Real Estate Finance in a Nutshell
Author:
Lindsey, Vada Waters
Edition:
7th
Copyright Date:
2018
21 chapters
have results for Real estate finance in a nutshell
Chapter 6 Federal Government Involvement in Financing Process 64 results (showing 5 best matches)
- As a general matter, the creditor in a standard real estate credit transaction must make the usual disclosure for closed-end transactions including a statement of the amount financed, the finance charge, and the annual percentage rate. Significant differences exist, however, between its disclosure obligations and those of a creditor in a non-real estate transaction. For example, the items to be included in computing the finance charge differ. Moreover, the real estate creditor must state whether the mortgage loan may be assumed. Further, in certain real estate credit transactions the borrower has a right to rescind that must be disclosed. If the transaction creates a lien on the debtor’s principal dwelling that secures a non-acquisition or non-construction loan, the consumer may rescind the transaction within three business days after closing or after the rescission right and other material matters are disclosed, whichever is later.
- Long before the Great Recession, Congress frequently addressed housing concerns and other matters related to mortgage law and real estate finance. Its activity in these areas has had a considerable impact on the mortgage market. This chapter discusses the federal government’s involvement in the real estate financing process via housing subsidies, mortgage insurance, secondary mortgage market support institutions, and various legislative measures, particularly those intended to address predatory lending and the other causes of the Great Recession and the subprime loan crisis.
- Many real estate credit transactions are governed by Truth in Lending. Although business or commercial real estate loans are, of course, exempt, the Act applies to consumer real estate loans regardless of amount. The $25,000 ceiling was removed from this type of transaction so that the average homebuyer is protected when embarking upon the only large-scale financing arrangement that person may ever enter.
- The purchaser also has the right to obtain specific performance, damages, or other appropriate relief from the developer for violations of the Act. Although the Act does not apply to lending institutions engaging in the normal course of their real estate financing activities, a lender may be liable for damages if it actively participates in a plan to sell or lease property covered by the Act.
- Over the years Congress has enacted laws on a variety of other real estate finance subjects. The following legislative measures have had an impact on the mortgage market.
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Preface 4 results
- The seventh edition of this book examines the law of real estate finance. It is intended to be used as an introductory guide for lawyers and a general reference for law students who are enrolled in law school classes that address real estate finance issues. It discusses the fundamental rules related to various types of mortgage instruments, priority of encumbrances, loans in default and foreclosure. This book summarizes the law and relies on case and statutory law from various states to provide context to the application of rules that are fundamental to real estate finance.
- The tax consequences of issues related to real estate finance are critical. Therefore, this edition discusses various tax issues related to mortgages and real estate finance. It discusses the tax consequences of loan modifications, deeds in lieu of foreclosure and short sales. In addition, this edition includes a new chapter on advanced tax issues. That chapter outlines the fundamental tax issues, including the tax issues related to the inclusion of debt in an owner’s adjusted basis, depreciation, disposition of real property encumbered by a mortgage, form of ownership, limitations on deductions and character of gain or loss. This chapter also addresses the tax treatment of like kind exchanges, installment sales and sale and leaseback transactions.
- The seventh edition greatly expands the federal government’s involvement in real estate finance resulting from the subprime loan crisis and the Great Recession that was in its early stages when the prior edition of this book was written. The seventh edition includes a discussion of the changes in the regulatory landscape, including the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
- Several people played significant roles in helping me write the seventh edition of this book. First, Vanderbilt Law School Professor of Law Emeritus Jon W. Bruce, the author of the first six editions of this book, provided me with a great foundation. In addition, I am grateful to Professor Carol N. Brown, a professor of law at the University of Richmond School of Law, for recommending me to West Publishing Co. to become the new author of this book. I also owe a thank you to Elana Olson, director of the Eckstein Law Library at Marquette Law School for her research support. Finally, I want to thank my three talented and dedicated research assistants, Edona Ajvazi, Matthew Carlson and Emily Greene, for their excellent research.
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Chapter 1 Introduction to Law of Real Estate Finance 46 results (showing 5 best matches)
- This introductory chapter presents an overview of the fundamentals on real estate finance. Because the mortgage is the cornerstone of real estate finance, it is the focal point of this chapter and for that matter the entire book.
