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REAL ESTATE OUTLINE Chapter 1: Opportunity costs: what you are foregoing by taking this route Sunk costs: will not get back; inspection Out-of-pocket: lawyer Chapter 2: Brokers v. Lawyers Usually a broker reps the seller Brokers Duties to clients: 1. Fiduciary 2. Loyalty a. Obtaining best terms for client b. Self dealing is a no no 3. Full Disclosure 4. Confidentiality a. Dual representation: i. Full disclosure is needed A. Commission a. Traditional: when he procures a ready willing and able buyer acceptable to seller b. New Rule: Sale must close c. Transaction fails because a condition in the K is not satisfied = no $ B. Brokers claims against buyer a. Lack of privity b. Implied K theory c. Tort theory Brokers duty to non-clients 1. no fraud, misrepresentation, etc a. split on if liable for innocent misrep 2. Trend: duty to investigate property and disclose defects reasonably Brokers and Lawyers: 1. Brokers can prepare standard K for sale a. K v. conveyances test: i. No deeds or closing docs b. Simple-complex test c. Incidental test: d. Public interest test 2. Lawyers acting as Brokers a. Regulation of brokers (licensing) has exemption for attorneys i. Incidental test ii. Total exemption

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Chapter 3: Preparing to Contract 1. Precontract: initial investigation; offers/counteroffers 2. Executory Contact: after K signing; completion and satisfaction of conditions and obligations are worked towards 3. Closing: $ for deed/conveyance. All conditions and obligations have been met. 4. Post-closing: Docs get recorded; closing letters Precontract Activities: A. Information gathering about market choices and risks and values i. Latent defects should be disclosed B. Cost of information and Third party factors Contract Formation: Negotiations to legally enforceable promises 1. Consideration 2. offer 3. acceptance 4. legal purpose A. Statute of Frauds a. ID parties, describe property, indicate intent to sell and buy, signed by party resisting enforcement, names price or other consideration B. Writing v. K a. Part Performance i. Oral K is enforceable when they can show substantial reliance on that K. I. possession by the buyer II. change of position a. buyer made repairs or improvements b. buyer paid all or part of $ ii. performance gives evidence to a K, suffers injury b. Equitable Estoppel i. Focus on affirmative actions of the seller that misled the buyer C. Parole Evidence Rule a. 4 corners b. Ambiguity c. Contradiction: not allowed unless there is ambiguity d. Timing D. Integration Clauses E. Letters of Intent a. Agreement to Agree: to give purchaser some type of assurance that a deal is likely to go through before expending additional time and money b. Legal Effect: usually not binding i. Binds parties to move forward in good faith and agree to each others proposals of reasonable terms for the final agreement F. Options a. Pay a negotiated price to obtain the option, getting solid right to buy at a specific time, but no obligation to actually buy

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i. Writing describes option price, how and when it is to be exercised, closing date, and other terms Chapter 4: The Executory Contract I. As a risk management device 1. allocating executory period risk A. Conditions: excuses parties from completion when a described event fails to occur B. Warranties: that something is as it was purported to be a. Party giving it takes on the risk b. Party getting it has reduced risk C. Representations: express disclosures or statements about important elements of the transaction. Stated in the K to show materiality and relevance of the info. a. Party making the rep takes on the risk D. Covenants and Negative Covenants: express the actions or non actions the parties agree to take the risks of. a. Buyer agrees to apply for loan w/in 5 days b. Seller agrees to not remove anything from house E. Remedies: states the consequences of particular events in advance a. Includes failure of conditions, warranties, etc 3. Lawyers role in explaining K a. That it is enforceable and that all essential terms are in writing b. That is reflects their clients interests i. Duty to non-clients: A. Notify them that you do not represent them and are not protecting their interest and just explain material terms II. Contract Modifications: 1. Subsequent Agreements: must it also be written. Some say yes and some allow proof of parole modification b/c original K establishes a real agreement 2. Waiver: Party can waive a condition by a. word b. action c. writing 3. Estoppel: Party can be estopped from enforcing a term if the other side has reasonably and detrimentally relied on their action or inaction III. Equitable Conversion: A. Split Title: Doctrine of Equitable Estoppel splits the title to the property between the seller and buyer when the K is signed. Seller has legal and buyer acquires equitable title. Both have property rights and transfer their interests. 1. Legal Title: Seller has legal title only as Trustee as security for the payment to come 2. Equitable Title: real owner of property prior to closing, just not right to possession.

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B. Traditional Risk of Loss Rule: Buyer has the risk of loss from fire and others from time the K is enforceable. C. Other Rules: 1. Control: who has control of the property at the time 2. Uniform Vendor and Purchaser Risk Act: on seller until buyer takes possession or legal title 3. Implied Condition: On seller, b/c implied condition that house will remain goodprobable expectations D. Contract Alocation: parties can expressly do it: usually on the one with control E. Insurance: Both parties have an insurable interest. III. Major Contract Conditions: A. Categories of Conditions: 1. Condition Precedent: avoid risks or duties under the K if condition not met 2. Condition Subsequent: relieved under K if expected event does not happen 3. Simultaneous Condition: Perform at same time 4. Inspection Condition: 5. Mortgage Financing: must be able to get financing, list $ and interest a. Seller financing Chapter 5: Condition of the Property I. Quantity: in gross or by acre II. Quality: A.Caveat Emptor: buyer beware B. Pro Buyer doctrines: 1. Intentional/Negligent Misrepresentation 2. Concealment 3. Latent Dangerous Effects: affirmative duty to disclose 4. Attorney Liability: provides false info and nonclient relies C. Implied duty to disclose material defects: some states go further 1. Materiality: significant effect on market value 2. Knowledge: seller knows about it a. some even say should have known 3. Residential v. Commercial: Mainly in home sales D. Stigma and nondisclosure statutes: nonphysical 1. material impact on value or emotional impact or psyiological defect E. Statutory Duty to disclose: eliminates uncertainty 1. Interstate land sales full disclosure Act: have to file a report on house -for 25 or more lots F. Implied Warranties for new housing: of habitability: can even include water access G. Express Allocation of Risk of Quality: 1. Right of Inspection: buyer contracts for this and establish standard 2. As is clause: all risk on buyer 3. Express Warranties: set forth in formal K

