Real Estate Finance Law
Authors:
Nelson, Grant S. / Whitman, Dale A. / Burkhart, Ann M. / Freyermuth, R. Wilson
Edition:
6th
Copyright Date:
2015
20 chapters
have results for real estate
Chapter Part 11 17 results (showing 5 best matches)
- The material in this treatise focuses upon, in a variety of simple and sophisticated factual settings, the use of real estate as security for obligations. In this connection, there is a substantial emphasis on the real estate mortgage and its functional equivalents. As the term is used in its modern context, a real estate mortgage involves a transfer by a debtor-mortgagor to a creditor-mortgagee of a real estate interest, to be held as security for the performance of an obligation, normally the payment of a debt evidenced by the mortgagor’s promissory note.
- A purchase money mortgage arises where the mortgagor’s acquisition of the mortgaged real estate is financed by the mortgagee-lender. Often a seller of real estate will take back a purchase money mortgage for part of the purchase price. More commonly, however, a third party lending institution will take a mortgage covering real estate acquired by the mortgagor with funds provided by the lending institution. In many states this is also treated as a purchase-money mortgage. Such transactions may be as simple as the purchase of a single family residence by a borrower-mortgagor or as complex and sophisticated as the construction and long term financing obtained by a developer to build a shopping center or an apartment building. In the non-purchase money situation the mortgagee-lender does not provide an acquisition loan but rather lends money on real estate already owned by the borrower-mortgagor. A corporation, for example, may often mortgage previously owned real estate to obtain...
- Today most mortgages are amortized or repaid over a substantial number of years. Until the 1930’s most mortgages, however, were of the “balloon-note” type. Typically these were short-term mortgages for three or five years, and borrowers made only interest payments until the loan came due. Then if the borrower had not saved enough to pay the entire principal, he would expect the note to be renewed or would attempt to refinance it with another lender. However, during the depression period of the 1930’s, many of these lenders were forced to demand full payment and to foreclose on properties when mortgagors could not pay. With the encouragement of the Federal Housing Administration and federal housing legislation, lenders during this period developed the amortized mortgage loan system under which mortgagors were permitted to repay loans over many years by making monthly principal and interest payments. Such loans are common today in both the housing and commercial real estate markets....
- For a more complete analysis of the historical development of the modern real estate mortgage, see Osborne, Mortgages §§ 1–7 (2d ed. 1970).
- Cunningham and Tischler, Disguised Real Estate Security Transactions as Mortgages in Substance, 26 Rutgers L.Rev. 1 (1973)
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Chapter Part 3 222 results (showing 5 best matches)
- Article 9 does not usually affect real estate mortgages as such; it expressly provides that it does not apply “to the creation or transfer of an interest in or lien on real estate * * *.” However, when the real estate lien and its associated obligation are themselves being employed as security for a separate debt, the documents (the note and mortgage) are personal property rather than real estate, and their pledge is covered by Article 9. The language quoted above might be read to negate this argument, since a pledge of a note and mortgage obviously involves, in part, a “transfer of a . . . lien on real estate.” However, this reading is contradicted by the Code’s statement that application of Article 9 is “not affected by the fact that the obligation [being pledged] is itself secured by a transaction or interest to which this Article does not apply.”
- For a variety of reasons these concealment strategies often fail. Some mortgagees closely monitor the public records for evidence of new real estate recordings affecting their mortgaged properties. Ownership changes may also become apparent from annual real estate tax statements that the mortgagee receives in its capacity as an escrow agent for real estate taxes and insurance, or when a new casualty insurance policy is issued and the mortgagee’s copy reveals the new owner. Moreover, mortgagees may keep abreast of transfers through a program of regular inspection of the real estate on which they hold mortgages.
- Participants often argue that the lead lender owes a fiduciary duty to them. The issue can arise in two distinct contexts. First, conflicts may arise between the lead lender and the participants because the characteristics of the underlying borrower and the real estate never matched the participants’ beliefs or assumptions. For example, the borrower may have had weaker credit, less real estate management experience, lower net worth, and a poorer track record in repaying past loans than the participants understood. Similarly, the real estate may have had a lower value or a lower rate of occupancy by tenants, been in a more risky location, or been more difficult to develop than the participants realized.