- Although the mortgage is still the foundation of real estate finance, many sophisticated financing variations exist today. The complex financing formats that have evolved over the past several decades may employ a combination of mortgages, leases, installment land contracts, outright conveyances, or other arrangements. In subsequent chapters, you will become well acquainted with fundamental mortgage law and will be introduced to a wide variety of other real estate financing devices. The tax implications are critical in determining the best approach to structure a transaction. These tax implications will be addressed in this book because they are important for the purchaser, lender and seller of the property to consider.
- The interest that a lender will charge on a loan is a significant factor in determining the best option to finance a real estate purchase. Today, interest rates are very low, and it is not uncommon for a purchaser to have an interest rate of 3% or 4%. In the 1980s it was not uncommon for loans to have interest rates around 17%. Undoubtedly, a loan with a higher interest rate affects its affordability.
- Real estate finance is best understood by one who is thoroughly acquainted with the development of the mortgage concept. An abbreviated jaunt through legal history, therefore, is in order. During this excursion, note how the legal pendulum swings first in the mortgagee’s favor, then in the mortgagor’s direction, and so on, back and forth, throughout history.
- Strict foreclosure was inherently unfair to the mortgagor because the value of the mortgaged land acquired by the mortgagee frequently exceeded the debt. The legal pendulum, consequently, began to swing back in favor of mortgagors. This time our state courts played an active role. The rest of this chapter deals exclusively with the evolution of real estate finance law in this country.
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Chapter 2 Real Estate Financing Devices 67 results (showing 5 best matches)
- The lease plays an important part in real estate finance, particularly in the area of commercial development. Leases may be used in a variety of ways, frequently in conjunction with another financing device.
- Treatment of the installment land contract as a contract, not a mortgage, caused it to become a popular means of real estate financing. It remains a viable arrangement in many areas of the country. Most jurisdictions still recognize the traditional contract approach, at least in limited circumstances.
- The mortgage is the most common means of effectuating real estate financing. It is both relatively uncomplicated and flexible. The mortgage is between two individuals, the mortgagee/lender and the mortgagor. A mortgage can secure the mortgagor’s debts or the debts of a third party if the mortgagor is willing to secure the debt with mortgagor’s property. It can also secure an antecedent debt. Most states have a statutory mortgage form that may be expanded as the parties desire. In addition, because the mortgage is a time-tested financing device, the rights and obligations of the parties are generally well established within each state.
- In commercial situations, however, tax matters are often of paramount concern. Indeed, certain financing devices discussed in this chapter were developed in large part as vehicles for tax planning. Given these circumstances, it is imperative that one entering any real estate financing transaction ascertain its tax consequences at the outset. Many tax consequences will be discussed in this book, including this chapter. Chapter 13 is devoted to advanced tax issues.
- Typically, a ground lessee obtains mortgage financing to construct the improvements. The mortgage on this leasehold estate is known as a leasehold mortgage. Although the discussion of mortgage law in this book concerns fee mortgages, it is generally applicable to leasehold mortgages. However, additional issues arise when a mortgagee accepts a leasehold as security.
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Chapter 9 After Default and Before Foreclosure 113 results (showing 5 best matches)
- Mortgagees may request the appointment of a receiver to operate the mortgagor’s business pending foreclosure. A court generally will grant the request only if the business is either specifically covered by the mortgage or based primarily on the rental value of the mortgaged real estate, as in the case of an apartment building. For a greater discussion of whether a receiver can exercise control of the mortgagor’s business see Nelson, Whitman, Burkhart & Freyermuth, Real Estate Finance Law § 4.41, at 240–242 (West 2015).
- If the lease was executed after the mortgage, the mortgagee may take possession and thereby terminate the lease on the theory that the lessee can have no greater right to possession than the lessor. Although the mortgagee appears to be in a generally favorable position in this situation, it is really at an advantage only if it desires to terminate the junior lease. If the mortgagee wants to continue the junior lease and collect rent from the junior lessee, difficulty arises because the lessee is liable only to one with whom the lessee is in either privity of contract or privity of estate. The junior lessee clearly has no contractual obligation to the mortgagee. In addition, no privity of estate exists between the junior lessee and the mortgagee because the mortgage could not transfer the mortgagor’s reversion against a lessee not then in existence. The mortgagee, therefore, faces “Catch 22” of real estate finance law. Because the mortgagee cannot force the junior lessee to enter a...
