NY Bar Exam 2011: Mortgages
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11 terms
Terms | Definitions |
|---|---|
 Mortgage (definition) | The conveyance of a security interest in land intended by the parties to be collateral for the repayment of a debt |
| Two Elements of a Mortgage | * A debt * Voluntary transfer of a security interest in debtor's land to secure the debt |
| Legal Mortgage | Evidenced by a writing to satisfy the statute of frauds ○ Voluntarily collateralizations evidenced by writing ○ AKA: note, mortgage deed, deed of trust, sale-leaseback, security interest in land ○ Parol evidence admissible to show parties' intent |
| Equitable Mortgage | Created when the creditor obtains possession of the deed, absolute on its face, that the parties understand is collateral for a debt ○ Parol evidence is admissible to show the parties' true intent ○ If equitable creditor sells the property to a bona fide purchaser, debtors only recourse is to proceed against the creditor for fraud and receive sale proceeds |
| Debtor-mortgagor has... | Title and right to possession |
| Creditor-mortgagee has... | A lien, right to look to the property in the event of default |
| Ways for Mortgagee to Transfer: | * Endorsing note and delivering to transferee □ Transferee (holder in due course) takes the note free of any claims that could have been asserted against the older creditor - To become holder in due course, note must be: ◊ Negotiable (made payable to the named mortgagee) ◊ Original note is indorsed by the mortgagee ◊ Delivered to transferee ◊ Taken in good faith, without notice of any illegality ◊ Transferee must pay value * Executing separate document of assignment |
| Distribution of Foreclosure Proceeds | * Attorneys fees, expenses of foreclosure, and any accrued interest on senior priority holder come off the top, before any distributions to creditors * Proceeds then distributing to priority holders in order, with each priority requiring complete satisfaction until any subordinate holder may take *Any creditors that have not been fully satisfied can proceed in deficiency judgment |
| Purchase Money Mortgage | Enable a purchaser-morgatgor to acquire encumbered land ○ Mortgagee gets superpriority over all other mortgagees, even those earlier in time, if filed properly |
| Equitable Redemption | ○ Debtor has the right to redeem the land and free it of the mortgage - Averts foreclosure ○ Cannot be exercised once valid foreclosure has taken place ○ Exercised by paying of the missed payment(s) plus interest plus costs ○ Mortgagor cannot waive right to redeem the mortgage at the front end of the deal |
| Statutory Redemption | NOT RECOGNIZED IN NY Gives the debtor a statutory right to redeem for some fixed period after the foreclosure sale ○ Usually for the foreclosure sale price rather than the amount of the original debt ○ Debtor has right to possess during the statutory period ○ If exercised, nullifies the foreclosure sale, restoring debtor to holder of title |
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