- , a transfer of the right to payment (i.e., ownership) of the note automatically transfers the right to any accompanying security interest in real or personal property, including a real estate mortgage.
- of a security interest to an obligation secured by real estate operates to attach the security interest to the underlying interest in real estate, of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.” This language confirms that the mortgage “follows the note,” and that no separate act (such as recording a mortgage assignment in the real estate records) is necessary to ensure perfection with respect to the mortgage.
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Chapter Part 6 259 results (showing 5 best matches)
- [M]ost single asset real estate bankruptcies, by their very nature, fit the bad faith standard. . . . [I]f debtors in single asset real estate cases were deemed to have filed in bad faith due to the very nature of their business, § 362(d)(3) would never have the opportunity to provide relief from the automatic stay to creditors with an interest in single asset real estate cases.
- This sanction has been rigorously imposed. For example, where a mortgagee first obtained a personal judgment against a mortgagor who consented to its entry, the mortgagee was held to have forfeited the right to foreclose on the mortgaged real estate. Moreover, resort to real estate foreclosure has been barred where the creditor first proceeded against chattel security without simultaneously seeking foreclosure of the real estate. Finally, the Ninth Circuit Court of Appeals held that even where a creditor proceeded properly by one action and included all security, real and personal, but failed after the foreclosure sale of the real estate to seek a “fair value” hearing, it forfeited its security interest in the personality.
- Nevertheless, a valid mortgage lien generally survives the bankruptcy filing, i.e., the bankruptcy estate takes the mortgaged real estate subject to the continued mortgage lien. the trustee has a practical interest in mortgaged real estate only if the debtor has “equity” in it—i.e., only if the value of the real estate exceeds the total amount of mortgage indebtedness against it. If the debtor has no equity in the real estate, the trustee should (and typically will) abandon it; it makes no sense for the trustee to incur the costs of insuring, preserving, and selling the real estate if those activities will produce no value for unsecured creditors. If the trustee abandons the real estate, title is vested back into the debtor, If instead the trustee concludes that there is equity in the real estate, the trustee can sell the real estate with the approval of the bankruptcy court, either subject to the existing mortgages or (more commonly) free and clear of them.
- Recall that the bankruptcy estate includes all interests that the debtor had in any property at the time of the bankruptcy petition, including redemption rights. See § 8.12 supra, note 338. Suppose that Bank had foreclosed on Debtor’s real estate and completed its foreclosure sale prior to the Debtor’s Chapter 7 petition. If the real estate sold for less than its value, it may be advantageous for the trustee to exercise the debtor’s state statutory redemption right (if the state’s law permits statutory redemption), because these statutes typically permit the mortgagor to redeem by paying an amount equal to the foreclosure sale price plus certain statutory amounts. See § 8.4 supra. If the trustee can redeem the real estate for a price less than its value, the trustee can then liquidate the real estate and hopefully produce additional proceeds for distribution to creditors.
- One action or security first legislation is hardly an unmixed blessing. Even though it generally may be desirable that the mortgagee foreclose on the encumbered real estate before proceeding against other assets of the mortgagor, most mortgagees probably follow such a course of action anyway, at least when the mortgaged real estate was intended to be the primary security for the loan transaction. Many mortgagees, however, rely primarily on the debtor’s personal net worth rather than on real estate security. Indeed, the mortgage is often a minor part of the loan transaction. In such a setting, it seems unfair to require the lender to foreclose on the real estate before proceeding against the debtor personally.
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Chapter 127 results (showing 5 best matches)
- While it is conceivable that a grantor could sell his interest in his real estate and retain possession as a lessee, the retention of possession by the grantor at least indicates that he retained some interest in the deeded real estate. Moreover, when retention of possession is coupled with substantial improvements to the real estate, the grantor’s case becomes even stronger. In any event, when retention of possession is coupled with favorable evidence based on the two factors discussed previously, the grantor’s case becomes strong indeed.