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a. Home Owner Warranties: can be purchased with the new homes III. Lender Liability: A. Lender acting like a developer: normally not liable for their appraisals or inspections, unless they exercise joint venture B. Lenders Knowledge of Sellers Fraud: knows or should know the seller is committing fraud, buyer can use as defense to not pay debt Chapter 6: Closing the Contract A. The Closing Process: review performance 1. The exchange: instrument of conveyance must: a. Be in writing b. Id the grantor and grantee c. Adequately describe the property d. Intent to convey e. Actual or constructive delivery of the instrument ro the grantee f. Grantee must accept the grant i. Dont have to record; voluntary act B. Attorneys Role at Closing: 1. Multiple Representation: duty of loyalty to client a. full disclosure to all parties b. informed consent by all parties i. Conflict and removal: lawyer must move in the event of litigation; he has confidential infor for each side and cannot participate in and adversarial proceeding. ii. Seller and Buyer: Dual rep at closing is allowed, but must withdraw if there is a dispute. iii. Payment of Fees: can be paid by source other than client as long as there is consent and no impairment - attorney as adverse party: bad news 2. Duty to Nonclients: one party is not represented a. implied or informal representstion: dual rep may inadvertently occur b/c unrepresented party believes attorney is protecting him too. i. hard to show b. Duty to not further clients wrongful conduct: if your client is bad you have to warn C. Doctrine of Merger: Terms from the Executory K are merged into the deed at closing. -risk is on buyer 1. Exceptions: a. Collateral Matters: IF the parties intended a particular undertaking to survive merger, then it does not apply. -colateral to closing 2. Fraud: cant use merger to get out of liability 3. Mutual Mistake: reformation is available despite the doctrine - not unilateral mistake C. Escrow:

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1. Loan Escrow: lenders use to collect and hold $ from debtor for paying annual real prop taxes, insurance premiums. a. wants to ensure payment of these items to not jepordize security b. earn interest 2. Closing Escrow: escrow agent gets deed, $, confirms steps, records a. conditional deliveries done this way 3. Contingency Escrow: used to resolve a problem that arises before or at closingunperformed obligation of seller a. Clearly id problem to be corrected b. sets a cost constraint on action to remedy c. time period to be done in d. standard for evidence of proof of compliance e. establish a right of inspection f. how, when and to whom $ in escrow will be paid g. id escrow agent and his duties and obligations Chapter 7: Contract Remedies I. Damages at Law: fungibility A. Expectancy Damages: upon breach, give benefit of her bargain. K price-FMV 1. Resale by seller after buyer breach: traditionally seller is not entitled to collect the difference between the K price and the new price. It is at time of breach. B. Reliance Damages: Lost profits, out-of-pocket costs. Forseeable to breaching party C. FMV: 1. Fair: By the loss in property value 2. Market: relevant to the type of property 3. Value: a. comparable sales b. replacement costs: cost of rebuilding or replacing building c. Income flow: net annual income 4. Time Value of $: discount future money for present value 5. Time of Breach: prices change often. D. Lost Profits: potential profits; burden to prove you would have earned it II. Equitable Remedies: only when damages are inadequate A. Reformation: K has an eorror and fails to reflect intent; mutual mistake only B. Rescission: right to terminate K due to material default, misrep, or unfulfilled conditionnot just mistake C. Specific Performance: land is unique, must be ready willing and able to buy -mutuality of remedy: traditional -must show need for SP as well: modern view 1. With abatement, if reasonable D. Equitable Liens: 1. Vendor Liens: secures any amount owed the seller or vendor. If adter closing seller extended credit and fails to secure remaining

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purchase price. Vendor can bring an action for judicial forclosure and sell prop to satisfy debt. 2. Vendees Lien: obtain rescission, may have right to return of down payment of reliance damages. Can put lien on prop to get the $. III. Liquidated Damages: prearranged K damages A. Actual damages not easily ascertainable at time of contracting 1. liquidity, FMV in future B. Reasonable Amount: not a penalty IV. Tort Remedies: non economic and punitive damages A. Negligence: causes foreseeable harm you can sue on negligence and not K law B. Strict Liability: not usually C. Emotional Distress: D. Punitive: for grossly negligent or purposeful conduct V. Slander of Title and Lis Pendens: A. Slander of Title: tort action; protects value of property when character is maligned. Person falsely disputes ownership. B. Lis Pendens: is a notice filed in the public records for real estate that states that litigation if currently pending, the outcome of which may affect the status of the property. -can only be filed if the claim has a conncetion with the status of title 1. gives notice to any bona fide purchasers VI. Other Remedies: injunction, ejectment, declaratory judgment Chapter 8: Allocating Risk by Contract and Deed I. Title Under the Real Estate Contract A. Implied term of marketable title: condition and promise. Buyers obligation to close is conditioned on of sellers title being marketable; he impliedly promises this. 1. Definition: Title that is food in fact, subject to no encumbrance not agreed upon by parties and free from reasonable doubt. No 3rd party claims 2. Timing: at closing, not earlier. Must give seller reasonable time to cure 3. Buyers Knowledge: can object at anytime, not when you 1st find out B. Record title compared to marketable title: must have it to be marketable 1. Adverse Possession Title: not record title, may be a risk -some courts say okfact specific C. Encumbrances: nonpossessory right in property held by a 3rd party that reduces value, restricts use, or imposes obligation. To be marketable it should be free of encumbrances; except the following do not impair title usually: 1. De Minimis: does not have appreciable effect (common easement) 2. Visible: buyer saw them (overhead cable lines) 3. Superfluous: written and recorded, but doesnt impose obligations on land owner in addition to those otherwise required by law 4. Obsolete: time expires D. Encroachments: 1. Sellers improvements encroach: may go over boundary line and be relocated or have to pay damages

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2. Neighbors: lose of title through AP or equity principles E. Zoning and other public regulations: find out after closing; is it still marketable 1. Narrow View of title: look at fee simple interest and encumbrances like liens 2. Broad view: look at expectations concerning property use F. Express Contract Provisions: 1. Contract Title: parties can replace judicial standard of marketable title 2. Record Title: requires status of proof of title from deeds and other instruments recorded. a. Seller required to furnish abstracts of title i. summary of record of title 3. Insurable Title: buyer must obtain G. Buyers Remedies for Title Defect 1. English Rule: not expectancy, but restitution a. out of pocket, deposit, interest i. unless in bad faith 2. American Rule: full range of choices, even expectancy II. Formal Requirements for Deeds: A. SOF 1. ID parties, ID land, shoe intent to convey B. Execution: signed by grantor C. Delivery: to grantee D. Acceptance: by grantee E. Acknowledgement and recordation: optional; effective upon delivery III. Deed Constructional Rules: courts use these rules of interpretation A. Intent of Parties: get parties intent by looking at whole deed B. Conflict between parts of deeds: 1. construed against grantor b/c he drafts it 2. priority given to certain clauses (granting clause) C. Extrinsic evidence of real intent: ambiguity 1. available for latent, but not patent ambiguity D. Reformation: unambiguous deed has error, original party can bring reformation but it will not affect any BFP who is present IV. Defective Deeds: A. Void Deeds: no legal effect at all 1. Forgery: can get damages against the forger 2. Lack of delivery: not valid ever B. Voidable Deeds: duress or incapacity. 1. grantor has right to rescind, but not against subsequent BFP V. Deed Covenants of Title: A. Warranty Deeds: 1. General title warranties protect the grantee against any and all defects that may have arisen during the entire chain of title up to the time of delivery.

