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Mortgages

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QuestionAnswer
Mortgage -secures pymt of a debt (doesn't create debt) -Debt is created by a promissory note -transactions purporting to be cond'l sales/absolute deeds may be treated as mrtg if the intent of parties was only to secure pymt
Strong Indications that Mrtg was intended 1. there was no change in possession 2. there is agreat disparity btwn the value of the prop and price 3. the transaction incl. a provision for redemption by or a reconveyance to the "seller" 4. Borrowing or lending accompanies the execution of the ins
Conveyance Any written instru by which an estate or interest in real estate is created, alienated, mrtged, or assigned in conveyance. -A mrtg is a conveyance because it transfers an interest in real property from one person to another
Default -defined by the agrmt btwn the parties. -Typically, default includeds failure to make pymts on the loan, failure to maintain adequate insurance, failure to pay taxes and assessments
Mortgage Lien -a claim thta is enforceable against land upon which the mrtg is based if there is a default. -any violation in the nature of the lien/charge on the land is also a violation of the covenant that property is free from all encumbrances
Mortgagee -a lender, who, in exchange for lending moeny, takes a security interest in real property. -ME -is a person entitled to bona fide purchaser protection
Mortagor -MR -is a borrower and owner of real property upon which the mrtg is based
Purchase Money Mrtg -is given to secure the loan that was used to purchase the mrtged premises
Lien Theory -WY -Title to property is deemed to remain in the MR, and the ME has a lien on the propety. -ME has no interest in title, only the right to foreclose in the event of a Default
Lien Theory Cont... -A ME's only remedy, after default is to obtain a jdgt against the MR & order to foreclose the mrtg and sell the prop to satisfy jdgt -Title to the prop passes to the ME after foreclosure and expiration of redemption rights, & upon receipt of sheriff dee
Compare-Title Theory -Some states have adopted a title theory, under which legal title passes to the ME upon execution and delivery of the deed. -The MR retains only the right of redemption
Execution and Description: Acknowledgement -Execution of mrtg must be acknowledged by parties before a judge/clerk/magistrate/county clerk/or notary. -If it's not acknowledged, it is not effective as against 3rd parties -Recording unacknowledged mrtg isn't constructive notice
Execution and Description: Marital Property -A husband may not, by himself, mrtg prop held with his wife as tentants by the entireties -Both parties must sign the mrtg, or it is not a valid conveyance
Exection and Descrption: Description -an error in prop descrip will not affect the validity of mrtg if the descrip still sufficienty identifies the prop. -If it misleads 3rd party, the mrtg may not be valid
Excecution and Description: Property included in Mortgage: Liquor License -legal descrip that stated "all other items necessary or useful to the practical and successful operat of a hotel" incl the hotel's liquor license. Upon foreclosure and sale, the purchase had first right to apply for rewnewal/transfer of the license
Property included in Mortgage: Water Rights -A mrtg on the landowners interest included the MRs interest in the water, despite absence of any specific reference in the instru to the water. -Forclosure, the ME becomes owner of such rights
Property included in Mortage: Fixtures whether an item becomes a fixture depends on the ojective intent of the parties. -Fixtures annexed to the mrtged prop by the MR come under the lien of the mrtg as btwn MR and ME.
