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Shannon Robinson Property II Cali Lessons Notes In a significant majority of states, the borrower and lender rely on the

e note and mortgage combination to define their rights and obligations To address the first question of how one effectively evidence the creation of a debt and the repayment terms, the parties most often rely on the debtors executing an instrument called a note. In financing settings the note referred to is a promissory note. It is also known as a mortgage note when a mortgage is involved. In laypersons terms, it is the IOU Generally, among other things, the note identifies such terms as The borrower The principal amount of the debt The interest the borrower must pay in addition to the principal The part to whom the debtor must pay these amounts The method of payment The frequency of such payments Acceleration of the entire unpaid debt when there is a material breach, and The final date by which full payment must be completed.

The note is the instrument used primarily to evidence the debts existence, the borrowers duty to repay it, and the lenders rights to receive payment. To address how one might provide a lender some security from the debtors potentially defaulting under its obligations, the parties usually have the borrower execute a mortgage in favor of the lender. The property identified in the mortgage becomes the lenders security or collateral supporting the debtors promise under the note. In most jurisdictions, the mortgage gives the lender a lien on the property identified in the mortgage. The property can be either real, personal, or a combination of the two. It is not the lender that gives the borrower a mortgage. It is the borrower who gives the lender a mortgage, in exchange for the loan from the lender. Mortgage Bob wanted to borrow money from Lucy. To complete the transantion, Bob executed an instrument evidencing Bobs $1,000,000 debt to Lucy and his duty to repay Lucy under the terms set out in the instrument.

Deed of Trust Bob borrowed money from Lucy. To protect Lucy in case Bob defaulted on his payments, Bob executed an instrument that gave Ender the right to sell Bobs land in CALIville in the event of such a default and use the sales proceeds to pay Lucy. Mortgage Bob borrowed money from Lucy. To protect Lucy in case Bob defaulted on his payments, Bob executed an instrument that gave Lucy a lien on Bobs land in CALIville. Installment Sales Contract Bob wanted to buy CALIacre from Lucy. As part of their arrangements, Bob and Lucy executed an instrument that allowed Bob to take immediate possession of CALIacre and pay Lucy the purchase price plus an annual interest until Bob paid Lucy in full. Furthermore, once Bob paid Lucy in full, Lucy would then be obligated to transfer title to Bob. The note evidences the debt. The mortgage adds a lien as security in favor of the lender. The deed of trust gives a third party the right to sell the security and use the sales proceeds to pay the lender. And the installment land sales contract gives the borrower immediate possession of the property but not until the borrower pays the seller/lender in full. A main objective of foreclosure is to produce at the foreclosure sale the quality of title held by the mortgagor at the time the mortgage is executed, the foreclosing plaintiff must join into the litigation all parties who hold an interest that is inferior to the mortgagees lien.