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2. Special or limited warranties protect against defects arising while grantor owned the property, not prior to. B. Quitclaim Deeds: no covenants of title. Grantee bears all risk associated with quality of title C. Types of Covenants: must be express, none are implied at common law -now statutory form for deeds creates statutory implied title covenants 1. Present Covenants: do not run with land; only breached at delivery of deed and then SOL runs a. covenant of seisin: grantor promises he is seized of the estate the deed purports to convey b. Right to convey: grantor promises he has this legal right c. Covenant against encumbrances: promises there are none 2. Future Covenants: run subsequent to grantees, provided not breached at time of transfer of title to subsequent grantee. Breached by actual or constructive eviction of the grantee. a. Quiet enjoyment: grantor promises grantee may posses and quietly enjoy land i. breached if grantor or agent of him evicts grantee b. Covenant of Warrant: same scope as above c. Further assurances: promises to give whatever further assurances may be requires to vest in the future to grantee i. cure title by getting releases from 3rd parties 3. Remedies for breach of deed covenants: usually limited to purchase price received plus statutory interest from date of breach 1. Further assurances gets specific relief VI. Relationships Between Title under Contract and Deed Covenants: A. Doctrine of merger says executory Ks are extinguished when deed is delivered. Deed covenants now take over. B. Quitclaim Deed and Marketable Title: If k calls for delivery of quitclaim deed and is otherwise silent, purchaser may raise title objection prior to closing based on implied right to marketable title. Chapter 9: Land Description 1. Meets and Bounds: describes each boundary line by length and direction 2. Government Survey System: sections and townships and grids therein 3. Subdivision plats: Surveyor: locate boundary lines Liability: by certificate, negiligence Recovery: privity Legal Adequacy of Description: formalism v. intent 1. Stricter in quality of land descriptions for deeds than other Ks Interpretation: to grantee, incorporation is ok, specifc language controls general, natural monuments beat artificial, monuments beat calls SOF: need ot have a legal description to be valid Buyer should obtain the survey

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Chapter 10: The Public Land Records I. Common Law Priority Rules: A. Delivery: first in time, first in right. Date of signing does not matter B. Exception for Prior Equitable Interest: if subsequent purchaser acquires legal title with notice of the prior equity C. Most statutes change these, but if not then common law rules II. Functions of Recording System: A. Title Assurance: can go and find it B. Priority Ranking: III. Title Search Process: A. Construct Chain of Title: B. Check for Adverse Recorded Transfers: by present owner and all previous owners of the property C. Study Recorded Instruments: D. Check Other Records: judgment liens, tax liens, bankruptcy IV. Types of Recording Acts: A. Race Statute: a subsequent purchaser who records first wins. 3 states only B. Notice Statute: a subsequent purchaser who takes without notice wins. 1/2 C. Race-Notice Statute: a subsequent purchaser who takes without notice and records first wins. states V. Bona Fide Purchaser Status: in notice or race-notice state there are 2 requirements A. Purchaser: must pay value for the interest. Includes loan. B. Without Notice: 1. Actual Notice: state of mind test 2. Constructive Notice: of all recorded instruments a proper search shows 3. Inquiry Notice: suggestive facts lead to a duty to inquire i. Parties in possession of the actual land is a duty to inquire VI. Off-Record Risks: A. Inquiry Notice: purchaser takes all risk of unrecorded interests B. Unrecorded Interest: recording acts protect BFD only against off record interest that is capable of being recorded. Some are not 1. Interests unable to be created by an instrument: AP, prescriptive easements, marital property rights 2. Instruments not eligible for recording: short-term leases VII. BFD Shelter Rule: once a BFD cuts off a prior unrecorded interest, he can transfer good title to any grantee that does not have to qualify as a BFD. He has shelter from BFD A. Except when the BFD transfers title to the person who earlier created the prior unrecorded interest. VIII. Recorded Interests that are Difficult or Impossible to Find: A. Name Indexes: 1. Wild Deeds: deed into grantor is a missing link that was never recorded 2. Late Recorded Deeds: gap between delivery and recording where in between another transfer happened 3. Early Recorded: transfer before actually have title. Once get title, the doctrine of estoppel by deed operates to transfer it back to the prior grantee

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4. Effect of late and early recorded deeds: split on if impart constructive notice B. Tract Indexes: Easier C. Defective Recorded Instruments 1. Non-delivered deeds: void 2. Forged: void 3. Improper Acknowledgment: all states limit recordation to properly ones a. latent v. patent defect: most say all fail to impart constructive notice, but some divide saying latent does. D. Mis-indexed Deed: Split Chapter 11: Title Products I. Title Abstracts: a summary of all deeds and other instruments for a tract of land found by searching public records. A. Types of Abstracts 1. Complete: chain of title back to sovereign 2. Partial: customary of 50-60 years; statute 3. Updated: Once issued, they are kept by owner who bought it. They can now only search from the end of the last one; continuation abstract B. Standard for Liability: based on negligence C. Who may rely on abstracts: 1. Those in privity: most expand to 3rd party Beny 2. Subsequent land buyers: negligent misrep theory II. Attorneys Title Opinions and Certificates: states as a professional, his opinion to the status and marketability of the title. Usually not a guarantee A. Standard of Liability: negligence and common norms 1. Marketable title standard: duty to disclose items of cloud 2. representation of scope of work: should be included B. Who may rely: same as above III. Title Insurance: Owners and Lenders Policies: alternative to abstracts or opinion. A. Primary Functions: 1. Search and Disclosure: 2. Rick Spreading: B. Process of issuing title insurance: 1. Title search 2. title commitment 3. title policy a. exceptions: easements, real covenants, servitudes, mortgages C. Absolute Liability: covered by the policy; no need to prove fault or negligence D. Policy Exclusions: zoning, AP, etc E. Off-record Risks: usually covered 1. except things that would be found by survey only F. Who may rely: owner of the policy 1. Warrantors coverage: if insured owner conveys by warranty deed, the policy usually protects the grantor if a title defect results in a claim against

