie a judge) 2. Amount of Debt: ES protects only to the extent of the senior mortgage that was repaid with funds of the refinancing mortgage. Equitable Subrogation: lender that pays mortgage of another and takes a new mortgage as security is subrogated to the rights of the 1st mortgagee as against any intervening lienholder. Power of Sale Foreclosure: same as Judicial Foreclosure -mortgage instrument must authorize this power and state must have a stature that regulates the procedure. Revival of Senior Debt: when refinancing mortgagee purports to foreclose its mortgage.Downloaded From OutlineDepot. sale procedures. Notice to junior interest: is not necessary unless they have K with mortgagee that states so B. more protection for debtor and junior 1. Priority to New mortgage: when the refinancing mortgagee purports to foreclose its mortgage the court may give it priority c. Priority of Mortgage that Refinances Prior Mortgage: A. Deed in Lieu of Foreclosure: after default. not excess if the new loan taken was bigger 2. Can be joined w/out consent V. and formalities 1.

avoids forclosure B. the process ends 7. Almost all states say waiver to redeem is invalid 2. Competing Redemptioners: a. Inadequate Consideration or Unconscionability: bargaining positions 3. Compliance with Statutory Requirments: substantial is usually A. Usually less that ordinary sales B. Time period: varies from a few months to 18 months after date of sale 3.others say Juniors too 6. Title Risks: deed in lieu does not cut of Juniors 4. FMV: allow deficiency judgments to the extent that the debt exceeds the fair value of the property . . One-action rule: some states limits mortgagee to a single action of foreclose and deficiency judgment B. Low price does not invalidate sale. Who can Redeem? -some states only mortgagor. Economics of Foreclosure: A. Advantages for Lender: gets title now and avoids proceedings D. Risk of Mortgagor’s insolvency or bankruptcy: w/in 90 days. the transfer may be set aside and creditors may attack the deed if it was for less than < market value VIII. May also refuse if there is an Inadequate price coupled with irregularity IX. Risks for Lender 1. Existence of right to redeem: some allow for it under both judicial and power of sale. Methods of Foreclosure: some bar if done by power of sale 3. C. if he fails -each liener has 5 days in priority b. Risks for Borrower: has substantial equity it is lost and underpricing C. Statutory Mortgagor Protections: A. Clogging Equity of Redemption: mortgagor can try this 2. clerical mistake means lender missed sale D. -minor flaws do not disqualify -statutes read liberally C. Limits on Deficiency Judgments: under certain circumstances 1. Advantages for Borrower: lender cancels all or part of debt.Downloaded From OutlineDepot. Certain loans protected: purchase money mortgages made by seller -certain property 2. Scramble Approach: anyone at any time in period -once mortgagor does. Redemption Price: usually foreclosure price. Priority Approach: mortgagor has 1st right. Statutory Redemption: right to redeem property for a period of time after completion of foreclosure sale: 33 states 1. plus interest and costs -few say he must pay the mortgagee the debt + interest 4. Courts may refuse to confirm foreclosures when there if a grossly inadequate price coupled with a mistake (even if good faith) 1. Right to Possession: during the statutory period -few say he must bond not to commit waste 5.

fair value: based on ordinary arms-length sales. she got a judgment lien on all joe’s real property. Anti-clogging rule for equity in redemption 2. Types of Mortgage Substitutes . go to court and seek to foreclose her judgment lien -Starr is a necessary party in her foreclosure action. who is a necessary party 2.absolute deed intended as security. Starr buys property for 35k. lease w/ option to purchase. After granting the mortgage. Joe defaults on mortgage. Joe hurts Karen who wins 20k in damages.Downloaded From a. Refinanced loans=equitable subrogation Starr is a fee simple subject to Karen’s lien Chapter 20: Mortgage Substitutes: I. Starr can re-foreclose the senior mortgage that Robert had owned. otherwise her lien is extinguished. securing the 40k debt -will join Karen. Starr wins 3. Robert fails to join Karen as a party to the foreclosure. To protect her interest she must -pay Karen the 20k plus costs to get the lien cancelled 2. sale-leaseback C. Karen is an omitted necessary party: still owns judgement 1. Robert forecloses. Does mortgage law not apply just b/c of as title: . granted by Joe. At court ordered sale. installment land K. Starr may redeem the property by paying 20k to Karen -results in a release of the judgment lien -Starr’s redemption right has priority over Karen’s right b/c Starr owns fee simple -if Karen tenders the 35 to Starr and Starr tenders the 20. The use of Mortgage Substitutes: sometimes used in credit transactions where a mortgage could have been used. Karen may seek to exercise her right as a junior lien holder to redeem the property -tenders 40k (amount of 1st mortgage) to Starr -Starr gets title -Karen now owns free and clear of all liens -Starr may have cause of action against Robert (depends on deed) Starr can: 1. Mortgages limit freedom of contract 1. Why? A. Foreclosure Procedures cannot be waived B. Starr will use it only if willing to sell to Karen if she comes up with the $. Starr is some states can bring an action of strict foreclosure against Karen. and securing a 40k debt. Gives Karen a court-set deadline to exercise redemption by paying Starr 35k in exchange for title. Ignores that foreclosures are usually depressed Robert has a 1st mortgage on Blackacre.

