Suretyship And Liens

Front 1

Define: suretyship

Back 1

When a 3rd party has agreed to back up the debt of another under circumstances in which the original DR is still liable on the debt

Front 2

If there is a promissory note, who must sign

Back 2

Prinicpal DR + surety, but where they signed d/n matter

Front 3

What is the anagram for the SURETYSHIP

Back 3

DRAW PIC

D = defenses available to the DR

R = repayment rigt

A = alteration discharge

W = writing

P = pro-rata contribution

I = immediate/direct liability

C = consideration

Front 4

Must a suretyship promise be supported by consideration?

Back 4

Yes, unless it's a promissory note

Front 5

What is the exception when a writing is not required for a suretyship promise/

Back 5

Main purpose rule: the main purpose of the suretyship is the ECONOMIC BENEFIT of the surety

Front 6

What type of liablity does a surety have?

Back 6

Immediate and direct; a CR can go after the surety immediately instead of hte principal of COLL, unless the suretor invokes their right to force the CR to first go after the DR or COLL or unless hte suretor is a guarantor of collection (DR must be insolvent)

Front 7

Who ultimately pays the debt in a suretyship?

Back 7

The DR; the law protects the surety's right to receive repayment

Front 8

What is the liability for co-sureties?

Back 8

A paying surety is entitled to a pro rata contribution from other co-sureties unless their agreement says otherwise

Front 9

When are 3 times that a surety cannot assert DR defenses?

Back 9

1. Infancy/minor

2. Discharge BR

3. Incapacity

Front 10

What can wholly/partiall discharge surety's obligations?

Back 10

CR alteration of K or improper impairment of the COLL that produces loss

Front 11

What is the essence of a suretyship

Back 11

Contract

Front 12

Distinguish b/t guarantors and sureties;

Back 12

All guarantors are sureties and a guarantor can raise any defense a surety could; the major difference is that when there is a guarantor of collection, the CR must exhaust it's remedies against the DR or show that those would be futile before going after that surety

Front 13

What are the 3 major differences when there is a PN?

Back 13

1. No consideration is necessary

2. A modification only discharges if the surety suffered loss bc of hte modification

3. A discharge fo the DR does not discharge the surety

Front 14

Is an unidentified surety permitted at CL?

Back 14

Yes, when there is no legend identifying the surety, the DR is dischraged and another person who says they are a surety wants to be discharged; parole evidence may be permitted unless

K transferred to 3rd party; CR didn't know of surety relationships

Front 15

How can you have consideration for a contemporaneous surety v. a belated surety?

Back 15

1. Contemporaneous: CR promises to extend credit

2. Belated: (1) new consdieration to surety or DR or (2) detrimental reliance by CR

Front 16

When does the statute of frauds not apply to a suretyship promise?

Back 16

1. Direct promise to pay by a 3rd party

2. Main purpose rule applies (dist/ b/t personal and economic)

Front 17

How can a surety request that a CR go after a DR first?

Back 17

1. Request this in writing and send by registered mail

2. CR must commence the action w/in 30 days after the notice;

Front 18

Define: RES

Back 18

These are the rights the surety has against a DR;

Reimbursement (unles statute of limitations, debt was illegal, underlying debt obtained by fraud)

Exoneration: equitably order that DR assets pay debt before CR gets judgment against surety

Subrogation: paying surety subrogated to all rights CR has against DR

Front 19

When is a co-surety entitled to contribution even if they failed ot raise a defense?

Back 19

Normally, co-sureties must raise common defenses in order to be entitled to pro-rata contribution. This rule d/n apply if the defense (1) belongs to the paying surety only or (2) only belongs to a non-paying surety

Front 20

What are common co-surety defenses?

Back 20

Statute of limitations ran

Illegal underlying contract

Defect of signatures

DR dischrage

Front 21

When does an extension of time given to DR by CR discharge surety?