- The Restatement defines the conditional sale as a “deed purporting to be an absolute conveyance of real estate accompanied by a written agreement conferring on the grantor a right to purchase the real estate.”
- The sale and leaseback is a commonly used method of financing commercial real estate transactions. Although the transactions are often complex, in its common form, an owner sells and conveys real estate to an investor-purchaser (often an institutional lender) who leases it back to the seller on a long-term lease. Often, the lease grants lessee-seller an option to repurchase the real estate upon the expiration of the lease.
- In sum, as the preceding text in this section illustrates, the proper method of perfection of such a security interest has been controversial. Some cases hold that perfection can be accomplished by recording in the real estate records; others that perfection can be accomplished by filing a UCC–1 financing statement; and still others that both real estate and Article 9 financing are necessary to a complete perfection.
- Assuming that the secured creditor files under Article 9, should it still record an assignment of the vendor’s contract interest in the real estate records? Even though such a recording is unnecessary and irrelevant under Article 9, recording in the real estate records is important and desirable for three reasons:
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Chapter Part 5 111 results (showing 5 best matches)
- Under the Restatement, the “surplus stands in the place of the foreclosed real estate, and the liens and interests that previously attached to the real estate now attach to the surplus.”
- Bureau of Consumer Financial Protection, Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X), Final Rule; Official Interpretations, 78 Fed. Reg. 10696, 10790 (Feb. 14, 2013)
- Bureau of Consumer Financial Protection, Mortgage Servicing Rules Under Real Estate Settlement Procedures Act (Regulation X), Final Rule; Official Interpretations, 78 Fed.Reg. 10696, 10790 (Feb. 14, 2013)
- Under the Restatement, either of two classes of people may pay off a mortgage debt: those who are “primarily responsible” for paying it and those who are not. Who is “primarily responsible”? The concept does not depend on personal liability for the debt. The mortgagor is primarily responsible if she still owns the real estate, whether the debt is recourse or nonrecourse. Likewise, a grantee of the fee title becomes primarily responsible, regardless of whether he assumed liability for the debt. Even a tenant, life tenant, or other limited interest holder is primarily responsible, except to the extent someone else has a duty to reimburse her for part of any payment she makes. Thus, under the Restatement, the mortgage is extinguished and the real estate redeemed if someone who is primarily responsible pays off the debt, including any valid accrued interest, prepayment fees, and other miscellaneous charges.
- Moreover, the tender must be in currency. Tender of a deed to the mortgaged real estate is insufficient even if the real estate is worth more than the outstanding debt.
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Chapter Part 7 101 results (showing 5 best matches)
- The Restatement deals with recording act and “chain of title” problems by treating a recorded mortgage containing an after-acquired property provision as unrecorded against those who later take interests in the after-acquired real estate. Thus, for example, under “notice” type recording acts, “the mortgagee’s lien on after-acquired property will be subordinate to the interest of any person who pays value for the real estate and lacks notice of the after-acquired property provision.” However, once the mortgagor acquires additional real estate, the Restatement gives the after-acquired property mortgagee the means to protect itself. The mortgagee acquires this protection by “recording a notice which specifically describes the parcel of after-acquired real estate, refers to the mortgage, and is in a form that provides record notice under local law. When such notice is recorded, the after-acquired property provision becomes part ...of the after-acquired parcel, and interests in that real...
- The great weight of authority rejected the Massachusetts approach. Although the rationale for the results often varied, the majority approach was more pro-chattel mortgagor. When an attached article became a fixture, the majority approach favored the purchase money chattel mortgagee over the prior real estate mortgagee so long as removal of the chattel did not substantially injure the real estate. When the real estate mortgage was subsequent to the purchase money chattel mortgage, the real estate mortgagee prevailed if he had no notice of the chattel mortgage and if he could reasonably have believed that the object in question was within the coverage of his mortgage.