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G. Recovery on policy: actual loss and amount in policy H. Tort Liability: usually as they are written 1. unless really bad searching. Courts are split as to whether they have a duty to a reasonable search before issuing a policy I. Ethical Problems: 1. Conflicts of Interest: attorney serves as agent of title co. and reps a party 2. Confidentiality: he learns of problem not known to co. 3. Good faith and fair dealing: Chapter 12: Improving Efficiency of the Title System I. Title Standards: bar-approved consensus of what defects are significant enough to affect marketable title A. Minor Variations in names: unlikely B. Period of Search: 50 years C. Legal Effect: they do not have force of law in court decision, but persuasive D. Parties incorporation of standards: II. Adverse Possession: A. Title-Clearing Function: defeats stale interests in property B. Modification of Boundary: undercuts recording system by preferring parties actual possession over legal description. III. Title Curative Acts: for defective instruments; certain defects are conclusively presumed valid after the passage of a certain number of years after recordation A. Types of Defects: missing/defect acknowledgment, failure to pay recording fee, lack of delivery B. Period of Time: depends 3-12 years C. Legal Effect: state leg and binds court IV. Marketable Title Acts: A. Goals: limit time span of searched and render more marketable titles B. Root of Title: Extinguishes interests in 1st deed over 30 years old C. Function: interest created prior to root of title no longer affects title 1. Preserving old interests: can rerecord D. Exceptions: railroads, US government, etc., other statutory exceptions V. TORRENS SYSTEM: Title Registration: government issues certificate of ownership for each tract of land. Non-fee ownership like mortgages are shown as memorials A. Not really in use because: B. indemnity funds, voluntary nature, exceptions to conclusiveness of ownership Chapter 13: Housing Markets and Products I. Single Family Homes: 1. Affected by Land use controls, zoning, covenants and restrictions, planned unit developments and owner associations II. Condos: common elements, legal structure determines property ownership 1. Affected by Declaration of condo statute, owner association 2. Ownership Interest in common elements, limited common elements, the unit III. Co-Op: IV. Time Share Housing

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Chapter 15: Residential Mortgage Markets and Products Each loan is an investment opportunity for a lender. A. Security for the loan: Credit based on estimated future income 1. Unsecured: just a promise to pay by the borrower i. Lender hopes he can get to other assets in default 2. Secured: borrower signs promissory note and puts up specific collateral i. Lender can take the property the mortgage was used for -recording the mortgage gives priority of claim II. Primary Mortgage Market: interplay between savers and borrowers. A. Savers give to banks and they lend that to borrowers that will give them a good return on investment III. Secondary Mortgage Market: Basically it is more risky, but allows more loans IV. Mortgage Products: A. point (up front fees) Chapter 14: Possession and Use of Mortgaged Property I. Mortgage Theories A. Title: signing of mortgage transfers title to borrower from lender for duration of mortgage 1. conveyance of title to mortgagee a. defeasible: mortgagor has future interest. Pay debt by law day and get possession, if not then mortgagee gets fee simple b. FSA w/ promise to reconvey: if payments resume 2. Gives mortgagee right to posses, but most have clause that mortgagor has right until default B. Lien Theory: majority; mortgagee has only right to a lien until foreclosure 1. Mortgagor has legal and equitable title, but mortgagee has foreclosure. C. Intermediate Theory: hybrid; mortgagor has title until default, then mortgagee II. Equity of Redemption: A. Hardship at Law: English common law is harsh B. Intervention of equity court: right to pay late became equity of redemption C. Anti-Clogging Rule: stuck down mortgage clauses that waived equity of redemption D. Late Payment and Foreclosure: puts cloud on mortgagees title 1. Strict Foreclosure: fail to file redemption by judicial date III. Deed of Trust: like a mortgage A. Power of Sale: adds a 3rd party (Trustee) to the loan transaction. If borrower defaults, the Trustee is authorized to foreclose and conduct a private sale B. Trustees role: neutral personbut not really IV. Possession by Mortgagor: A. Doctrine of Waste: protects mortgagee; duty not to destroy by permissive waste 1. Balance: preserve economic value of property i. voluntary or permissive waste

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ii. duty to repair and avoid legal risk(failure to pay taxes on it) C. Relationship of Waste to Underlying Debt: 1. based on tort theory so even a non-personally liable loan holder may be liable here a. discharge in bankruptcy 2. Non-recourse: not liable under permissive waste, but liable for bad faith V. Possession by Mortgagee: A. Fiduciary Duties: 1. Standard Care: reasonable prudent and careful manner 2. Duty to Account: collect rents and stuff 3. 3rd parties: not usually in privity VI. Assignment of Rents: Lender usually had clause that he gets them. A. Express assignment of specific lease: usually in separate document B. Types of assignments of rents: 1. Collateral: creates a lien or security interest in the rent. Bargains for this right in case of default. Must take action to invoke it -must take possession or get a receiver 2. Absolute: passes title to the rents to the lender. Can get them immediately or conditioned on specific events 3. Presumption of collateral assignment C. Effect on leases of mortgagee taking possession: 1. Senior lease, junior mortgage: tenants rights are not affected. Given right notice, now performs to lender. 2. Junior lease, senior mortgage: depends on mortgage theory of state a. Title and intermediate: upon default, lender has immediate right to posses even leased premesis and can evict a junior tenant. b. Lien: does not have this right, but has a valid lien on the rents and can act on these after default and prior to foreclosure or can get a judicial receiver. Lender is bound by prepayments VII. Receivers: person who takes possession of the mortgaged property for lender. A. Judicial Appointment: mortgagee asks court to appoint one and is available in all states as an incident to foreclosure, B. Scope of Power: managerial usually. Courts decide C. Advantages of receiver for lender: protect from misbehavior of mortgagor 1. Getting possession fast: foreclosure takes longer 2. getting income from non-rental property: receiver can do that 3. Getting preforeclosure protection in lien-theory states: since they would normally lack right to posses until foreclosure, this is their only protection from waste 4. Avoiding fiduciary duties: liabilities now on receiver D. Disadvantages: 1. Paying receiver fees 2. going to court 3. losing control to the receiver

