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2011-07-16 00:07:43
NY Bar Exam

NY Bar Exam
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  1. What is a mortgage?
    A conveyance of land intended by the parties at the time of the making to be security for the payment of money or the doing of some prescribed act.
  2. How is the debt represented in a mortgage?
    By a promissory note (a promise to pay).
  3. In New York, does the mortgagee (creditor) have title to the property?
    No, only a lien upon the land.

    Title and the right to possession remain in the mortgagor (debtor).
  4. Does a mortgage need to be in writing and signed by the mortgagor or by an agent acting pursuant to written authority?
    Yes, under the statute of frauds.
  5. Can certain transactions in land that do not satisfy the requirements of legal mortgages be enforceable as equitable mortgages?
  6. Is an equitable mortgage entitled to preference over subsequent judgment creditors?
    Yes, but it will be cut off by a bona fide purchaser.
  7. When will a deed conveying real property be construed as a legal mortgage?
    If there is any other written instrument that makes it appear that hte legal deed was intended to create a mortgage.

    Even in the absence of such other written instrument, a mortgagor may prove by parol evidence that there was an intention to create a mortgage. If the burden of proof is met, the court will hold that an equitable mortgage--and not a conveyance of title--was accomplished.
  8. What obligations can be secured by a mortgage?
    Any existing monetary obligation or obligations capable of being reduced to a money equivalent, including (i) preexisting debts and (ii) debts of one other than the mortagor.
  9. If the sum being secured is not recited in the mortgage or in a separate instrument, what remedies are available to the mortgagee?
    Remedies are limited to the property mentioned in the mortgage.
  10. Can mortgages secure advances to be made in the future?
    Yes, particularly in construction loan agreements. Such a mortgage is valid and constitutes a security interest for all advances made to the mortgagor.
  11. What interests in real property can be mortgaged?
    Any transferable interest in real property, including a fee simple, a life estate, an interest of one spouse in a tenancy by the entirety, or a tenancy for a term.
  12. Can a mortgage lien be imposed on personal property on the premises?
    Yes, by appropriate language.
  13. Are accessions to mortgaged real property subject to the mortgagee's lien?
  14. What defenses is a mortgage subject to?
    The same kind of defenses as are available against assertion of the underlying obligation that the mortgage secures.
  15. Can an action for foreclosure be sustained and a mortgage held valid even though the underlying note is illegal and was tainted by fraud?
  16. Will a defense available to the mortgagor be available to a grantee of the mortgagor who takes subject to or assumes the mortgage with consequent reduction in cash paid on purchase?
  17. When does usury serve as a defense available as actions both for principal and for interest?
    If the mortgagor is not a corporation.
  18. When may the mortgagor seek, without tender of principal or interest, affirmative relief to have the mortgage removed as a cloud on title?
    When there is usury and the mortgagor is not a corporation.
  19. Is the principal forfeited where a bank or association is the usurious lender?
    No, only interest.
  20. Is affirmative relief to remove the mortage personal to the borrower?
    Yes. It is not available to the borrower's heirs, devisees, or representatives on the borrower's death.

    Usury, however, is available as a defense to such persons.
  21. Is the defense of usury available to a corporation whose principal asset is a one- or two-family dwelling?
    Yes, and it is not waviable, if the corporation was organized or acquired within six months prior to execution of the mortgage.
  22. Are a mortgage and bond valid despite the minority of the mortgagors if the mortgagors are husband and wife entering into a transaction involving real property to be used as their home?
  23. What controls in the event of a conflict between the note and the mortgage?
    The provisions of the note.
  24. Can the mortgagee take possession until the debt is paid?
    If she has the express or implied consent of the mortgagor.
  25. What are the rights of a mortgagee to land?
    A mortgagee merely has a lien. She is not automatically entitled to possession, although she may take possession until the debt is paid if she has express or implied consent of the mortgagor. The mortgagee may be subject to accounting by the mortgagor.
  26. What are the rights of a mortgagor to land?
    The mortgagor has, until foreclosure, title and right to possession. The mortgagor may not commit waste or in any way impair the value of the property securing the mortgage.
  27. Can the mortgagor commit waste or in any way impair the value of the property securing the mortgage?
  28. What are the general requirements of a mortgage transfer?
    Notice of the mortgage is necessary to bind a recording purchaser of property. The mortgagee must record or risk losing her lien if an assignee of property records.
  29. Can transfor of a mortage and note be effected by delivery?
    Yes. Because a mortgage is collateral to the debt it secures, the mortgage always follows the debt.
  30. Is assignment of a mortgage without the debt valid?
    No, it is void.
  31. Does an asignee of the mortgagee take subject ot the existing equities in favor of the mortgagor?
    Yes, unless the mortgage secures a negotiable instrument that has been assigned to a holder in due course.
  32. When the mortgage is assigned, the mortgagor will execute an estoppel certificate. What is the effect of an estoppel certificate?
    It generally deprives the mortgagor of the defense of criminal usury.
  33. For how long is payment valid when made to the mortgagee rather than the assignee?
    Until the mortgagor receives notice of assignment of the note and mortgage, except where the debt is represented by a negotiable instrument that has been transferred to a bona fide purchaser.
  34. Can a mortgagor tendering final payment compel the mortgagee to assign the mortgage to the mortgagor or to another?
  35. What happens if a mortgaged property is transferred "subject to the mortgage"?
    The property becomes the primary source for payment of the debnt; the original mortgagor continues to be liable on the bond.
  36. If the mortgagee and transferee modify the mortgagor obligation, is the original mortgagor discharged from his suretyship?
  37. What happens if property subject to a mortgage is transferred to one who assumes the mortgage?
    The transferee becomes the primary obligor. The orginal mortgagor is liable only secondarily.
  38. What does assumption of the mortgage require?
    That the party assuming the mortgage execute and acknowledge (i) a writing stating that she assumes and agrees to pay the mortgage debt and stating the amount of the debt, or (ii) a deed reciting the assumption of debt and the amount of the debt.
  39. Does assumption relieve the original mortgagor of his obligation on the bond?
  40. Does any modification in the obligation by agreement of the mortgagee and transferee completely dischrage the mortgagor?
  41. What is the critical difference between taking property subject to a mortgage and assuming a mortgage when taking property?
    When a transferee takes subject to a mortgage, if the transferor defaults on the obligation secured by the mortgage, the mortgagee may foreclose on the transferee's property but may not hold the transferee personally liable on the defaulted obligation.