- A mortgagor’s equitable right to redeem may be barred by estoppel, laches, or a statute of limitations. Generally, none of these possibilities will arise if the mortgagor remains on the mortgaged property. Nelson, Whitman, Burkhart & Freyermuth, Real Estate Finance Law § 575 (6th ed. West 2015). It is when the mortgagee takes possession that circumstances are ripe for the development of these bars to redemption.
- A mortgagee will frequently include as a default in the loan documents the mortgagor’s failure to pay property taxes and hazard insurance to protect the mortgagee’s security interest. If the mortgagor lacks hazard insurance and a fire destroys the mortgaged property, the mortgagee loses its security interest and can only sue the mortgagor for a deficiency upon default. In addition, if the mortgagor fails to pay state and local real estate taxes, the local and state governments can foreclose on the tax liens which may result in the mortgagee’s loss of its security interest.
- Even when the mortgagee has the right to possession of the mortgaged real estate upon default, it may want to have a receiver appointed rather than take possession itself. Several reasons support such an approach. First, the stringent accounting duties imposed on a mortgagee in possession are avoided. Second, the potential tort and contract liabilities of a mortgagee in possession are eliminated. Third, junior leases are preserved and rents may be collected under those leases even when there is no assignment of rents.
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Chapter 12 Financing Cooperatives and Condominiums 26 results (showing 5 best matches)
- This book is designed to present the fundamentals of real estate finance, not an exhaustive analysis of condominium law. Hence, the remainder of this section treats only the narrow area of condominium financing.
- Owners of rental apartment buildings or other structures often convert their property to condominiums as a means to profitably dispose of real estate. The condominium conversion process presents some financing problems. The existing mortgagee may be unwilling to cooperate with the conversion and grant partial releases as the condominium units are sold. In this event, the owner must obtain short-term mortgage financing from another source in order to bridge the conversion period. The proceeds of the new mortgage loan are used to satisfy the original mortgage debt. The owner then organizes the condominium and sells the units. The transition from the interim loan to permanent financing is accomplished as described in the preceding section on construction financing.
- The cooperative and the condominium pose unique real estate finance problems. These issues are explored in this chapter, but first it is necessary to review the general legal principles underlying each form of development.
- A condominium is created when a developer records a formal declaration that the developer submits certain real estate to the local condominium act. The property may consist of various kinds of development, such as a single high-rise structure, a number of garden apartment buildings, or a series of row houses. The contents of the declaration for a condominium is determined by the jurisdiction. For example, in North Carolina, the declaration must contain several items, including the name of the condominium (which must include the term “condominium”), the county, a legal description of the real estate, maximum units, use and occupancy restrictions, alienability restrictions, and allocation of common elements, expenses and votes. N.C. Gen. Stat. §§ 47C–2–105 & 47C–2–107 (2017). In every state, each condominium unit is identified in the declaration.
- In order to finance the purchase or construction of the cooperative building, the cooperative corporation places a blanket mortgage on the property. Shareholders are not personally liable on this blanket mortgage. However, this general financing arrangement presents the individual cooperative members with certain financing problems.
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Chapter 8 Transfer of Mortgagee’s Interest 101 results (showing 5 best matches)
- Courts may imply an assignment of the mortgage by operation of law under the equitable doctrine of subrogation. In real estate finance law, subrogation is the substitution of one who pays the mortgage debt to the position of the mortgagee.
- Legal problems that arise from the transfer of the mortgagee’s interest are some of the most complicated in real estate finance. This is primarily because the mortgagee’s interest in the mortgage loan consists of two types of property—the obligation which is personalty and the mortgage which is realty. The material in this chapter is more easily understood if the reader remains constantly aware of this duality.
- (Owens, J., dissenting). The dissenting judge’s approach may represent the majority approach, but the Restatement approach is the modern trend and is followed in many jurisdictions. Nelson, Whitman, Burkhart & Freyermuth, Real Estate Finance Law 942–943 (West 2015). (stating that in New Jersey a mortgagee is not entitled to subrogation if the mortgagee has actual notice).