Back 21

at CL when it's a gratuitous surety; If the surety is compensated or there is a PN, then they are discharged only to the extent that there is loss

Front 22

When is a modification of contract by CR a discharge of a surety;

Back 22

At CL for a gratuitous surety; compensated and PN only to the extent of actual loss

Front 23

What happens if the COLL is impaired?

Back 23

There is a discharge to teh surety to the extent that the COLL is impaired;

Front 24

Can sureties waive their rights to discharge?

Back 24

Yes

Front 25

Define: Personal Property Lien

Back 25

A person who provides storage or repair services for another party's personal property is entitled to a lien to secure payment of the charges for storage or services

Front 26

When is a personal property lien lost?

Back 26

When possession is relinquished;

Front 27

What is the priority of a personal property lien?

Back 27

They have priority over Art. 9 liens, except: landlords liens and innkeepers liens

Front 28

What is a general service and storage lien

Back 28

Non-motor vehicle lien where

1. Work performed pusuant to a K and

2. Work performed in ordinary course of business

Front 29

What happens to the GSSL lien if a person in lawful possession but not the owner gets the lien?

Back 29

Max amount is $100; except motor vehicles

Front 30

What is the right of purchaser at a personal property lien foreclosure sale?

Back 30

A purchaser at a lien foreclosure sale gets all the rights fo the LH conducting the sale and will take priority over Art 9 if the LH claim would have had prioirty over Art. 9

Front 31

How is a real property lien created?

Back 31

First furnishing of goods/services, which means doing work or providing materials (visible commencement, unless they are engineers or architects)

Front 32

Who can file a real property lien?

Back 32

Owners, tenants and prospective buyers; contractor s and subcontracotrs

Front 33

Who can't create a real property lien?

Back 33

Real estate appraisor who prepares the appraisal

Front 34

What is the general rule for real property liens in regards to subcontractors?

Back 34

A subcontractor's lien upon funds owed to the party who hired it, if the sub isn't paid, it can claim a lien on the funds owed ot hte person who hired the sub

1. Send letter to person who owes them the money statig that they haven't been paid, they should have been and explain the work and that they are making a claim above them

2. If hte party ignores the notice of the lien the owner becomes personally liable and if the owner ignores, the subcontractor can get a lien on the landowners land

Front 35

When can 1st and second tier subs can a lien on the landowners real estate?

Back 35

1st -- improper payment or subrogation of GC's rights (1st tier not paid and landowner didn't pay GC)

2nd -- no subrogation if GC paid 1st tier

Front 36

When is a real property lien perfected

Back 36

Notice is given to the lien agent designated by the owner of real property unless the cost is less than 30K, work is on consumer's primary residence, no new mortgage/other claim arises

Priorit is dated from time notice given to the LA or work comenses, unless given w/in 15 days of commencing work (then relates back)

Front 37

What is the statute of limitations for a real property lien

Back 37

1. Claim filed with clerk fo court w/in 120 days after completion of work

2. Suit to enforce the lien filed w/in 180 days after the completion

Front 38

What is the priority of personal property lien holders?

Back 38

1st in time; 1st in right (notice to LA or creation of work)

Front 39

Who wins when there is a tax lien?

Back 39

Gov't always wins

Front 40

When there is a tax lien and different jurisdictions, what happens?

Back 40

Pro rata on tax sale

Front 41

What are the important things to note about a judgment lien?

Back 41

Only applies to a money judgment and only attaches to real property but lasts for 10 years but can be renewed until DR's death

Front 42

DEfine: doctrine of instaneous seisin

Back 42

subordinates prior judgement lient to a seller/3rd party financer's PMM

Front 43

What is the judgment lien priority for AA propert?

Back 43

pro rata share

Front 44

When is a P entitled to an attachment lien?

Back 44

This is rare; only if P can show

1. Risk that D wil be unavailable at judgment

2. Assets will be unavailable at judgment