- For the intermediate class of fixtures, Article 9 defers to state real estate law the question of when a good becomes a fixture, a set of rules to resolve priority conflicts between real estate mortgagees and parties holding conflicting interests arising under Article 9. The default priority rule is that an Article 9 security interest in fixtures is subordinate to the conflicting interest of an “encumbrancer” such as a real estate mortgagee. The drafters recognized, however, that fixture priority for real estate mortgagees would in many cases provides such mortgagees with an undeserved windfall not contemplated in the original mortgage transaction. Thus, provides a series of exceptions to the general rule under which an Article 9 fixture secured party can obtain priority over the conflicting real estate mortgagee. In most instances, to qualify for this priority, the fixture secured party must make a proper “fixture filing.” ...filing establishes the filer’s priority vis à vis a real...
- * * * instrument * * * of such a nature that, in the event of default, the real estate described in the instrument could be subject to the satisfaction of the obligation with the same priority as a first mortgage or a first deed of trust in the jurisdiction where the real estate is located.
- The Uniform Land Transactions Act (ULTA), promulgated in 1975 by the National Conference of Commissioners on Uniform State Laws, but as of this writing not adopted by any state, expressly recognizes the validity of an after-acquired real estate clause except in certain situations where the mortgagor is giving real estate security for residential real estate that he will or does occupy. In the latter situation an after-acquired property clause will not attach to subsequently acquired real estate unless it is contiguous to the parcel described in the mortgage or unless the subsequently acquired property is itself described in the original mortgage.
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Chapter Part 9 52 results (showing 5 best matches)
- Real estate investment trusts.
- (non-real estate loans); (real estate loans).
- Witner, REITs: The Revolution in Real Estate Financing, 22 Real Est. L.J. 248 (1994)
- Gunning and Roegge, Contemporary Real Estate Financing Techniques: A Dialogue on Vanishing Simplicity, 3 Real Prop. Prob. & Tr. J. 322, 325 (1968)
- However, in 1982 the Garn-St. Germain Act removed all statutory restrictions on real estate lending by national banks. This situation continued until 1993, when the banking agencies, acting under the authority of the FDIC Improvement Act of 1991, instituted a uniform system of real estate lending regulations for all federally-insured and federally-chartered banks and savings associations.
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Chapter Part 2 156 results (showing 5 best matches)
- Normally, a mortgagee is not responsible to third parties, private or governmental, for the physical condition of the mortgaged real estate or injuries that occur on it. Only by becoming a mortgagee in possession or by acquiring title through foreclosure or a deed in lieu does a mortgagee assume the normal responsibilities of an owner or possessor of real estate.
- See generally Alvin L. Arnold, 1 Real Estate Transactions: Structure and Analysis with Forms, Appendix 5.3, Checklist of Permanent Mortgage Commitment (2013); Andrea M. Mattei, A Due Diligence Checklist Based on Expansive Representations and Warranties, in Commercial Real Estate Financing: Strategies for Changing Markets and Uncertain Times, in ALI-ABA CLE (2012); K.C. McDaniel, Standard Form of Hotel Loan Agreement, Annotated with Introduction, in Modern Real Estate Transactions: Practical Strategies for Real Estate Acquisition, Disposition, and Ownership 1403–1404, in ALI-ABA CLE (2011); ; Alan Wayte, Selected Issues in the Negotiation of Real Estate Financing Documents, in Commercial Real Estate Financing: Strategies for Changing Markets and Uncertain
- The Restatement defines the term “rents, issues and profits” broadly to include “the proceeds payable by a lessee, licensee, or other person for the right to possess, use or occupy the real property of another.” Thus, for example, under the Restatement approach, hotel room revenue qualifies as rents from real estate. This approach is sensible because like the lease revenues received by an owner-mortgagor of an office building or a shopping center, the hotel room revenues collected by an owner-mortgagor of a hotel represent income derived primarily from granting others the right to occupy and use real estate. Likewise, the Uniform Assignment of Rents Act defines “rents” to include sums payable for the right to possess or occupy the real property of another person, even if the occupant does not technically constitute a “tenant” under real property law.