- Under the traditional approach, if the underlying obligation is nonnegotiable, priority among assignees is generally governed by applicable real estate recording statutes. This means that the first assignee prevails unless a subsequent assignee fits within the protection afforded by the local recording statute.
- Upon conveying away the mortgaged real estate subject to the mortgage, the mortgagor becomes a surety. If the grantee fails to pay the obligation and the mortgagor is forced to do so, justice demands that the mortgagor be subrogated to the rights of the mortgagee.
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Chapter 5 Mortgage Market 108 results (showing 5 best matches)
- The wraparound mortgage is an innovation in secondary financing. This financing device can be used either to derive additional funds from mortgaged real estate or to finance the purchase of such property. In either case, the wraparound mortgage is like a typical second mortgage in that it attaches to realty already encumbered by a mortgage. Its unique feature is that the face amount of the wraparound mortgage is equal to the amount actually disbursed to the mortgagor plus the unpaid balance of the prior encumbrance. The mortgagor’s payments on the wraparound mortgage, therefore, cover both the money advanced under the wraparound mortgage and the amount due on the first mortgage. The wraparound mortgagee takes a portion of the payment it receives and makes the necessary payment on the original mortgage.
- Mortgage brokers deserve consideration in this section even though they typically do not serve as a source of funds for real estate financing. Instead, the primary business of mortgage brokers is to arrange loan transactions between borrowers and mortgage lenders. Mortgage brokers thus contribute to mortgage market efficiency, particularly in the residential area, by performing a significant coordination/administrative function. Mortgage brokers have been involved in an increasing number of mortgages over the years and frequently receive a controversial type of remuneration—a portion of loan interest called the yield spread premium.
- The principles of real estate finance law discussed in this book are meaningful only when considered in light of the practical aspects of mortgage lending. This chapter, therefore, deals with the structure and operation of the mortgage market.
- The institutions that make mortgage loan funds available form the core infrastructure of the mortgage market. The most significant sources of real estate financing are described in general terms in this section.
- The following treatment of real estate financing sources includes discussion of periods when several mortgage lenders were experiencing financial difficulty and what then transpired. Part VII discusses lenders’ role in creating the subprime loan crisis and the Great Recession that began in 2007.
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Chapter 13 Advanced Tax Issues 73 results (showing 5 best matches)
- Prior to the enactment of the Tax Reform Act of 1986, the at risk rules did not apply to real estate. The rules were made applicable to real estate after the explosion of tax shelters. This explosion was made possible because the Supreme Court in determined that nonrecourse indebtedness was included in an owner’s adjusted basis. The real impact of did not take effect until Congress accelerated depreciation deductions which allowed for higher deductions in the earlier years after the property was placed in service. As a result, many individuals began investing in real estate for its tax benefits rather than the income derived from the real estate holding.
- There are significant tax issues that impact real estate finance. Although it is beyond the scope of this book to address all of these issues, some of the most salient concepts will be discussed in this section to provide a basic understanding of these concepts. Other important tax principles were discussed in Chapter 2, including the deductibility of mortgage interest. Chapter 9 discussed the tax consequences of loan modifications, deeds in lieu of foreclosure and short sales.
- This chapter explains the important concepts of adjusted basis, the tax shelter aspect of real estate, depreciation, choice of form for real estate holdings, limitations on deductions, like kind exchanges, installment sales, sale and leasebacks, sale of a principal residence and character of gain or loss. In addition, this chapter discusses the tax considerations of these concepts where the property is encumbered by a mortgage.
- Under the Internal Revenue Code, if more than one half of a taxpayer’s personal services are devoted to real property trades or businesses that the taxpayer materially participates and the taxpayer performs more than 750 hours of service, then the passive activity limitation rule does not apply to the taxpayer’s rental real estate activities for the year. . Under this exception, each of a taxpayer’s interest in rental real estate is treated as a separate activity unless the taxpayer elects to treat all real estate activities as one activity.
- An owner’s initial amount at risk is the sum of the owner’s cash contributions to the activity, the adjusted basis of property contributed by the owner to the activity, and amounts borrowed for use in the activity for which the owner is personally liable or has pledged property that is not used in the activity as security. . In general, the amount at risk is the owner’s investment and the owner’s risk of loss. A recourse debt is always added to the amount at risk because the owner bears the risk of loss. However, an owner will be considered at risk with respect to a nonrecourse debt if it “qualified nonrecourse financing” related to an activity of holding real property. In order to meet this exception: 1) the owner must borrow money from a “qualified person” or from the government or guaranteed by it, 2) no one can be personally liable on the loan, and 3) the loan cannot be a convertible debt. . A “qualified person” is a lender who is not related to the owner (unless the financing...
