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52 Cards in this Set

  • Front
  • Back
The method of transferring a note is by endorsement.
Each co-maker of the note is fully responsible for the payment of the note.
The maker of a note is realeased by the sale of the security securing the note.
A valid debt must exist to have a valid mortgage.
The mortgagor of a mortgage is the lender or creditor.
A foreclosure of a first mortgage will terminate a second mortgage lien on the secured property.
A property sold with a mortgage assumption means that the purchaser does not have personal liability to pay the debt.
Foreclosures may take place either judicially or nonjudicially.
A mortgage cannot be given to secure a future debt.
A debtor always the right to pay off the debt and redeem the real property from foreclosure befor the sale.
What is an open-end or dragnet mortgage?
This is a mortgage that is given to secure any and all debt between the mortgagor and the mortgagee, including past debt, present debt, and future debt.
What is the difference between purchasing real property subject to a mortgage and assuming a mortgage?
The purchaser of real property does not have personal liability for the payment of the mortgage. The purchaser of real property who assumes the mortgage has personal liability to pay the mortgage.
What risks are inherent in second-mortgage loans?
The main risk is the first mortgage will not be paid and foreclosure may result. The foreclosure could have the effect of terminating the second-mortgage lien.
Why is bankruptcy a good debtor's defense to a foreclosure?
It acts as an automatic injunction to any attempts to foreclose on the debtor's property.
You are assisting in the representation of a lending institution as the holder of a promissory note from the Good Earth Land Company. The note is personally guaranteed by the principal shareholder of Good Earth Land Company, Gooden Earth. The note currently is being modified to extend the final term for repayment for an additional five years. Is there any documentation in regard to this extension in addition to the note you should receive from Gooden Earth?
The general rule of law is that an alteration of the note without a guarantor's sonsent releases the guarantor from the guaranty. Gooden Earth, as guarantor, should consent to the extension of the note and agree the extension will not in any way affect his guaranty.
You are assisting a mortgage lender who specializes in making second-mortgage loans to homemakers. You have been requested to prepare an estoppel certificate to be signed by the first mortgagee on the home. What types of things would you include in the estoppel certificate to be singed by the first mortgagee?
a) Attach a true and correct copy of the note and first mortgage.
b) State the outstanding upaid principal balance of the note.
c) State that the borrower is not in default.
d) State the second-mortgage will not constitute an event of default.
e) Agree to give the second-mortgage holder notice of any defaults under the first mortgage and an opportunity to correct such defaults before foreclosure.
You are a legal assistant in a law firm that handles foreclosures for mortgage lenders. You are attending a power of sale foreclosure. The bidder at the sale bids and buys the property for $100,000 more than the debt owed to the foreclosing lender. As you are standing there with the $100,000 in hand, a person approaches you. The person tells you that he has a second mortgage on the property in the amount of $50,000 and that he is entitled to that amount in excess proceeds. Should you give this person the money? What should you do with the excess money?
Do not give the money to the alleged second-mortgage holder. The money should be interpled into court so the proper parties can be determined.
What are the requirements for a valid mortgage?
a) Names of the parties.
b) Words of conveyance or grant.
c) Valid description of the property.
d) Description of the debt being secured.
e) Proper execution and attestation.
f) Effective delivery to the lender.
What is the effect of a valid foreclosure sale?
It terminates the owner-debtor's interest in the property. It also terminates any interest in the property after the date of the foreclosed mortgage.
What is the difference between a promissory note and a guaranty?
A promissory note is an obligation to pay money. A guaranty is an obligation of a person other than the debtor to guarantee payment of the note.
Name the parties to a promissory note.
a) Maker
b) Payee
Must a guaranty of a note be written?
List the three basic security instruments given to secure a note in commection with a loan secured by real property.
a) Mortgage
b) Deed of Trust
c) Security Deed
List the parties to a deed of trust.
a) Owner of the property.
b) Lender
c) Trustee - holds title for lender.
When is interpleader used in commection with a foreclosure sale?
Money is paid into the court. The debtor and all junior mortgage holders who have an interest in the money are notified of the proceeding. The lender is released of any obligation upon payment of money to the court.
What is the importance of filing a UCC Financing Statement?
The method of protecting a creditor's security interest in personal property is by filing a UCC-1 financing statement. If the statement is properly filed, the creditor's security interest will be protected against subsequent purchasers or creditors who deal with personal property.
What information is required on the UCC-1 Financing Statement?
a) Debtor's name and address.
b) Secured party,s (creditor) name and address.
c) Description of personal property.
d) Description of real property where personal property is located.
The debtor and property must be precisely identified.
A title examiner would search the grantee index from the past to a present date.
A bona fide purchaser for value will receive ownership of property subject to all claims that the purchaser had actual or constructive notice of.
The most common recording statute is the notice recording statute.
The most common recording statute is the race recording statute.
Constructive notice is imparted to unrecorded instruments that are referred to in a recorded instrument.
A lis pendens gives notice of a federal tax lien against the property.
A person who acquires property by inheritance is not a bona fide purchaser for value.
Probate records should be examined when property is acquired or passes through an estate.