Recording: Place of Recording A mrtg must be recorded in the office of the county clerk in the county where the property is located
Recording: Race-Notice -WY -a properly recorded mrtg is constructive notice to any & all 3rd parties, and scuh mrtg takes precedence over subsequent pruchaser, ME, or lein claimant. -unrecorded mrtg is void as to subsequent GF purchaser who give val consid. (purchasers burder
Recording: Release -ME must release the mrtg w/in 30days after receiving by certified or registered mail a written request to release if there has been full perform. of the mrtg. -Failure to makes ME liable for actual damages & special damages in amt on .10% of orig princi
Rights of MR -Possession of prop until exp of MRs redempt period -Rents & Profits of prop until exp of MRs redemp period -Assignment: MR may, in absense of provision to contrary, assing the mrtg, and the ME may not object
Relationship With Lender Generally, a contractual one, defined by the written loan doc -Lender may incur add'l obligations to borrower through conduct that creates a special or fiduciary relationship: this relationships is extraordinary and not easily created
Adverse Possession -adverse entry made b4 the mrtg is executed, the ME must act w/in 10yrs after entry -If adverse made after mrtg is executed, 10yr SoL doesn't begin to run against the ME until mrtg becomes due. ME may not extend the 10yr period by extending time for pymt
Leases -A ME cannot disaffirm a lease executed prior to the mrtg -ME may cancel a lease executed subsequent to the mrtg only upon foreclosure and onli if the lessee is made a party to the foreclsoure suit
Waste -MR's waste: ME may seek injunction/sue for damages in the amt that its security is impaired. Restrain ME from removing fixtures when removal will impair value. IF prop is sold on foreclosure ME may not maintain action for waste committed prior to sale
3rd Party's Waste A ME has an action for waste against a 3rd party if: 1) the ME's security is impaired; and 2) the 3rd party's acts are wrongful agasint the MR, or the 3rd party has knowledge of the mrtg
Assignment of Rents and Profits -By Agrmt: ME must take affirmative steps to obtain by: 1)notice to tentants to pay ME; 2)taking possession of prop, 3)petitioning crt for appointment of reciever -By Crt order: may award rents & profits to ME for prevention of waste, preservation of pro
Due on Sale Clause -a mrtg provision that authorizes ME to declare due & payable all sums secured by mrtg if any part of the real prop securing the loan is sold or transferred w/out MEs consent. -Fed law permits in resid'l mtgs unless state law prohibits-WY doesn't prohibi
Foreclosure: Default on agrmt underlying the mrtg entitles the ME to take steps (foreclosure) -Foreclosure cuts off the MRs equity of redemption (EoR) -EoR=common law right of MR to recover mrtged prop free & clear by paying the entire debt after default & b4 foreclosure
Foreclosure: Acceleration Mrtg and note evidencing the obligation secured by the mrtg may provide that the entire amt of debt becomes due upon any default. -this permits ME to collect entire amount of debt immediately, rather than only the amt of missed pymt.
Foreclosure: Alternatives the ME may foreclose the mrtg by judicial action or, if the mrtg so provides, by advertisement and sale
Waiver of Strict Compliance -ME's acceptance of late pymts or acquiescence in other deviations from the terms of the mrtg may constitute waiver of these provisions, and the ME may not insist on strict comliance until waiver is cured by notice of intent to isist on strict compliance
Judicial Foreclosure: Jurisdiction and Venue -in rem proceeding; proper venue county where land is situated -if prop situated in more than 1 county, action may be brought in any county where part of the prop is located. -St crts have juris over owndership rights in fee patented lands on Indian res
Judicial Foreclosure: Junior Interests -person w/ an interest in land that is jr or subject to the mrtg is a necessary party D -Party who acquires interest during course of proceed is not necessary party, but will be bound. -When not made party to foreclosure-not bound to foreclosure decree
Judicial Foreclosure: Unrecorded Jr. Interest -Unclear whether is a necessary party -G/R: the foreclosing party must join such part if the ME has actual knowledge of such interest.
Judicial Foreclosure: Senior Interest -Sr is not subject to mrtg -Party w/ sr. interest is not a proper D -foreclosure will not affect sr interest and purchase will take subject to sr interest
Judicial Foreclosure: Mortagor/Transferor A MR who has transferred the prop is a propery party beacuse of his personal liability on the debt
Judicial Foreclosure: Effect of Nonjoinder -of a necessary party-doesn't impair party's interest. Omitted party may bring action for redemp or foreclose his interest as if there was no prior foreclosure. -Purchaser at foreclosure sale must bring a new foreclosure action against omitted parties
Judicial Foreclosure: Form of Judgment -Typical foreclosure decree in Wy gives jdgt to the ME for the entire amt of the debt, then orders that the prop securing the debt be sold, w/ the proceeds of the sale applied in satisfaction of the debt
Judicial Foreclosure: Foreclosure Sale -an action for foreclosure results in a judicial foreclosure sale -i.e. a public auction by the sheriff, with the prop going to highest bidder
Judicial Sale: Notice -time and place of sale, names of the P and D, and descrip of prop must be advertised in a newspaper of general circulation in the county where the prop is loacted for 4 succcessive weeks before sale.
