Blaw Test 3 Ch 28

Front 1

someone who owes another a debt or obligation.

Back 1

Debtor

Front 2

someone to whom a debt or obligation is owed by another.

Back 2

Creditor

Front 3

is claim against a debtor’s property that must be satisfied before the property (or its proceeds) is available to satisfy the claims of other creditors.
-generally take priority over other potential claims to the same property

Back 3

lien

Front 4

3 types of liens

Back 4

-Liens on Real Property
Mechanics Liens (a statutory lien).
Mortgages (common law).
-Liens on Personal Property
Artisan’s Liens (common law).

Front 5

This statutory system permits one who furnishes labor or materials to improve real estate to claim a lien until they are paid
-real estate becomes security for the debt

Back 5

Mechanic’s Liens
(Most statutes grant first priority to mechanic’s lien over all liens which attach after first work performed)

Front 6

written instrument giving a creditor a lien on the debtor’s real property for the payment of a debt.
(Must be executed with the formality of a deed and recorded in the county in which the property is located)

Back 6

Mortgages (Real Property)

Front 7

three alternative ways to use real estate as security for an obligation

Back 7

A Mortgage (2 party)
A Land Contract (2 party)
A Deed of Trust (3 party)

Front 8

an agreement between two parties, the mortgagor and mortgagee

Back 8

A Mortgage (2 party)

Front 9

an contract between two parties (often referred to as a “Contract for Deed” in Minnesota).

Back 9

A Land Contract (2 party)

Front 10

Three party arrangement(uncommon in Minnesota)

Back 10

A Deed of Trust (3 party)

Front 11

If there is still money owed to creditor after foreclosure and the debtor is still liable for this.

Back 11

there is a deficiency

Front 12

before a foreclosure sale takes place, the mortgagor can pay the full amount of the mortgage debt plus any interest or costs that have accrued.

Back 12

right of redemption
(In some states, mortgagors can even redeem the property within a certain time after the foreclosure sale. This is known as a statutory period of redemption. (This is why buyers at a foreclosure sale need to be careful.)

Front 13

allow a creditor to recover payment from a debtor for labor and/or materials furnished in the repair of personal property.
((1) a debt created by the improvement to goods or provision of services concerning the goods; plus
(2) possession by improver/provider of services)

Back 13

Artisan’s Liens

Front 14

Two types of judicial liens

Back 14

Writ of Attachment
Writ of Execution

Front 15

a court ordered seizure of a debtors non-exempt property prior to the issuance of a final judgment.

Back 15

Writ of Attachment

Front 16

a court ordered seizure of a debtors non-exempt property subsequent to the issuance of a final judgment. The proceeds are then used to pay the judgment, accrued interest and any costs of the sale

Back 16

Writ of Execution

Front 17

When a creditor is successful in a suit against a debtor, the court awards a judgment against the debtor. This judgment is often enforced by the establishment of a BLANK on personal or real property of the debtor

Back 17

judicial lien

Front 18

Exemptions (under both Federal and State laws) are intended to protect some “basic” family assets from the reach of creditors

Back 18

-Homestead exemptions.
Personal property exemptions, such as:
Household furnishings,
Clothing and personal possessions,
Usually one vehicle,
Animals such as livestock or pets,
Business “Tools of the trade.”
-Most all of these are limited to some specific dollar amount.

Front 19

is another way a creditor to collect a debt by seizing property of the debtor that is held by a third party

Back 19

Garnishment

Front 20

is a person who is liable for the payment of another person’s debt or for the performance of another person’s duty
- joins with the person primarily liable
-Can be oral or in writing

Back 20

surety
( Creditor need not exhaust all legal remedies against the debtor before holding the surety responsible.)

Front 21

does not join the principal debtor in making a promise, but makes a separate promise to be liable only after the principle debtor defaults and cannot pay
-secondarily liable
-Must be in writing only!

Back 21

guaranty

Front 22

Defenses of Surety & Guarantor

Back 22

-A modification of the contract between Debtor and Creditor that materially affects the surety/guarantor obligations
This will release a gratuitous surety entirely and a compensated surety to the extent he suffers a loss. Why?
-Surrender or impairment of the Debtor’s collateral releases surety to the extent he is damaged.
-Release of a co-surety releases surety to the extent he is damaged.

Front 23

-If the surety/guarantor performs or pays principal’s obligation, then the surety acquires all rights creditor had against the principal.
-Surety “steps into shoes” of the debtor obtaining: right to collateral in creditor’s possession, judgment rights creditor had against principal, and any creditor rights in bankruptcy proceedings

Back 23

Right of subrogation

Front 24

Surety may recover costs from the principal under their

Back 24

Right to Reimbursement

Front 25

If one of two or more co-sureties/guarantors perform or pay a principal’s obligation, the one who satisfied the obligation has what right from their fellow sureties/guarantors
-a surety who pays more than her proportionate share on a debtor's default is entitled to recover from the co-sureties the amount paid abouve the surety's obligation

Back 25

Right to Contribution