real estate finance - full book (500 pgs)

In california we have mortgage companies not trust

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Unformatted text preview: Notary, Nurse, Food Handlers, Tax and Securities 8: FINANCING INSTRUMENTS Made by one person to another Signed by the maker Payable upon demand or on a fixed date For a specific sum of money Payable either “to the order of” or “to the bearer” All of these elements must be present if the instrument is to qualify as a negotiable note. ENDORSEMENT OF NOTES If a note is payable “to bearer,” endorsement is not necessary since the note is transferred by simple delivery to the other person. Paper money is such a note. If the note is payable to a named person, that person must “order” the maker to pay to the transferee by an endorsement. The endorsement may be: In Blank – Endorsement with a signature alone makes the note payable to any bearer of the note. Special – Holder endorses “pay to the order of (name of new payee)” and signs the note; the note is now payable only to the new payee. Restrictive – Holder restricts further negotiability by writing “for deposit only” and signs the note. Qualified – Adding the words “without recourse” before signing a note means the endorser will not be liable for the amount of the note if the maker refuses to pay. HOLDER IN DUE COURSE One who takes a negotiable note which has been transferred from the original payee through endorsement becomes a holder in due course, with certain rights, under the following conditions: Valid Note – Note is valid on its face. Innocent of Defects – Holder became the holder of the note without knowledge of any defects (if such exist). Dynasty School (www.dynastySchool.com) 8-3 REAL ESTATE FINANCE Good Faith and Consideration – Holder took the note in good faith and for a valuable consideration. DEFENSES BY THE MAKER Under certain circumstances the maker of the note cannot be held to the promise to pay. Some circumstances affect the debt only as against the original payee; some affect any subsequent holder. Personal Defenses – The maker may use the following commonly recognized personal defenses against the original payee, but not against a holder in due course. • • • • Fraud in inducement, e.g., false statements used...
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