Notice Must State: "the property being foreclosed upon may be subject to other liens and encumbrances that will not be extinguished at the sale & any prospective purchaser should research the status of title before submitting a bid"
Judicial Sale: Parties Present -foreclosing ME, jdgt creditor, foreclosing lienor, or auth. agent of the foreclosing party must be present at the same unless that person has previously waived w/ the sheriff the right to appear and bid -Any sale conducted w/out these peeps is void
Role of Sheriff -The sheriff conducting sale is not the authorized agent of the foreclosing party unless the foreclosing party give the sheriff an authorized opening bid that the sheriff presents at sale
ME as bidder the ME may bid at a sale and can bid up to the value of the debt w/out having to pay any money
Certificate of Purchase Purchaser at sale receives a cert of purchase, executed by sheriff conducting sale, stating amt of bid & that purchaser is entitled to a sheriff's deed at end of redemp period, unless prop is redeemed. -Cert is to be recorded. Not conveyance of title
Judicial Sale: Misc Rules -The purchaser at a foreclosure sale has a mere inchoate right until the sale is confirmed by the crt -The price of purchase at sheriffs ale establishes the redemption price and also determines whether there is a deficiency jdgt
Termination of Interest In the event a person obtained an interest in prop subsequent to mrtg foreclosure, was not party D, or was not given proper notice, that person's interest may be terminated in civil action commenced by any holder of a cert of redemp/sheriff deed
Confirmation of Sale -Crt has inherent pwr to refuse confirmation -general econimc situation makes it impossible to achieve fair price-crt may refuse -mere insufficiency of price generally doesn't justify refusal
Purchaser -properly conducted=takes free&clear of jr interests joined in foreclosure action & of unrecorded conveyances/mrtgs -obtains same title that relates back to time mrtg created -1st ME who purchases may cut off rights of 2nd if sale w/out collusion
Deficiency Judgment if the property sells for less than the amt of the jdgt, there is a deficiency jdgt for the difference, which is a personal obligation of the MR
Foreclosure Sale: Prerequisites 1. Mrtg on defaulted prop must contain pwr of sale provision 2. mrtg must have been recorded 3. must be a default 4. no suit instituted to recover debt secured by mrtg; and 5. notice of intent to foreclose must be sent by cert mail/return receipt/last
Foreclosure Sale: purpose avoid expenses and delay of a judicial proceeding
Foreclosure Sale: enforceability -A pwr of sale provision is a pwr coupled with an interest & is irrecovable by the MR -Upon death of MR, the ME is not req'd to fila claim against MR's estate unless a deficiency jdgt is sought
Foreclosure Sale: Procedures Unless the mrtg provides, pwr of sale foreclsoure sales must be conducted in accordance with the statutory procedures
Foreclosure Sale: Notice of Sale To the Public -Published for 4 successive weeks in paper of gen circu in county prop is located. Must incl: 1)time & place of sale 2)names of MR and ME 3)date of mrtg and recording infor 4)amt claimed to be due as of date of notice 5)descrip of prop 6)look prev state
Foreclosure Sale: Notice of Sale To Individuals Prior to 1st pub, a copy of notice must be served by return cert mail on: 1)record owner 2) peron in possession of mrtged premises, if different from record owner 3) all holders of recorded (last 25yrs) mrtgs and liens subordinate to mrtg being foreclosed
Foreclosure Sale: Notice of Sale To Corporations -on a corp mrtg-must be addressed to individual officer of corp, make reference to corp and be sent to corps last known adress.