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Chapter 11 Foreclosure 87 results (showing 5 best matches)
- A valid foreclosure of a mortgage terminates all interests in the foreclosed real estate that are junior in the mortgage being foreclosed and whose holders are properly joined or notified under applicable law. Foreclosure does not terminate interests in the foreclosed real estate that are senior to the mortgage being foreclosed.
- Depression era legislation still restricts the recovery of deficiency judgments in a number of jurisdictions.
- Third, relief from the automatic stay will be granted when elements regarding a “single asset real estate” are met.
- Even though the above rule is a widely-accepted principle, courts frequently address issues related to the distribution of foreclosure sale proceeds. For example, in Illinois, distribution of proceeds are first distributed to cover reasonable expenses of the foreclosure sale followed by reasonable expenses securing possession and maintaining the property before the foreclosure, including the payment of taxes and hazard and liability insurance. . In , the trial court had granted a motion from the purchaser at the foreclosure sale that a portion of the surplus should be paid to the purchaser for unpaid real estate taxes. Id. at 72–73. In its reversal, the court of appeals noted that the trial court abused its discretion by granting the request because a purchaser of property was required to take it subject to any prior liens, including the lien for unpaid real estate taxes. ...additional support for its decision in the “Notice of Sheriff’s Sale” which stated that the property was...
- There is also a question of who is entitled to possession during the statutory redemption period. As a general rule, the mortgagor may retain possession of the mortgaged real estate during the statutory redemption period. (providing a one-year redemption period and allowing the mortgagor to possess the real property); Kan. Stat. Ann. 426.530 (2017) (allowing the purchaser to possession during redemption period, but the purchaser receives a deed with a lien reflecting the mortgagor’s redemption right). Several states only allow for the mortgagor to possess the property in certain situations. Mont. Code Ann. § 25–13–82 (2017) (allowing the mortgagor to possess the property during redemption if it is being occupied by the mortgagor as a home); (allowing the mortgagor to possession if the property is used as the mortgagor’s homestead or for farming purposes but allowing the purchaser to collect rent from a tenant who may continue to possess the property until the lease expires).
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Chapter 3 Mortgaged Property 39 results (showing 5 best matches)
- A fixture is an item of tangible personal property that becomes realty by its attachment to land with the intent it remains permanently affixed. The fixture concept presents several real estate finance problems.
- Any transferable interest in realty may be mortgaged. Thus, a fee simple, joint tenancy interest, leasehold, life estate, reversion, and remainder are all mortgageable interests. It is important to note that the mortgage is to the extent of the mortgagor’s interest in the mortgaged property. For example, if the mortgagor possesses a life estate interest in real estate and grants a mortgage to a bank, the security is on the life estate only. Hence, if the bank forecloses and is the highest bidder at the foreclosure sale, the bank has a life estate for the life of the mortgagor (pur autre vie). Upon the mortgagor’s death, the bank’s interest passes to the holder of the future interest by operation of law.
- In all jurisdictions, a mortgagee may obtain an injunction against waste when the mortgagor causes the mortgaged realty to diminish in value to the extent that the mortgagee’s security is impaired. It is generally agreed that impairment in this case occurs when the property depreciates in value to a point at which the margin between the value of the real estate and the amount of the mortgage debt is less than prudent lenders normally require.
- The mortgagee may seek to extend the mortgage lien to land the mortgagor subsequently obtains. The mortgagee usually may achieve this result by inserting an after-acquired property clause in the mortgage. The Restatement defines an after-acquired property clause as “any language in a mortgage that purports to be effective against any other parcel of real estate that mortgagor subsequently acquires.” Restatement (Third) of Property, Mortgages § 7.5(a) (1997). As a general rule, the clause creates an equitable lien on all real estate the mortgagor acquires after the execution of the mortgage.