Disguised Mortgages: for lender risk reduction A. grantee says it’s a BF sale w/ purchase option B. not secure loan C. Market uses of installment land K: for seller financing in 2 market situations. court may…but parties usually disagree 2.Downloaded From OutlineDepot. Unequal bargaining power: grantor has great financial need 3. Avoiding restrictions on Borrower’s Mortgage of Property: a. Appropriateness of Remedies: if buyer breaches. May go other way othertimes though 1. Poor Man’s Mortgage: person who does not qualify for institutional financing b/c no down payment/bad credit .com -Some courts look to substance of the K and other say freedom of K II. Grantee often refutes if no written evidence. Factors: that point towards a deed intended as a security: 1. is an executory K under which purchaser pays price in installments over a lengthy period of time 1. Equitable Mortgage: different term 1. Negative Pledge: Negative covenant. Sometimes it is signed and held in escrow B. If dispute develops. or contract for deed. also when there was a mortgage intended. but technical diff. taking a regular warranty deed. but seller retains title and promises to deliver a deed when the last payment is made. Price is less than FMV: suggests debt. A. court may go mortgage if foreclosure is the remedy 3. marital property b. III. Fiduciary Relationship Between Parties: owes grantor special relationship 5. Grantor retains possession: true sales=grantee takes position 6. prior loan w/ due on sale clause for 2nd mortgage V. Prior loan between parties: once a mortgage always a mortgage 2. Existence of a Debt: maybe IV. -he says it is a mortgage. 1. Absolute Deed Intended as Security: party advances $ to landowner. Status as equitable mortgage: both sides argue this in different circumstances C. borrower promises the lender not to convey or encumber specified property before the loan is repaid A. 4. Construction against institutional lender: if they select the form ambiguity goes against them D. Subjective Intent: if they believed it was. Parole Evidence: is admissible to show it was an absolute loan. Title Retention and Deed: K is executory. owner claims parties agreed that owner could regain title by paying back $ + extra. Factors whether a negative pledge = an equitable mortgage 1. Possession: buyer goes into possession right when K is signed 2. Parties’ Motivation: in default the lender wants a mortgage b/c wants same priority it has when not in default. courts use this for disguised mortgages a. not sale. written evidence of owner’s right to regain title: says owner can repurchase. Installment Land Contract A.

Vendor’s Remedies for Purchaser’s Default 1. may terminate K and sue for expectancy 3. Restitution: vendor rescinds K and wants to be put in pre-K position a. Vendor has option to declare it. Vendor does this banking on idea that is they default. Forfeit Clause: most have these. after default has right to pay vendor the unpaid K balance and receive title a. Purchaser’s Right of Redemption: in some states. General Rule: freely alienable 2. K termination and repossession will be cheap and easy -also that home has the value of the debt or more 2. All Installment Contracts: in a few states is an EM. Substantial Payment: some states say this is no longer available. sale under standard judicial foreclosure procedures a. Transfers by Purchaser 1. Foreclosure is only means to terminate K and regain right to possession i.Downloaded From OutlineDepot. Courts apply K analysis a. Modern: treated as a penalty -not enforceable if causes great hardship -or gives borrower restitution for excess payments over the damage amount 2. absent K defenses b. get value from possession to rescission and gives payments back 4. Foreclosure as a Mortgage: Vendor does so as an equitable mortgage. practical effect: seller should never use b. must foreclose and an equitable mortgage D. Expressly provides for forfeiture as a remedy for purchaser breach. Traditional: enforceable as written. Expectancy Damages: instead of declaring forfeiture. if paid substantial part of the price already 5. Express Restrictions: due on sale clause . Vacation/Resort Sales: on lots C. K rights and right to possession are forfeited.

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