Foreclosure Sale: Conduct of Public Sale -Place= held by sheriff, person appointed, at front door of crthouse of county in which prop is located -Terms of sale -Attendance by foreclsoing ME, jdgt cred
Payment of Proceeds paid by officer making sale in follwoing order: 1 reasonable expenses of the collection & enforcement 2 satisfaction of obligations secured by the mrtg being foreclosed 3. satis of oblig secured by subord/jr mrtg or other lien 4. surplus on demand to
Test to set aside a Foreclosure Sale 1. Blameless P 2. absence of neg on part of person seeking relief 3 D w/ knowledge of mistake attempting to secure by inequitable condcut an unconscnionalbe advtg over P and to enrich selves unjustly at Ps expense 4. ability of crt to restor to status
Defective Sale: Exception A BFP takes free of defects in sale: to achieve this status purchaser must prove he is a: 1) purchaser in GF 2) for valuable consid 3) with no actual, constr, or inquiry ntoce if alleged defects in MRs title 4) would be prejudiced by cancellation
Notice actual=knowledge of another purchasers interest construct: notice of all properly recorded claims Inquiry: notice fo facts that would prompt a reasonably curious person to inquire further
Notice: Lis Pendens Purpose=to warn all persons that certain prop is the subject matter of litigation and that any interests acquired during the pendecny of the suit are subject to its outcome -preserves rights
Foreclosure Sale: purchaser -takes title free of all interests jr to the mrtg. -ME may "fairly and in GF" pruchase the prop -Sale may be conducted by the sheriff even if mrtg specifies the ME must conduct sale
Foreclosure Sale: Deficiency Sale A ME must acct to and pay a MR for any surplus, and the MR is liable for any deficiency -If prop sells for less than debt, the ME may seek a jdgt agaisnt MR for deficiency
Deed In Lieu of Foreclosure -a deed from the MR to the ME, given in full satisfaction of debt -agrmt to waive right of redemp is invalid and unenforceable. MR not precluded from conveying prp to ME subsequent to exection of mrtg in consideration for release of personal liabilty
Deed In Lieu of Foreclosure cont... -ME who takes a deed runs risk that rights of jr lienholder may not be cut off -MR may attack deed by action for redemp -crt uphold as mrtgs transactions in which MR, after default, conveyed prop to ME, who in turn executed K to convey back to MR
Redemption -under lien theory, a MR has statutory right to redeem mrtged prop after mrtg has been foreclosed & the prp has been sold at a foreclosure sale. -Cert of purchase=lien against or equitable interest in prop -MR retains legal title until redemp period end
Redemption -in the event of redemption by MR, foreclosure sale and cert of purchase are null and void -jr liens/mrtgs are revived, but mrtg itself doesn't survive & cannot be foreclosed again
Redemption: MR Agricultural Real Estate (any parcel of land excess of 80acres outside boundaries of city/town) -MR, heirs, excecutors, admins, assignees, or guarantor may redeem ag real estate w/in 12mos after date of sale -12mos redemption period available only upon foreclo of mrtg no jdgt
Redemption: MR Non-agricultural Real Estate -MR, heirs, executor, admins, assignees, or guarantor may redeem nonagricultural real estate within in 3 months after the date of sale
MR: Effect of Redemption -MR has stat right of redemp that commences w/ forecl sale & continues for that period. -MR preserves orig title & doesn't reacquire title from purchaser @ sale -redemp voids forecl sale and reutrns prop to presale status except for oblig that's been pd
Redemption: Jr Liens -Jr liens are revived at redemption because redemp renders foreclosure sale null&void -Mrtg given to secure redempt money has priority over any jr liens that might be revived -IF MR doesn't redeem, jr parties may redeem w/in successive 1-mon periods
Redemption Price -Amt to be pd to exercise right of stat redemp is based on price pd at forecl sale -MR must pay purchase price plus 10% annual interest, plus amt of any taxes, assessments, or liens pd by purchaser -Jr lienholders must the same plus any sr lien held by
Possession, Rents and Profits Ag Real Estate: MR entitled to retain for 3mos after sale Non-Ag: MR entitled for 3mo period during which he can redeem. Purchaser entitled upon expiration of 3-mo redemp period until jr lienholder redeems
Sheriff's Deed Contents: statment of jdgt, date of execution, statment of mrg date/place of record, parties, & statement of decree in case of forecl suit, or statment of time/place of sale. -Effect=good title to prop-conveys to grantee title, estate and interests of MR
Installment Land Contracts -a K under which property is sold on an installment plan, and the sller allows the buyer to take possession of the prop -title remains with seller until pymt of last installment
Installment Land Contracts: Default: Sellers Options options upon default -Sue for SP: -Declare Forefeiture: may repossess prop and retain all pymts made by buyer as rental pymts and liquidate damages, elminating buyers interest -See Strict Foreclosure