- Once the mortgagee has accepted the real estate as adequate security for the debt, it is concerned, of course, that the mortgagor maintains the mortgaged premises so that the property does not decrease in value. The mortgagor’s duties in this regard are generally governed by the doctrine of waste, the principle that prohibits a lawful possessor from physically damaging or destroying the property occupied.
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Chapter 4 Underlying Obligation 75 results (showing 5 best matches)
- Mortgagees generally are willing to make below-market-interest-rate loans if they receive sufficient upfront money to offset the reduced interest rate of return. A mortgage loan made on this basis is called a “buy-down.” Real estate developers and other sellers may use the buy-down technique to make their residential properties more marketable by paying an institutional lender to offer low-interest-rate financing to purchasers. In such case, the interest buy-down is typically for only a short term, such as a year or two; thereafter the interest rate returns to the market level.
- The Depository Institutions Deregulation and Monetary Control Act of 1980 preempted several aspects of state usury law. The most significant provision for real estate financing purposes is that portion of the Act which exempts most residential first mortgage loans from state interest rate limits. 12 U.S.C.A. § 1735f–7a. The Act gave the states the option to override this federal preemption within a three-year time frame. Several states did so. Thus, although the Act provides some uniformity in this area of usury law, considerable diversity still exists among the states.
- The mortgagor frequently is required to make monthly payments that cover not only principal and interest, but also build an escrow account from which the mortgagee may pay real estate taxes and insurance on the mortgaged property as they come due. The escrow account system originated during the Depression when many mortgagors were unable to pay real estate taxes or insurance premiums, and lenders were forced to pay these obligations in order to protect their security.
- In the 1970s and early 1980s, the Comptroller of the Currency, the Federal Home Loan Bank Board (today the Office of Thrift Supervision), and the National Credit Union Administration authorized the federally-chartered lending institutions under their control to develop alternatives to the traditional mortgage. Moreover, the Alternative Mortgage Transaction Parity Act of 1982, 12 U.S.C.A. § 3801 , preempted state law on the subject and enabled nonfederally-chartered institutions to compete effectively in the residential real estate financing marketplace by authorizing them to offer the same alternative residential mortgage instruments available from similar federally-chartered institutions. The states had three years from the passage of the Act to override this preemption. Some states reinstituted local law by doing so.
- The mortgagors’ attack on interest-free escrow accounts has achieved greater success outside the courtroom. Controversy fueled by their lawsuits has precipitated federal and state legislative action. The federal Real Estate Settlement Procedures Act limits the amount of funds that may be placed in escrow, and statutes in some states require the payment of interest on these accounts.
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Chapter 10 Priorities 85 results (showing 5 best matches)
- Id. (citations omitted). For a greater discussion of the constitutionality of mechanic’s liens, see Nelson, Whitman, Burkhart & Freyermuth, Real Estate Finance 1074–1083 (West 6th ed. 2015).
- Statutes in most states impose a lien on real estate to secure the payment of taxes or assessments levied on the real estate. Usually these real estate tax and assessment liens are allowed to leapfrog existing encumbrances to the first lien priority position. (2016) (real estate tax liens are prior to all liens except liens held by the state and for taxes accruing in prior years); (2016) (lien for taxes is prior to other liens with a lien for state taxes ranking above county real estate taxes); (2016) (real estate tax liens are prior and superior to all other liens); (2017) (real estate taxes and special assessments given priority over other liens). To minimize the risk of losing priority to subsequent tax liens, mortgagees commonly require the mortgagor to escrow funds for the payment of real property taxes.
- Subordination agreements are frequently employed as part of the real estate development process. Developers, of course, need raw land upon which to construct shopping centers, apartment houses, office buildings, subdivisions, and other projects. Because developers may be unable to purchase land outright and because construction lenders commonly may be unwilling to make land acquisition loans, sellers often finance the sale themselves. This form of financing is not difficult to implement. The seller agrees to convey the land to the developer in exchange for a small down payment and a note for the balance of the purchase price secured by a purchase money mortgage on the land. The developer then obtains financing for the actual development. Construction lenders, however, normally demand a first lien on the property as security. Without the subordination agreement, the construction lender’s mortgage can be extinguished if the purchase money mortgagee forecloses its mortgage. For the...
