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27 Cards in this Set

  • Front
  • Back
What are security interests?
Devices used to secure a loan on real property.
What are the 3 types of security interests?
1. Mortgage
2. Deed of trust
3. Installment land contract
Given by a debtor (mortgagor) to a creditor (mortgagee).
What happens if mortgage isn't paid?
Sheriff sells the land at a court-ordered foreclosure sale if mortgage isn't paid.
What are 2 special situations also treated as a mortgage?
1. Absolute deed (equitable mortgage) - separate promise of re-conveyance
2. Sale/leaseback - option to repurchase
Deed of trust?
Given by debtor to a third party trustee who holds it until the loan is paid off.
What if the loan is not paid?
Trustee may get court to order sale or trustee may sell property on his own at a public auction.
Installment land contract?
Debtor signs a contract promising to make payment, and seller keeps title until loan is paid off.
Intro card
What are the consequences of having mortgage/deed of trust? 6 items.
1. Equity of redemption
2. Foreclosure by public aution sale
3. Multiple mortgages
4. Foreclosures wipe out...
5. Proceeds of foreclosure sale
6. Mortgage is foreclosed and not enough money to pay off mortgage
Item 1: Equity of redemption
At any time up to the foreclosure sale, debtor can redeem the property. Amount in arrears or acceleration clause, whichever is required or allowed.
Can the right of redemption be waived?
No, but can be done later with separate consideration.
Clogging this right is prohibited though.
If multiple mortgages...
Priorities are first in time, first in right, unless a recording act changes that.
3 points on mortgage priorities
1. Mtg priorities may be changed by contract
2. Purchase money mortgages are given priority over other mortgages
3. If owner does anything to increase a senior mortgage, then that mortgage loses its interest over junior ones, but only to extent of the change.
Foreclosures wipe out all...
Junior interests, but do not wipe out senior interests.
Junior interests do not go with the land...
They will be paid off if there is enough money coming from the foreclosure sale.
Protections to holders of junior interests?
They have the right to pay off any mortgage being foreclosed in order to keep their interests.
Use proceeds of foreclosure sale in this order:
1. Costs of foreclosure, inc. atty's fees and expenses
2. Pay mtg that was foreclosed, inc. interest
3. Pay off junior interests, in order
4. Anything left goes to mortgagor
If mortgage is foreclosed and not enough money to pay off the mortgage...?
Let mortgagee sue debtor for balance due.
What to look for in an installment land contract?
Look for a forfeiture clause; says if debtor misses a payment, seller can cancel the K, keep all money, and get the property back.
Each party can freely transfer his/her interest in the property.
Mortgagor can do what?
Transfer title to property; mortgage tags along; and transferee takes subject to the mortgage.
Mortgagor continues to be personally liable on the note.
Unless grantee specifically assumes mortgage (mortgagor is still a surety if grantee can't pay), grantee is not personally liable on it.
What's a due on sale clause?
Mortgagor transfers w/o the mortgagee's consent, and the full amount of the loan is immediately due and payable.
If a fixture filing is not made as required by UCC Article 9 within 20 days of attachment...
then the security interest in the chattel is subordinate to the earlier mortgage on the real property.
If fixture filing was done properly, then...
supplier of chattel can simply remove it w/o regard to any earlier mortgage or security interest.