- As we have seen, mortgagees are understandably insistent that mortgagors carry casualty insurance on the mortgaged real estate and that insurance premiums be paid promptly. Insurance provides protection against the partial or complete destruction of the mortgage security. Mortgagees also have special concern as to real estate taxes and assessments because, as Professor Durfee once aptly pointed out, “in most tax systems * * * the burden of the ordinary tax on land and the burden of special assessments for local improvements rests on both mortgagor and mortgagee in the sense that unless these charges are satisfied by someone before the axe falls the interest of both parties will be rubbed out. The state goes after the land and its claim overrides In other words, a “first” mortgage on real estate will be eliminated by a sale under a subsequently arising real estate tax lien. Hence, virtually all mortgages contain clauses specifically imposing the duty to pay taxes on the mortgagor...
- The foregoing decisions and others like them made many lenders reluctant to lend on the security of real estate that was or might be contaminated and to foreclose or otherwise acquire it. If someone was personally liable for the mortgage obligation and if state anti-deficiency or one-action legislation did not present an obstacle, mortgagees were inclined to waive their rights in their real estate security in favor of suing on the underlying obligation. On the other hand, if the mortgagors were insolvent, the underlying obligation was non-recourse, or state law barred any action on it, mortgagees were tempted to abandon any attempt to proceed against their real estate security. Mortgagees clearly were uncomfortable with this state of affairs.
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Chapter Part 12 23 results (showing 5 best matches)
- Since most real estate development entities are “single-asset” borrowers that own nothing except the particular real estate project, the personal liability of the borrower entity has little meaning; it will be unable to respond with money if its sole asset, the real estate project, is in financial difficulty or has already been foreclosed. Hence, to be useful to the lender, the nonrecourse carve-outs must be guaranteed by some or all of the individual principals of the entity.
- Indeed, with such an obligation the whole system of mortgage enforcement would break down. There are several reasons for this. First, in the event of a foreclosure sale, the purchaser would presumably bid what the real estate is worth. However, unless the mortgage debt is reducible to a money amount, it would be impossible to determine a deficiency or to allocate surplus among junior lienors, if any, or to the mortgagor. Second, creditors of the mortgagor would face the same uncertainty in attempting to enforce a judgment against the mortgaged real estate. Third, mortgagees would have difficulty in assigning the mortgagee’s interest, since prospective investors would be unable to determine its value with any accuracy. Finally, mortgagors would find it extremely difficult to obtain second mortgage financing. Because of the inability to ascertain the amount of the prior lien, lenders would have substantial difficulty in determining the value of the mortgagor’s equity for loan...
- Such a clause may be considered essential for federal income tax purposes to a real estate venture in which outside investors buy shares. it is much more natural to construe it as negating the existence of any independent obligation except insofar as the land itself can be looked upon as owing a “real” obligation.
- However, while such clauses are seemingly beneficial to lenders, they may come back to bite them in the long run. If the principals own multiple real estate entities, and another of those entities enters bankruptcy, the presence of such a clause would seem to increase substantially the risk that a bankruptcy court will order a substantive consolidation of the entities, much to the detriment of lenders holding loans to entities that are still solvent.
- Thus, unliquidated debts such as open book accounts, fluctuating lines of credit, and contingent obligations that are uncertain in amount, such as indemnity bonds, may be secured by mortgages on real estate.
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Chapter Part 4 96 results (showing 5 best matches)
- Brumfield, The “Short Cut” to the Stabilization of the Underwater Housing Market: How the New FHFA Short Sale Guidelines Promote Economic Efficiency, 41 Real Est. L.J. 456 (2013); Real Estate Economy Watch.com, Short Sale and Foreclosure Discounts Converge, available at
- See Willis V. Carpenter & Blair E. Daniels, Short Sale Addendum, Colo. Real Est.Prac. Form 8–19 (2012); Dunaway, Babbitt, Gerth, and McGrane, Law of Distressed Real Estate § 3B:8; Miller, Short Sales Overview with an Emphasis on Broker Issues, 26 No. 3 Prac. Real Est. Law. 9 (2010); Gerald J. Robinson, Provisions for Short Sale in Contract for Sale of Residence, Real Est. Forms; Vacco, supra note 398.