- Under common law, a lis pendens provides constructive notice of claims asserted against the real estate in the pending litigation. . It alerts lenders, creditors, prospective purchasers and others that title to real estate is subject to litigation. Therefore, one who acquires an interest in real estate involved in litigation is bound by the court’s judgment or decree. Id. In , the mortgagor was delinquent in paying condominium fees and mortgage payments. Id. Before the foreclosure sale in that action, the senior mortgagee initiated foreclosure proceedings. Id. The mortgagee named the condominium association as a party to the action but neglected to record a notice of lis pendens. Id. After the mortgagee’s foreclosure action, a judicial sale was held on the condominium association’s lien. Id. A purchaser purchased the property at the foreclosure sale and sold it to a subsequent purchaser. .... The subsequent purchaser moved to set aside the judgment of foreclosure in favor of the...
- priority between the holder of a security interest in fixtures and the mortgagee goes to the first one to properly file in the public records. A purchase money security interest filed before or within twenty days after items of personal property become fixtures. . However, a security interest in property takes priority over existing nonconstruction loan mortgages on the theory that the party who supplies the money used to acquire the fixtures should be favored. But, because a construction lender provides funds for the entire improvement and expects all parts thereof to serve as collateral for its loan, existing construction loan mortgages take priority over purchase money security interests in items of personal property that become fixtures during construction. . Finally, regarding the recordation process, the UCC requires that fixture financing statements be filed and indexed in local real estate records so a person conducting a title search can discover them. .... §§ 9–501(a), 9–...
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Outline 108 results (showing 5 best matches)
Index 40 results (showing 5 best matches)
Copyright Page 5 results
- Nutshell Series, In a Nutshell
- The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- Printed in the United States of America
- © West, a Thomson business, 1997, 2004
- © 2018 LEG, Inc. d/b/a West Academic
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Chapter 7 Transfer of Mortgagor’s Interest 52 results (showing 5 best matches)
- Mortgagees today may freely enforce due-on-sale clauses upon most transfers of mortgaged real estate. A federal statute, discussed later in this section, so mandates. The current situation, however, is a product of years of litigation, regulation, and legislation on the subject. This historical background is traced below.
- The mortgagee may consent to the transfer conditioned upon the grantee’s assumption of the mortgage and the payment of a transfer fee or an increased interest rate. The Garn-St. Germain Depository Institutions Act of 1982 contains an unusual provision that “encourage[s]” the lender to consent to transfer upon the grantee’s assumption of the mortgage at a blended interest rate not more than the average of the original rate and the current market rate.
- The doctrine of merger provides that when successive real property interests come into the same hands, the lesser interest ends by merging into the greater interest. Thus, when the mortgagee acquires the mortgaged real estate, the mortgage normally merges into the fee. However, because merger is predicated on the actual or presumed intention of the owner of both interests, the mortgage generally is preserved if merger would be detrimental to the mortgagee.
- If the grantee does not assume the mortgage debt, the conveyance is merely “subject to” the mortgage. Upon default, the mortgagee may foreclose and have the encumbered real estate sold, but as a general rule the mortgagee may not proceed against the “subject to” grantee personally.
- The Federal Home Loan Bank Board in 1976 authorized federal savings and loan associations to freely enforce due-on-sale clauses upon most transfers of mortgaged real estate. 12 C.F.R. § 545.8–3(f) & (g) (1982). There was some question, however, as to whether this regulation preempted restrictive state laws on the subject. The Supreme Court answered the preemption question in the affirmative in , thereby eliminating any doubt about the authority of federal savings and loan associations in this area.
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Table of Cases 44 results (showing 5 best matches)
- Publication Date: November 20th, 2017
- ISBN: 9781683282631
- Subject: Real Estate Transactions
- Series: Nutshells
- Type: Overviews
- Description: This work presents a thorough overview of the law of real estate finance. It covers introductory matters, the mortgage market, real estate financing devices, the underlying obligation, mortgaged property, transfer of both the mortgagor's interest and the mortgagee's interest, and financing cooperatives and condominiums. It reviews the government involvement in the financing process. In addition, the volume provides an expansive review of rights and obligations after default and before foreclosure, priorities and foreclosure. It covers the tax consequences of the acquisition, owning and disposition of real estate. Legal principles and relevant caselaw are stated along with their underlying theories to enhance understanding of the law of real estate finance.