The grantor index enables an examiner to build a chain of title from present to the past.
Once a judgement has been recorded in the public records, it becomes a lien on all property of the judgment debtorowned at the time of recording but not on any future property acquired by the debtor.
What is the difference between actual and constructive notice?
Actual notice occurs when a purchaser has direct knowledge or information about title matters. Actual notice includes any facts that the purchaser can see with his own eyes, any facts the purchaser learns about the property, or any information that should put the purchase on alert to conduct an investigation that would lead to the finding of certain facts in regard to the property.
Constructive notice is a presumption of law that charges the purchaser with responsibility of learning about all title matters that would result from an inspection of the property or an examination of the public real property records.
What are the three types of recording statutes, and how do they differ?
a) Race
b) Notice
c) Race-notice
Differences between the three involve the timing of the recording as well as knowledge of prior ownership of the real property.
Explain the bona fide purchaser for value rule.
The rule states that anyone who purchases property in good faith for valuable consideration without notice of any claim to or interest in the property by any other party takes the property free and clear of any claims to or interests in the property by other parties.
What is the difference between a grantor index and a grantee index?
A grantor index is an alphabetical list by last name of all people who are grantors of a real property interest within the county in a given year. The grantor index will have a list of sellers, borrowers, mortgagors, grantors of easements, etc.
The grantee index is an alphabetical list by last name of all people who are grantees of any property interest within the county in a given year. The grantee index will have a list of purchasers, holders of mortgages and security deeds, easement holders, tenants, lien holders, etc.
Jose has been using a road over his neighbor Sam's property for the past twenty years. In the state where Jose and Sam live, the use by Jose of the road for twenty years gives Jose a prescriptive easement. There are no written documents evidencing the easement. The road is plainly visible from an inspection of the property. If Sam sells his property to Alice, does Alice have a right to stop Jose from using the road?
No, Alice cannot stop Jose's prescriptive easement. Alice as a bona fide purchaser for value, will take subject to any title matters that she has actual or constructive notice of. The road was clearly visible from an inspection of the property, and therefore, she has actual notice of the road if she had inspected the property, and constructive notice, since Alice has an obligation to inspect the property.
Mary owns a small apartment complex. At the time Mary purchased the apartment complex from Sam, she gave Sam a mortgage securing a debt for $100,000. The mortgage was mentioned in the recorded deed from Sam to Mary for the apartment complex, but the mortgage was not recorded. Mary sells the apartment complex to John. Mary does not tell John about the unrecorded mortgage to Sam. After the sale of the apartment complex from Mary to John, is the mortgage held by Sam enforceable against the apartment complex?
The mortgage held by Sam is enforceable against the apartment complex. Because the mortgage, although it was not recorded, was mentioned in a deed that was recorded, the mortgage was therefore properly entered into the real property records and provided constructive notice for all subsequent purchasers of the apartment complex, including John.
Would it be easier to find a recorded mortgage from Alice Owner to Sam Seller by looking under Alice Owner's name in the grantor index or by looking under Sam Seller's name in the grantee index?
It would be easier to look under Alice Owner's name in the grantor index.
You are assisting an attorney in the closing of a real estate transaction. You have in your possession a copy of the contract for the purchase and sale of the property. The contract contains the names of both the purchaser and the seller as well as a complete legal description of the property being bought and sold, and has been attached as an exhibit a survey of the property. You have been asked to order a title examination on behalf of your client. What information do you need to give the title examiner?
a) name of the current property owner (seller).
b) Legal description of the property.
c) Survey of the property.
Purchaser and seller have entered into a contract gor the sale of real property. Before closing, Seller has refused to honor the contract and decides to sell the property to a third party. Purchaser files suit against Seller for breach of contract. What else should Purchaser do to protect his or her rights against Seller and in the property?
A pending suit may affect title to the property will not constitute notice to a bona fide purchaser for value unless a notice of lis pendens is filed. The purchaser to protect rights against subsequent purchasers of the property, would need to file a lis pendens.
What information is provided in a grantor or grantee index?
a) Grantor name.
b) Grantee name.
c) Date of instrument.
d) Date of instrument recording.
e) Nature of the instrument.
f) Description of property conveyed.
g) Record book and page number where instrument can be found and examined.
Explain how an unrecorded document can be imparted as constructive notice to a bona fide purchaser for value.
An unrecorded document that is referenced or mentioned in a recorded document would give constructive notice.
Why is recording a real estate instrument important in connection with the bona fide purchaser for value rule?
The recording of a real estate document gives constructive notice to a subsequent bona fide purchaser for value.
Where are title examinations generally conducted?
At the courthouse in the county where the property is located.
When reviewing deeds and other instruments found in a title examination, the examiner usually will note what information concerning each instrument?
a) Identity of parties, the date instrument was signed, and the date it was filed.
b) Examine the signature and witnessing requirements.
c) Note what estate was being conveyed, fee simple or life estate.
d) Pay particular attention to any covenants or other requirements that may be set out in the instrument.
What is lis pendens and why is it important in a title examination?
A notice there is a lawsuit pending regarding title to real property.