C conveys BA to D giving D a Quitclaim Deed for 100000 5 2008 X shows up and

C conveys ba to d giving d a quitclaim deed for

  • University of Kentucky
  • LAW 807
  • Test Prep
  • lawstudent1995
  • 32
  • 100% (1) 1 out of 1 people found this document helpful

This preview shows page 26 - 27 out of 32 pages.

4.2005: C conveys B/A to D, giving D a Quitclaim Deed for $100,000 5. 2008: X shows up and sues D! X wins the lawsuit. D is kicked out 6. What recourse does D have? a.Future warranties may be enforced against the person who made them by anyonein the subsequent chain of titleb.Look at C: no recourse. C conveyed B/A to C, giving D a Quitclaim DeedTherefore, C did not make any warranties to Dc.Look at B: B gave a special warranty deed and it was not B who did anything wrongSo B has to recourse against Bd.Look at A: RECOURSE!! D can sue A for breach of the covenant of quiet enjoymenti.But A’s liability is limited to the purchase price A got for the property [$50,000]ii.It’s better than nothing, but it is not as good as $100,000 which D paid for B/AD is going to suffer a net loss of $50,000 f. Mortgages and Other Financing Devices i. Mortgages 1. A mortgage is a consensual lien placed on real property to secure a debt. The debtor also signs a promissory note for the amount of the debt. If the debtor defaults on the loan, the creditor may sell the mortgaged property in order to pay off the loan. In addition, the debtor may be personally liable on the promissory note for any deficiency if the proceeds of the sale of the mortgaged property are not sufficient to pay off the loan a. The debtor is known as the mortgagor and the creditor is known as the mortgagee 2. A debtor may obtain more than one mortgage on a particular piece of property. The mortgage that is obtained first is known as a first mortgage and is senior to any subsequent mortgages. If the debtor defaults on a second mortgage, the second mortgagee can foreclose on the mortgaged property, but first must pay off the first mortgage before receiving any of the proceeds of the foreclosure sale a. Example : A purchases a house for $100,000 from B. A makes a $10,00 down payment, obtains a $75,000 first mortgage from C, a bank, and obtains a $15,000 second mortgage from B [knowns as a purchase money mortgage]. A subsequently defaults and C foreclosures. The house only brings $50,000 at the foreclosure sale. C gets $50,000. C may be able to recover the balance of the debt from A if A has any assets. Likewise, B may try to recover the balance of A’s debt to him by suing him personally. However, B will get nothing from the sale of the house because his mortgage was junior to C’s i. What is the house realized $90,000 at the foreclosure sale? 1. C would get $75,000. B would get $15,000. A would get nothing. 3. When the debtor defaults, the creditor normally asks the court to order a foreclosure sale . This sale is known as a judicial foreclosure sale and is conducted by the sheriff or some other public official. Many states permit the creditor to include a power of sale provision in the mortgage which allows the creditor to conduct a private foreclosure sale. In either case, the creditor can only recover the amount of the debt and must turn over any surplus, known as the equity of redemption , to the debtor.
Image of page 26
Image of page 27

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture