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Real Estate Transactions Outline-1

Real Estate Transactions Outline-1 - Real Estate...

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Real Estate Transactions Outline Mortgage the power to sell whatever the borrower has at the time the mortgage is created -fee simple absolute = right to sell & possess -mortgage = fee simple absolute minus the right of possession -equity = fsa - mortgage -mortgagor = landowner (person) -mortgagee = (lender) bank - NY Real Property Law § 291 -if O conveys to A, and A does not record, O can convey to a subsequent bona fide purchaser (B) for value who records first; conveyance to A is void against B (encourages recording) -conveyance- a voluntary grant of real estate by deed good faith- no knowledge of A -quitclaim- to release a claim or title -O has fsa, conveys mort. to A, who records (O has equity, or fsa-mort.) O – A® - X -O conveys to B, who records, O defaults. What is X buying? \ -X gets fsa, B gets nothing -O conveys to A, A records; O conveys to B, B records O – A® -O defaults on both mortgages; what is Y buying? \ -Y gets fsa-A’s mort. B® - Y -B gets cash first but only collects the amount of the mort. debt; rest goes to equity owner (O) -only people who get cash out of a foreclosure sale are the people who sold something Handout Hypos 1. O conveys mort. to A, doesn’t record O – A - X -O sells fsa to B, who records & is BFP \ fsa -O defaults, A starts foreclosure vs. B; A quitclaims to X B®(BFP) -deed from O to A is void; A has no power of sale; X gets nothing 2. same as above, but what if B had not recorded? X owns B’acre since A still has a valid sale 3. O grants mort. to A, A doesn’t record O – A - X -O grants jr. mort. to B, who records & is BFP \ mort. -O defaults & A starts foreclosure vs. B; A quitclaims to X B®(BFP) -what does X own? 4. O grants mort. to A, A doesn’t record O - A -O grants jr. mort. to B, who records & is BFP \ -O defaults, B starts foreclosure vs. O & A B®(BFP) - Y -B quitclaims to Y; what does Y own? Fsa 5. O grants mort. to A, A doesn’t record O - A -O grants jr. mort. to B, who records & is BFP \ -O defaults, B starts foreclosure vs. O & A B®(BFP) - Y -at auction, A tells audience of its un® mort.; B quitclaims to Y -what does Y own? Fsa b/c it’s B’s good faith that matters, not Y’s; B’s power to sell was locked in -who gets cash from Y? B (sr. mort.) gets paid first, then A (jr. mort.), then O 6. O grants mort. to A, A doesn’t record O - A -O grants jr. mort. to B, who doesn’t record \
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-O defaults, B starts foreclosure vs. O & A B(BFP) - Y -at auction, A tells audience of its un® mort.; B quitclaims to Y -what does Y own? fsa-A’s mort. + double-dealing power over A (but B hasn’t used this power) -B is not a BFP; A has a mort. – O’s power to convey mort. to someone else -B’s power of sale is fsa-A’s mort.; Y should record O to B, which would make A disappear -once Y records O to B, B become a BFP who records 1 st , Y then owns fsa b/c bad faith is at time of purchase, not time of recording 7. O grants mort. to A, who doesn’t record O - A -O grants jr. mort. to B, who records but is not BFP \ -O defaults, B starts foreclosure against O & A B® - Y -A shows up at auction & tells audience of his un® mort.; B quitclaims to Y -what does Y own? fsa-A’s mort. + double-dealing power (A is still vulnerable)
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