Installment Land Contracts: Default: Buyers Rights default by seller, options: -Sue for SP -Restitution: of amts pd on K less seller's actual damages (show fraud, accident, mistake, unconscionability, unfair, oppressive forfeiture) -Declaratory Jdgt:seeking to have K declared an equitable mtg -Resciss
Security Deeds -an absolute conveyance from borrower to lender as part of an agrmt by lender to reconvey prop to borrower when debt is pd. -likely to construed by crt as mrtg, creating right of redemption
Priorities: WY is a filing date priority juris. -an action to determine the relative priorities of mrtg and jdgt leins is equitable in nature, therefore, there is not right to jury trial -Priority btwn ME and holder of perfected SI in personalty is governed by UCC
Purchaser at Foreclosure Slae -Assuming there are no redemptions, title to the mrtged prop vests in the purchser at the foreclosure sale and relates back to the date of the mrgt, extinguishing invervenign rights and claims
Judgement Liens: Automatic Liens -District Crt jdgt is a lien against the real prop of jdgt debtor located in county from the date of jdgt is filed with county clerk -jdgt rended from circ crt must be filed with clerk of dist crt and county clerk
Judgment Lien: when it attaches -from day the jdgt is filed with county clerk -Jdgts by confession and jdgts rendered during the same term in which the action was commenced are liens against the prop from the date on which the jdgt was rendered
Judgment Liens: Priority -a prior jdgt lien has priority over a subsequent mrtg. -any mrtg has priority over a lter jdgt lien -clerk must maintain syst for indexing jdgts
Replacement Mortgages -a mrtg replaced by a new note and mrtg -acquires the priority of the replaced mrtg, unless new mrtg modifies the mrtg to the detrimient of jr leinholders
Purchase Money Mortgages -a mrtg given to secure the looan that was used to purchase the mrtged prop -the test of whether a mrtg is a purchase money mrtg is whether the proceeds are to be used for the purchase price
Purchase Money Mortgages: Requirements -must be given directly back to seller or lender who lent funds used for the purchase to secure the unpd balance of purchase price -mrtg must be executed in course of same transaction during which prop is acquired but need not be exactly contemporanesous
Purcahse Money Mortgage: Priority -has priority over other liens that otherwise would attach immediately -rationale for priority afforded is that such a mrtg makes other liens possible
After-Acquired Property Clause -a provision in a mrtg stating that property subsequently acquired by the MR will secure the mrtg debt
After-Acquired Property Clause: Validity -generally upheld as btwn the parties to mrtg -clause creates an equitable lein on the theory that this type of mrtg is a K to give a mrtg when prop is actually acquired
After-Acquired Property Clause: Warranteis Crts may require that a mrtg contain warranties of title if the after-acquired prp is to be included w/in the operation of warranty
After-Acquired Property Clause: Fixtures and Improvements -ME generally entitled to these -if SI is created and perfected in chattel before it is attached to land, the SI has priority over the mrtg on land, although the secured party is liable for damges to land resulting from removal of fixture
Mortgages to Secure Future Advances -any mrtg given to secure loans to be made in the future (usually const loans) -have priority over subsequent liens, even when advance made after subsequent lien attaches -MR who makes advances w/ notice of intervening lien doesn't have priority over li
Materialmans or Contractor's Liens -arises by operation of law to secure ymt for work performed on or materials provided for improvements to real prop.
Scope of Materialmans Lien -attaches to improvements & real prop on which the improvements are located up to one acre. If improvements cover more than one acre, the lien extends to all the add'l land covered by improvements
Materialmans or Contractor's Liens: Priority -priority over all subsequent liens as of the commencement of construction on the improvements and real prop. Priority date of all liens for work performed or material provded for a project relates back to the date of commencement of construction.
Materialmans or Contractor's Liens: Satisfaction of LIen -lienholder may remove the improvements from the land to satisfy the lien
Federal Tax Liens -are superior to mrtgs perfected after the lien is effective
State Tax Liens: Severance Tax Lien -are superior to all other liens, claims, mrtg or encumbrances except one held by Bona fide creditor and propely perfect, filed and recorded under WY law prior to filing of severance tax lien
State Tax Liens: Mineral Prodcution Tax all taxes, fees, penalties, & interest imposed on mineral prod are an automatic and continuing lien in favor of the cnty in which mineral was produced. -to file, cnty treasure must file notice of tax lien & cert copy of delinquent tax statment with clerk
Easements an easement created subsequent to exection of mrtg is extinguished by foreclosure of the mrtg
Created by: sachav3