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E. Standard for appointment: in equity, borrower has committed a serious default, actually need a receiver or harm will happen -must be a default and one other risky factor (ie borrower insolvency) 1. Receivership clauses: some mortgage docs have this -courts are split Chapter 16: Mortgage Obligations I. Form of Obligation: secures payment for performance of an obligation 1. usually a debt owed to mortgagee 2. normally a promissory note is separate from the mortgage for evidence and has all the details about the obligation to makes payments of principle and interest 3. mortgage just secures the debt; makes the real property serve as collateral in case the debtor does not pay II. Usury: limits amount of interest a lender can charge a borrower. 1. Traditional Fixed Limit: 10-12% no matter what 2. Compounding of Interest: how often interest is calculated A. Simple interest: annually B. Market Customs: Installment loans, usually interest is when installment is due 3. Spreading interest over the loan term: not usually equally distributed -normally paid after it accrues A. Prepaid interest: sometimes you pay these points up front B. Adjustable interest rate: if it goes to high, courts may apply equal spreading of the interest if it goes above the max rate i. usury savings clause: if subject to fixed limit a. Generic Clause: parties do not intend to violate and borrower will not pay over the max -usually against PP b/c buts risk on borrower to find out the interest rate b. Interest cap rate: states the legal % and puts a life-of-theloan max rate equal to it 4. Time-Price Rule: seller of real estate extends financing to a buyer he usually takes back a promissory not secured by a purchase money mortgage. A. some states apply usury B. most have a time-price or credit-sale rule i. can give a cash price and a higher credit price a. but the difference in price will not be construed as interest 5. Remedies for usury violations: at minimum, the lender forfeits the interest that exceeds the usury limit A. Statutory Damages: damages 2 or 3x the amount of excess interest B. No interest: can collect only the principle C. No further payments: relieved of duty to pay loan 6. Lender Defenses: Very difficult 7. Federal Preemption on single family homes, apt., coop, etc A. preempts only 1st lien mortgages, not junior mortgage loans

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-not businesses III. Late Payment: mortgagor is owed compensation depending on terms of the mortgage. It is usually also secured by the mortgage. A. Interest on Unpaid Sum: on the period of tardiness. Only remedy unless not provides otherwise. Usually specify a rate of interest B. Late Payment Charge: expressly provide for a fixed amount to be charged C. State Statutory Limits: D. Federal Regulations: 15 days equal to 4% of installment E. Liquidated Damages: is what a late payment charge is kinda like; must be reasonable 1. Amount of Charge 2. Difficulty of measuring actual damages F. State Usury laws: cant be higher interest too high or borrower will have defense G. Effect of statutes and regulations on common law liquidated damages rules and usury rule: usually if it complies with the law the courts will say its ok. IV. Prepayment: A. Total Prepayment: promissory note is cancelled and mortgage is released B. Partial Prepayment: C. Voluntary Prepayment: borrower does on own accord D. Involuntary: lender compels it due to default or other event specified in K 1. due on sale clause if transfer property E. Borrowers right to prepay: usually have it in K, but if not 1. Perfect tender in time: traditional implied rule and majority says there is not a right to prepay unless there was an agreement not to. a. should comply with K terms b. Effect on Mortgage: lender has right to reject prepayment then also has general right to insist the property remain as security for the debt. May restrict borrowers property rights 2. Implied right to Prepay: minority or by judicial decision to go this way 3. Express Prepayment provisions: parties can specify this in the K a. prepayment penalty: compensate lender for loss of bargain b. enforceability: usually, parties choose allocations of risks V. Nondebt Obligations: A. Debt is obligation to pay a fixed amount of money 1. Collateral promises: mortgagor usually makes other promises a. when debt is paid, obligation is gone i. promise to insure your store B. Primary Obligation is not a debt: requirements of the mortgage: 1. Written description of obligation: expressly state what is secures 2. Definitely ascertainable amount: a. supplier of materials and labor: may secure purchase price or wages by getting and express mortgage

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reasonable

3. Support Mortgage: promises to provide financial support for the remainder of their life. Not quantified in $, but judicially as support

Chapter 17: Transfers by Borrowers and Lenders I. Transfers of Mortgaged Property: Either the debt is paid and the mortgage is released to no longer affect the title or it remains existing and the grantee will either assume or take title subject to the mortgage. A. Assumption of Mortgage Obligation: Buyer promises the seller that he will pay all the debt in accordance with the terms. 3 parties are now involved (BSM) 1. Buyers Position: Buyer is personally liable to pay the debt. Mortgagee may sue if he fails to do so. 2. Sellers Position: a. Primary Liability to pay the debt is now with the buyer. This is the intent of assumption. b. Seller is Surety: remains liable as the maker of the promissor note, but because the buyer is primarily liable, the seller is secondarily liable. He is a surety c. Suretys Rights: If mortgagee sues the seller on the promissory note without foreclosing or threatens this, the seller can: i. pay the debt: and through subrogation he now obtains the mortgagees rights to enforce the note against the buyer and to foreclose on the property. ii. Sue the buyer: in most states for breach of the promise to assume. 3. Further Transfer and Assumption: if the assuming buyer sells with her new buyer assuming the debt, the original seller becomes a subsurety. c. 1st buyer is to bear the entire risk and cost of the 2nd buyers default 4. Express release of liability: When the seller is personally liable on the mortgage debt, the seller can avoid continuing liability as a surety only if the lender agrees. Need an express release of liability. Courts will not find an implied release or waiver or estoppel if the lender knew and consented to the assumption. 5. Mortgagees Position: The assuming buyer is personally liable now. a. direct contact between buyer and mortgagee: sometimes these 2 will have a K i. When there is no K between them, 2 rationales justify the mortgagees right to enforce the buyers assumption -3rd party beneficiary: consider the mortgagee to be 3rd party beny of the K between buyer and seller