- They have been attacked most often on the ground that they unreasonably restrain alienation of the real estate, but the courts have nearly always quite correctly rejected this argument. The necessity of selling the real estate with the mortgage on it may reduce the price to the seller, particularly if current financing is available at lower rates, but it certainly does not restrain alienation in a legal sense.
- . When a borrower in bankruptcy prepays a mortgage loan, the lender will not only desire to collect the prepayment fee provided in the documents, but will also wish to treat the fee as secured by the mortgage on the real estate. The argument is relevant, of course, only if the value of the real estate is greater than the balance on the mortgage debt before the additional fee is considered—in other words, the loan itself is oversecured.
- As noted above, when a person who is primarily responsible for the mortgage debt pays it off, that person ordinarily wants (and gets) the mortgage discharged. However, there is one situation in which such a person wants (and gets) an assignment of the mortgage by way of subrogation instead. It is the case in which the buyer of real estate assumes or takes subject to a first mortgage debt on the real estate, but is unaware of and does not assume an existing second mortgage or other junior lien. When the purchaser later discovers the second mortgage, she or he is entitled to pay the first mortgage debt and be subrogated to the first mortgage as against the junior lien.
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Chapter Part 10 126 results (showing 5 best matches)
- Equitable liens also can be asserted against improved real estate. If the claimant contributed to an improvement on the real estate, the equitable lien is a substitute for a conventional mechanic’s lien. Alternatively, a lender may request an equitable lien.
- Jeminson v. Montgomery Real Estate and Co.,
- Walsh, A Practical Guide to Mortgage Loan Commitments, 8 Real Est. L.J. 195 (1980)
- ABA Sec. of Real Prop., Prob. & Trust Law, The Lawyer’s Role in Financing the Real Estate Development 36 (Prob. & Prop. Cassette Series, Vol. 1, No. 3, 1975). See also
- In addition to covering the “hard costs,’’ such as materials and direct labor, the construction lender may be willing to cover certain “soft costs,” such as legal and accounting services related to the project, insurance, real estate taxes, fees for a permanent loan commitment, and possibly interest on the construction loan itself. Other negotiable points include whether the construction loan will cover any portion of the land acquisition or site development costs, such as the extension of utility lines, roads and streets, and storm and sanitary sewers. Alternatively, the lender may agree to lend the lesser of a specified percentage of the prospective appraised value of the property when construction is complete or of the project’s total cost, including holding costs, such as loan interest and real estate taxes, and a contingency fund for unforeseen events and cost overruns.
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Preface 4 results
- Indeed, the past seven years produced an upheaval in the world of real estate finance not experienced since the Depression era. Residential and commercial real estate values plummeted. Default and foreclosure rates skyrocketed, particularly in the residential sector. Fannie Mae and Freddie Mac became insolvent, received an enormous public bailout, and were placed in federal conservatorship—yet are now once again earning enormous profits and have largely repaid the public bailout. Enormous sums have been spent to implement mortgage modification programs designed to keep distressed borrowers in their homes, yet substantial doubt remains about the overall effectiveness of these efforts.
- We are highly pleased to welcome two new co-authors in this Sixth Edition: Professors Ann Burkhart of the University of Minnesota and Wilson Freyermuth of the University of Missouri. Both are long-time colleagues and friends of Nelson and Whitman, the authors on the past four editions. Ann and Wilson are both outstanding scholars who have published widely in the areas of property and real estate finance. They are among the nation’s top academics in their fields. Moreover, they are also the co-editors with Nelson and Whitman on the Eighth Edition of
- Further, while the law governing foreclosure of personal property security enjoys nationwide consistency under UCC Article 9, the law of real estate finance remains frustratingly nonuniform. While state courts and legislatures have begun experimenting with the implementation of mediation and loss mitigation programs designed to facilitate mortgage modification for distressed borrowers, these efforts remain haphazard. The crisis has prompted the Uniform Law Commission to renew its efforts to promote a uniform law governing foreclosure, but the outlook for its success remains quite unclear.
