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6 Cards in this Set

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What is the Spangler exception to anti-deficiency bars?
Anti-deficiency bars will not apply when the nature and use of the property changes and the seller knows about the change.
When will courts lift an automatic stay in bankruptcy?
ME must petition the court to lift the stay and:

1. Show that there is a lack of adequate protection of the security or

2. Show the debtor lacks equity in the property and that they property is not necessary for proper reorganization.
What are the types of anti-deficiency statutes?
17-19 states rely on FMV: deficiency is limited to debt-FMV

12-14 states impose procedural/1 action requireemnts: can only go after debtor once

7 states strictly prohibit in certain circumstances: most ofteen see with PMM on residential property. Converts debt into non-recourse.
What are the ways to limit an OE Clause?
Stated Maxmimum amount of debt
Same kind of debt
Limit to contractual debt
limit to same parties
Require express reference to the mortgage instrument
Obligatory/Optional distinction
Cut-off provision (letter from MR)
What are the six powers a bankruptcy trustee which an ME should fear?
Avoidance of security- TR has all defenses available to MR and others because considered a BFP

Automatic Stay- Upon filing of a petition, all actions against debtor are stayed.

Cure of Default- TR can cure default and deaccelerate the loan.

Voidable preferences- A transfer to a creditor within 90 days of the filing of the petition, were the creditor received more tha he would have received under straight litigation is voidable by TR.

Fradulent Transfers- TR can set aside transfers made within a year if debtor was insolvent at time of transfer and debtor received less than reasonable equivalent value.

Control of rents- TR has power to control- will trump assignment of rents agreements.
What is an OE Clause?
An open-ended clause creates an open/indefinite amount of debt on the security.

Can range from a Dragnet to Future Advances.

Dragnet clause can add on any debt, prior or future, from any source if held by lender.

Future advances can only cover additional advances by the lender. Found everywhere for insurance+taxes.

Many courts require a showing of intent at the time of the debt to include in M debt or only can add like kind of debt.