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-Derivative Rights: against the assuming buyer. By subrogation, it steps into sellers shoes and enforces the promise to pay the debt B. Taking Subject to the Mortgage Obligation: The buyer does not promise to pay the debt, but agrees that the mortgage is permitted as an exception to good title and that the seller is not responsible for paying the debt 1. Nonrecourse Financing: Buyer has no personal liability to pay the debt, but usually does so he will not loose the property to the mortgagee C. Modification and Extension of Mortgage Debt: When the mortgagor coveys property to a 3rd party who assumes or takes subject to the debt and subsequently the mortgagee and buyer modify or extend the debt w/o including the seller in the agreement, is the seller still personally liable? Depends on what the buyer does: 1. Assumption: Discharge of Surety: when a debt is modified or extended, the surety is discharged unless he agreed to the new terms. a. because this new term adds to the suretys risk 2. Negotiable instruments with the UCC: when these are assumed there are different rules 3. Taking subject to Debt: 3 approaches a. Total Discharge: like assumptions b. No Discharge: she remains fully liable for the unpaid portion of the original debt c. Partial Discharge: to the extent of the value of the real property at the time the mortgagee grants an extension or price change to the non-assuming buyer 4. Reservation of rights clause: Promissory notes and mortgages often have these saying a mortgagee and a successor owner may extend or modify the debt without discharging the mortgagor. a. enforced, but strictly construed D. Restrictions on transfer by Mortgagor: 1. General rule is that mortgage has free alienability no matter what. 2. Due-on-sale clause: parties can K to restrict the alienability; this one says that is you sell without lender approval, they have the option to accelerate the loan 3. Garn-St. Germain Act: preempts state laws that protects mortgagors from lenders enforcing due on sale clauses. Makes the clause automatically enforceable 4. Prior State Law Approaches: a. automatic enforceability b. Impairment test: lender act reasonably in exercise of rights i. only if it impaired his security -new guy not creditworthy -likely to commit waste E. Garn-St. Germain Act: 1. Automatic Enforceability: lender has complete discretion 2. Lenders conditions to transfers: lender can voluntarily withhold consent and impose any condition on the proposed transfer

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3. Borrower can bargain to have an express standard for the lender to use to be put in as a clause and it is enforceable 4. Scope: applies ot every real property loan mortgage, loan, advance, credit sale secured by a lien.whether for real or personal property 5. Office of Thrift Supervision: has authority to issue rules about the act. 1. very broad view 2, due on sale clause definition: gives the option 6. Automatic Clause: ruled by state law b/c OTS says Act doesnt cover it 7. Exemption for residential borrowers: nonsubstantive transfers a. shorter leases, transfers by joint tenancy, trust, familyetc b. this preempts any state rules about these transfers F. Seller-buyer avoidance of Due on Sale Clause: Silent Sale 1. Sellers risk: potential liability to lender for breach of K and can accelerate whenever they like. (some states say they must notify) The can also sue and get expectation damages. a. difference in yield of interest rates at K time and transfer time 2. Buyers risk: liable for interference with lenders K rights. 3. Lawyers risk: ethics, but are allowed to do this if it is not a crime 4. Fraud: some instances 5. Confidentiality: lawyer cannot reveal w/out consent II. Transfer of Mortgage Debt A. Assignment: transfer of a mortgage loan. Lender sells entire interest in a loan 1. Assignment: lender executes and delivers a written Assignment of the Note and Mortgage. (second one is recordable) 2. Endorsement: Lender endorses the original promissory note 3. Delivery: lender delivers the original promissory note and mortgage to assignee 4. Recordation: Assignee records assignment of mortgage B. Mortgage follows obligation: must have note C. Failure to Record assignment of mortgage: 1. If original mortgage is recorded, the priority starts at that date and transferor steps into shoes of transferee 2. if not, then must record to have any priority D. Types of assignments: 1. Outright Sale: whole interest in promissory note and mortgage 2. Security Interest: mortgagee can pledge the promissory note a. borrow money and grant to that lender a security interest in the note and mortgage i. To perfect the security in the note you must give notice E. Negotiable Instruments: writings that evidence a mortgage 1. Assignee of nonnegotiable debt: takes subject to any defense the mortgagor has against mortgagee 2. Assignee of negotiable debt: risk is reduce when they have a negotiable instrument and the assignee is a holder in due course b/c takes free of personal defenses. (fraud in the inducement, no consideration, etc)

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a. but still takes to real defenses asserted by mortgagor -incapacity, duress, fraud in face 3. Negotiation of Mortgage: when negotiable instrument is assigned to a holder in due course no personal defenses are allowed when he sues for payment, but what if he tries to foreclose mortgage, is it also negotiable a. Majority view is that the mortgage follows the instrument i. no personal defenses b. minority view is that mortgages are not negotiable 4. To be negotiable the maker must have an unconditional obligation to pay a fixed amount of $, and the note cannot contain additional undertakings of the maker. 5. Who is a holder in due course: assignee of negotiable instrument a. must have possession of the instrument b. transfer must be by negotiation c. assignee must pay value for the instrument d. holder must that the instrument in good faith, w/out notice of any defenses or claims that the instrument is overdue/dishonored 6. Laws sometime protect mortgagor from the normal consequences of assignments of negotiable instruments to holders in due course a. Most states limit in consumer mortgage loans: UCCC i. consumer credit sale: prohibits the sale of an interest in land when price is <25grand and interest rate >12% -take subject to all defense b. Consumer loan: mortgage loan under 25k and 12%. Lender makes consumer loan to enable a consumer to buy property or services is sometime subject to real defenses. Lender takes subject to them if lender i. knows seller arranges for extension of credit by lender for a fee ii. lender is related to seller iii. seller guarantees the loan or assumes risk of loss by lender upon the loan iv. .. b. Federal Trade Commission Regulation: i. consumer purchases: includes for acquiring goods and services for personal, family and household use -non-negotiable ii. mandatory notice of the intent to sale must be given to the consumer Chapter 18: Default and Acceleration I. Default Clauses: A. Purposes: allow the mortgagee to exercise one or more remedies provided for by the mortgage, including foreclosure 1. Usually set forth in promissory note and mortgage instrument

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a. or refer to a collateral instrument; cross-default B. Lenders Decision: try and evaluate behavior to decide: 1. Foreclosure: move quickly if intentional default, threatens value of security, no realistic hope of payment 2. Workout Potential: hardship, willing to pay, good prospect C. Interpretation of Default Clauses: promissory note mortgage, and other instruments almost always have them. Standard principle of K law 1. Payment is made upon actual receipt of by the lender. a. mailbox rule does not apply II. Acceleration: entire principle balance of loan, with all accrued interest is made immediately due and payable. A. Types of Acceleration Clauses: 1. Automatic: when certain events happen 2. Optional: a. advantages: more flexibility and control B. Lack of Acceleration Clause: 1. No acceleration is what most courts say 2. Anticipatory Repudiation: few accept idea that failure to pay a series of installments justifies their request for asking for full payment C. Procedure for acceleration: 1. Automatic: just tell the borrower acceleration has occurred 2. Optional: must tale some affirmative action that demonstrates intent to accelerate. a. Lenders notice to borrower of intent to accelerate followed by an act evidencing acceleration is often required b. before the borrower cures or tenders to cure the default D. Defenses to Acceleration 1. History of Late Payments: Waiver or estoppel a. anti-waiver clause: acceptance of 1 or more late payments is not a waiver; takes away the defense. i. some courts accept it and some say that by accepting late payments, the lender waives the anti-waive clause b. Lender can reinstate a duty to make punctual payments i. notify borrower of this intent 2. Materiality of Default: most courts safeguard borrowers if it is a a. technical default, b. not material or substantial, c. has not impaired security, d. equity principles permit it e. accepting late payments in the past 3. Borrowers Statutory rights to cure default: a. Prior to Acceleration: must give notice and give reasonable time b. After Acceleration: allowed to pay arrearages and reinstate the installment loan E. Amount Payable upon Acceleration: principle