- More significantly, the foreclosure crisis produced by this upheaval has revealed a real estate finance system that is significantly broken, both for borrowers and lenders. On the one hand, the crisis has exposed that rampant securitization produced appallingly inadequate recordkeeping and servicing practices. Original promissory notes that ostensibly were to end up in securitization pools were frequently lost, destroyed, or improperly negotiated, raising unnecessary legal doubt regarding the ability to enforce the underlying obligation of the borrowers. The MERS system—which conceptually might have functioned to streamline the securitization process by avoiding the need for a recorded chain of mortgage assignments—became a lightning rod (quite justifiably so, in some respects) to the extent that it permitted MERS members to institute foreclosures in the name of MERS rather than in the name of the actual beneficial owner of the mortgage note, contributing to a perceived lack of...
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TableofCases 83 results (showing 5 best matches)
- American Institute of Real Estate Appraisers of Nat. Ass’n of Realtors, United States v.
- B.F. Saul Real Estate Inv. Trust v. McGovern
- Baltimore Markets v. Real Estate-Land Title & Trust Co.
- Barbour v. Handlos Real Estate and Bldg. Corp.
- Baypoint Mortgage Corp. v. Crest Premium Real Estate etc. Trust
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Chapter Part 8 11 results (showing 5 best matches)
- In this last illustration, there is a wide divergence of opinion as to the extent to which ME3’s knowledge or notice of ME2’s lien will deprive ME3 of the benefits of subrogation. The Restatement takes the broad view that ME3 should be entitled to subrogation even if ME3 had actual knowledge of ME2, provided that ME3 “reasonably expected to receive a security interest in the real estate with the priority of the mortgage being discharged, and if subrogation will not materially prejudice the holders of intervening interests in the real estate.”
- For the text of §§ 10.2 to 10.8 and 10.10 to 10.15, see Nelson, Whitman, Burkhart & Freyermuth, Real Estate Finance Law, Sixth Edition, Practitioner Treatise, Vol. 2.
- See Patrick E. Mears, Who’s on First? Negotiating Debt and Lien Subordination Agreements in Real Estate Transactions, Prob. & Prop., Jan. 1999, at 19.
- Bryson v. Newtown Real Estate & Development Corp., 153 Conn. 267, 216 A.2d 176 (1965)
- ; the subrogee not only gets the security of the creditor who was paid off, but the priority of that security. In many cases the subrogee would have a right of reimbursement against the owner of the real estate, could sue and obtain a judgment,
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- Publication Date: October 24th, 2014
- ISBN: 9780314278326
- Subject: Real Estate Transactions
- Series: Hornbooks
- Type: Hornbook Treatises
-
Description:
This treatise provides current, expert coverage on the law of mortgages, including the mortgagor-mortgagee relationship prior to foreclosure; mortgage substitutes; transfers by the mortgagor; transfers by the mortgagee; payment and prepayment; the foreclosure process; deficiency judgments and anti-deficiency regulation; priority issues; governmental intervention in the mortgage market; and financing real estate construction.
The Sixth Edition provides a comprehensive update of relevant case law, legislation, and regulation since publication of the Fifth Edition in 2007. This update includes:- A thorough and up-to-date revision of the material on judicial and nonjudicial foreclosure
- New material on “short sales” and “loss mitigation”
- A comprehensive revision of the material on securitization and the ownership, transfer, and enforcement of securitized mortgage loans
- A comprehensive revision of materials on governmental intervention in the mortgage market, including new material on the impacts of the Dodd-Frank Act
- Discussion of recent cases and theories on the application of the “disparate impact” test in racially discriminatory mortgage lending
- A thorough and functional restructuring of the material on bankruptcy law and its impact on mortgagees in Chapters 7, 11, 12 and 13 proceedings
- Comprehensive discussion of recent judicial authority on priority issues
Like the Fifth Edition, the Sixth Edition also comprehensively tracks judicial discussion and application of the principles in the Restatement (Third) of Property: Mortgages.
