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### 9 Cards in this Set

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 What is the difference between a mortgagor and a mortgagee? Mortagagor- fee simple owner Mortgagee – the financing equity May a third party benefidciary K be formed after there is a brake in assumption? Assume mtg payable to the bank -->TPB K Another Assumption --> another TPBK Subject to --> no TPB K (this is called a break in the assumption) Assumption --> Tpb Under assumption the old owner is liable unless you have a novation. Subject to- O owes bk 500,000 N1 buys house from O and takes subject to the MTG- there is no promise by N1 to pay off the mortgage. What is the equity? Sell for 100k on a 75k mortgate the equity IS \$25K S decides to sell her equity in ther home to V her neighbor. V was not able to finance her own motgage so S agreed to let V assume her mortgage commitment to the bank. V then paid off the equity to S. V made the required payments than stopped. The bank forclosed and sold the prop. It id not pay off the debt and there was a deficiency. Does S still ow the debt to the Bank? Both are liabile unless there is a novation What is the difference between assuming the mortgage and taking the mortgage subject to? Assumption- means the buyer takes a person liability to make the payments. The old owner is liable unless you have a novation There is a tpk Subject to- no TPB...Subject to- O owes bk 500,000 N1 buys house from O and takes subject to the MTG- there is no promise by N1 to pay off the mortgage. If a buyer takes a house subject to the payments and they no longer make payments is the old owner liable? and can they sue the new owner for the payments? Yes the old owner is still liable. And no you can not sue because they never made a promise to pay under the language of "subject to" If the bank who gave out the mortgaee to the owner number two sued turned around and sued them for the money would they prevail? Yes because with subject to there is a greater risk to Why whould the someone want to purchase another's equity in a property under subject to? She does not have to shoulder the burden. Gain security from future liability What happens if there is a break in the chain of assumptions?- May you have subsequent k after a “subject to”? Problem 180 This is the break in assumptions- May you have subsequent k after a “subject to”? Once you have a subject to you can have no further tpb k. since a promise to pay nothing can not be transferred. Majority says that it makes no difference. You may have subsequent TPB K’s after a “subject to” Who does the majority position favor? The bank? Majority- the bank wins. Minority clark wins. Clark Bank Scarlette- Regardless of where the third party arises. Run the white sheet all the way through.