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decision to

really no

1. Prepayment Premiums: usually one or the other and not both b/c he decided to accelerate and it is not the mortgagors voluntary end the loan transaction by prepaying the debt a. Except when the default is intentional, some courts say ok i. if clause if broadly worded 2. Late Payment Charges: Acceleration means entire debt is due, so there is no obligation to pay installments on certain dates, so there is late payments a. Lenders drafting of docs: can change this

Chapter 19: Foreclosure I. Strict Foreclosure: Action brought by motrgagee after mortgagor has defaulted. Forces payment or cuts off mortgagors equity in redemption. Court orders the debt to be paid by a certain date and if they fail the mortgagees title becomes absolute. A. Only 2 states use this as primary foreclosure B. Specialized Application: if foreclosure omits a 3rd party, this can cut off their interest II. Key Concepts: A. Action on the Debt: ME sues to get a judgment for damages that are equal to the principal, interest, and other mortgage charges. B. Foreclosure Action: ME seeks to change ownership of the property by erasing mortgagors equity of redemption. Action in equity. W/ power of sale its extrajudicial C. Deficiency: value of prop is less than debt. Usually seek judgment for the shortfall; deficiency judgment by bringing an action D. Surplus: value is more, the mortgagor has equity. 1. Paid to mortgagor if no other parties have better claim to it. a. if others are shut out by foreclosure they are entitled to the $ before the mortgagor ranked by priority E. Election of Remedies: can elect to bring an action on the debt or foreclose 1. Action on debt can be brought 1st without foreclosing. a. can bring subsequent foreclosure if J not satisfied 2. Foreclosure First: w/out seeking judgment on debt. a. if deficiency, then can bring an action 3. Simultaneous: can do this III. Judicial Foreclosure: gives purchaser same title the mortgagor had A. Necessary Parties: Junior interest holders are necessary parties and must be joined as defendants to really transfer the title. 1. If they are omitted from the foreclosure action, they are not bound by it a. Junior Rights: still has property rights. If a junior liener i. foreclose the junior lien. Revives 1st mortgage, which is now held by foreclosure purchaser ii. Redeem the property: by paying the forclosure purchaser the amount of the 1st mortgage debt - purchase transaction

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junior gains fee title in exchange for price of the first debt b. Foreclose Purchaser Rights: that finds there is an omitted Junior i. Re-foreclose the senior mortgage: and join the other party ii. Redeem the property: pay off the junior lien -priority over Junior lien rights and can buy them out 1st iii. Use strict foreclosure: in some jurisdictions he can bring an action of strict foreclosure against junior lienor, forcing them to redeem C. Proper Parties: person who has rights or duties to property, but not a necessary party. Can be joined w/out consent V. Power of Sale Foreclosure: same as Judicial Foreclosure -mortgage instrument must authorize this power and state must have a stature that regulates the procedure. A. Cheap and Fast: states have it; more protection for debtor and junior 1. Notice to junior interest: is not necessary unless they have K with mortgagee that states so B. Statutory Procedure: specify notice, sale procedures, and formalities 1. Strict Compliance: protect mortgagors from risks that no unbiased 3rd party is supervising the foreclosure process (ie a judge) 2. Harm presumed from statutory violation: set aside the nonjudicial sale. -no injury need be shown C. Title Risk: 1. Judicial Foreclosure: once decree is issued and time for appeal passes the title is safe 2. Nonjudicial Foreclosures: people can sue at any time= weaker title VI. Priority of Mortgage that Refinances Prior Mortgage: A. Equitable Subrogation: lender that pays mortgage of another and takes a new mortgage as security is subrogated to the rights of the 1st mortgagee as against any intervening lienholder. -doctrine of equitable subrogation protects refinancing mortgagee who did not know of the junior claims at the time of refinancing 1. Amount of Debt: ES protects only to the extent of the senior mortgage that was repaid with funds of the refinancing mortgage, not excess if the new loan taken was bigger 2. Form Relief: given to the refinancing mortgagee a. Refinancing mortgagee has right to Re-foreclosure the senior mortgage b. Priority to New mortgage: when the refinancing mortgagee purports to foreclose its mortgage the court may give it priority c. Revival of Senior Debt: when refinancing mortgagee purports to foreclose its mortgage, the courts may revive the senior debt B. Record Priority Prevails: few states VII. Deed in Lieu of Foreclosure: after default, the borrower voluntarily conveys the property to the lender

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A. Advantages for Borrower: lender cancels all or part of debt; avoids forclosure B. Risks for Borrower: has substantial equity it is lost and underpricing C. Advantages for Lender: gets title now and avoids proceedings D. Risks for Lender 1. Clogging Equity of Redemption: mortgagor can try this 2. Inadequate Consideration or Unconscionability: bargaining positions 3. Title Risks: deed in lieu does not cut of Juniors 4. Risk of Mortgagors insolvency or bankruptcy: w/in 90 days, the transfer may be set aside and creditors may attack the deed if it was for less than < market value VIII. Economics of Foreclosure: A. Usually less that ordinary sales B. Low price does not invalidate sale. C. Courts may refuse to confirm foreclosures when there if a grossly inadequate price coupled with a mistake (even if good faith) 1. clerical mistake means lender missed sale D. May also refuse if there is an Inadequate price coupled with irregularity IX. Statutory Mortgagor Protections: A. One-action rule: some states limits mortgagee to a single action of foreclose and deficiency judgment B. Statutory Redemption: right to redeem property for a period of time after completion of foreclosure sale: 33 states 1. Existence of right to redeem: some allow for it under both judicial and power of sale. Almost all states say waiver to redeem is invalid 2. Time period: varies from a few months to 18 months after date of sale 3. Redemption Price: usually foreclosure price, plus interest and costs -few say he must pay the mortgagee the debt + interest 4. Right to Possession: during the statutory period -few say he must bond not to commit waste 5. Who can Redeem? -some states only mortgagor; - others say Juniors too 6. Competing Redemptioners: a. Priority Approach: mortgagor has 1st right, if he fails -each liener has 5 days in priority b. Scramble Approach: anyone at any time in period -once mortgagor does, the process ends 7. Compliance with Statutory Requirments: substantial is usually ok. -minor flaws do not disqualify -statutes read liberally C. Limits on Deficiency Judgments: under certain circumstances 1, Certain loans protected: purchase money mortgages made by seller -certain property 2. Methods of Foreclosure: some bar if done by power of sale 3. FMV: allow deficiency judgments to the extent that the debt exceeds the fair value of the property

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a. fair value: based on ordinary arms-length sales. Ignores that foreclosures are usually depressed Robert has a 1st mortgage on Blackacre, granted by Joe, and securing a 40k debt. After granting the mortgage, Joe hurts Karen who wins 20k in damages, she got a judgment lien on all joes real property. Joe defaults on mortgage, Robert forecloses. Robert fails to join Karen as a party to the foreclosure. At court ordered sale, Starr buys property for 35k. Karen is an omitted necessary party: still owns judgement 1. go to court and seek to foreclose her judgment lien -Starr is a necessary party in her foreclosure action. To protect her interest she must -pay Karen the 20k plus costs to get the lien cancelled 2. Karen may seek to exercise her right as a junior lien holder to redeem the property -tenders 40k (amount of 1st mortgage) to Starr -Starr gets title -Karen now owns free and clear of all liens -Starr may have cause of action against Robert (depends on deed) Starr can: 1. Starr can re-foreclose the senior mortgage that Robert had owned, securing the 40k debt -will join Karen, who is a necessary party 2. Starr may redeem the property by paying 20k to Karen -results in a release of the judgment lien -Starrs redemption right has priority over Karens right b/c Starr owns fee simple -if Karen tenders the 35 to Starr and Starr tenders the 20, Starr wins 3. Starr is some states can bring an action of strict foreclosure against Karen. Gives Karen a court-set deadline to exercise redemption by paying Starr 35k in exchange for title, otherwise her lien is extinguished. Starr will use it only if willing to sell to Karen if she comes up with the $. Refinanced loans=equitable subrogation Starr is a fee simple subject to Karens lien Chapter 20: Mortgage Substitutes: I. The use of Mortgage Substitutes: sometimes used in credit transactions where a mortgage could have been used. Why? A. Mortgages limit freedom of contract 1. Anti-clogging rule for equity in redemption 2. Foreclosure Procedures cannot be waived B. Types of Mortgage Substitutes - absolute deed intended as security, lease w/ option to purchase, installment land K, sale-leaseback C. Does mortgage law not apply just b/c of as title:

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-Some courts look to substance of the K and other say freedom of K II. Disguised Mortgages: for lender risk reduction A. Equitable Mortgage: different term 1. courts use this for disguised mortgages a. also when there was a mortgage intended, but technical diff. III. Absolute Deed Intended as Security: party advances $ to landowner, taking a regular warranty deed. If dispute develops, owner claims parties agreed that owner could regain title by paying back $ + extra. Grantee often refutes if no written evidence. A. written evidence of owners right to regain title: says owner can repurchase. -he says it is a mortgage, grantee says its a BF sale w/ purchase option B. Parole Evidence: is admissible to show it was an absolute loan, not secure loan C. Factors: that point towards a deed intended as a security: 1. Prior loan between parties: once a mortgage always a mortgage 2. Unequal bargaining power: grantor has great financial need 3. Price is less than FMV: suggests debt, not sale. 4. Fiduciary Relationship Between Parties: owes grantor special relationship 5. Grantor retains possession: true sales=grantee takes position 6. Existence of a Debt: maybe IV. Negative Pledge: Negative covenant, borrower promises the lender not to convey or encumber specified property before the loan is repaid A. Status as equitable mortgage: both sides argue this in different circumstances C. Factors whether a negative pledge = an equitable mortgage 1. Subjective Intent: if they believed it was, court maybut parties usually disagree 2. Appropriateness of Remedies: if buyer breaches, court may go mortgage if foreclosure is the remedy 3. Construction against institutional lender: if they select the form ambiguity goes against them D. Parties Motivation: in default the lender wants a mortgage b/c wants same priority it has when not in default. May go other way othertimes though 1. Avoiding restrictions on Borrowers Mortgage of Property: a. marital property b. prior loan w/ due on sale clause for 2nd mortgage V. Installment Land Contract A. or contract for deed, is an executory K under which purchaser pays price in installments over a lengthy period of time 1. Possession: buyer goes into possession right when K is signed 2. Title Retention and Deed: K is executory, but seller retains title and promises to deliver a deed when the last payment is made. Sometimes it is signed and held in escrow B. Market uses of installment land K: for seller financing in 2 market situations. 1. Poor Mans Mortgage: person who does not qualify for institutional financing b/c no down payment/bad credit

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a. Vendor does this banking on idea that is they default, K termination and repossession will be cheap and easy -also that home has the value of the debt or more 2. Vacation/Resort Sales: on lots C. Vendors Remedies for Purchasers Default 1. Forfeit Clause: most have these. Expressly provides for forfeiture as a remedy for purchaser breach. K rights and right to possession are forfeited. Vendor has option to declare it. Courts apply K analysis a. Traditional: enforceable as written, absent K defenses b. Modern: treated as a penalty -not enforceable if causes great hardship -or gives borrower restitution for excess payments over the damage amount 2. Expectancy Damages: instead of declaring forfeiture, may terminate K and sue for expectancy 3. Restitution: vendor rescinds K and wants to be put in pre-K position a. get value from possession to rescission and gives payments back 4. Purchasers Right of Redemption: in some states, after default has right to pay vendor the unpaid K balance and receive title a. if paid substantial part of the price already 5. Foreclosure as a Mortgage: Vendor does so as an equitable mortgage; sale under standard judicial foreclosure procedures a. All Installment Contracts: in a few states is an EM. Foreclosure is only means to terminate K and regain right to possession i. practical effect: seller should never use b. Substantial Payment: some states say this is no longer available, must foreclose and an equitable mortgage D. Transfers by Purchaser 1. General Rule: freely alienable 2. Express Restrictions: due on sale clause