    On the other hand, if the transferee assumes the mortgage and there is a default on the obligation secured by the mortgage, not only can the mortgagee foreclose ont he transferee's property, but also it can seek payment from the transferee personally.
  42. When does a conveyance satisfy the bond and mortgage?
    If the mortgagor (or subsequent transferee of the mortgagor) conveys the property to the mortgagee, and if the value of property is equal to the remaining debt secured by the mortgage.
  43. If a decedent's property is encumbered by a mortgage, does the beneficiary take it subject to the mortgage?
  44. If a decedent's beneficiary takes property encumbered by a mortgage, and the mortgage payments are not made, what are the mortgagee's remedies?
    The mortgagee's first recourse is against hte property; and if foreclosure of the property does not satisfy the mortgage, he may then proceed against the decedent's estate.

    However, neither the personal representative nor the devisee or distributee is personally liable for any deficiency.
  45. Is a mortgage provision stating that the principal becomes due at the mortgagee's option in the event of a sale of conveyance enforceable?
    Yes. This is a "due on sale" clause.
  46. When the mortgage debt is due and is unpaid, what are the mortgagee's remedies?
    The mortgagee may either sue on the debt or foreclose the mortgage.
  47. When can a mortgagee who has brought suit on the debt begin a foreclosure action?
    Only if he has a jdugment on the debt and that judgment is unpaid.
  48. If a mortgagee chooses first to institute foreclosure, can he institute an action on the debt?
    No, except by leave of the court in which the foreclosure action was brought.
  49. What is a foreclosure action?
    An action brought by the mortgagee to foreclose the exercise of what is otherwise the equitable right of the mortgagor--to redeem the property from the mortgagee by tendering payment.
  50. For how long does the mortgagor retain the right to redeem the property from the mortgagee by tendering payment?
    Until the moment of sale pursuant to a judgment of foreclosure.
  51. Can a foreclosure action be brought upon any default on payment of the debt that the mortgage secures?
  52. Can nonpayment of principal or interest effect an acceleration of the debt so that the entire principal becomes due?
    Yes, if the parties so agree.
  53. In a foreclosure based on nonpayment, is the mortgagee's oral waiver of the right to accelerate the debt and foreclose the mortgage enforceable?
  54. When is a foreclosure prohibited?
    If (i) the mortgage was secured to pay for legal fees in a matrimonial action, (ii) it is on the mortgagor's primary residence, and (iii) the mortgagor remains the titleholder.
  55. Who is a necessary party to a foreclosure action?
    Every person whose interest is claimed to be subordinate to the plaintiff's mortgage lien.
  56. Are persons with an interest superior to that of the foreclosing mortgagee permitted to be joined as defendants in a foreclosure action?
  57. What is the effect of omitting a necessary party in a foreclosure action?
    To preserve his interest despite foreclosure and sale.
  58. Does a tenant need to be joined as a party to a foreclosure action?
    Not if the tenant and the mortgagee have made a subordination and nondisturbance agreement. Such an agreement effectively makes the tenant's right to possession under the lease from the mortgagor superior to the mortgagee's rights under the mortgage.
  59. What is the effect of a subordination and nondisutrbance agreement?
    It effectively makes the tenant's right to possession under the lease from the mortgagor superior to the mortgagee's rights under the mortgage. If there is such an agreement, a tenant need not be joined as a necessary party in a foreclosure action.
  60. What is the effect of foreclosure sale?
    Extinguishes all subordinate interests of persons included as defendants in the foreclosure proceedings.

    NOTE: The judgement does not extinguish all subordinate interests.
  61. Does the purchaser at a foreclosure sale acquire title clear of any claim of the parties to the foreclosure action?
    Yes. The title reverts back to the date of the mortgage, cutting off any intervening rights.
  62. May the mortgagee buy at the foreclosure sale?
  63. What happens if the last owner or his nominee purchases property at the foreclosure sale?
    Junior liens on the property cut off by the foreclosure action are revived and attached.
  64. What remedy does the mortgagee have if foreclosure sale proceeds are less than the judgment in the foreclosure action?
    If the mortgagor was personally served in the foreclosure action, the mortgagee can ask the court for a deficiency judgment.

    Demand for such judgment must be made within 90 days of sale.
  65. When must demand for a deficiency judgment be made?
    Within 90 days of sale.
  66. Is there an equitable right of redemption in New York?
    Yes, but only prior to sale. There is no statutory right of redemption after the sale regardless of who buys at the sale.
  67. What are the basic priority rules in absence of recording?
    Priority in time is priority in right ("first in time, first in right") except that a subsequent legal mortgage that is accepted in good faith, without notice, and for value will have priority over a prior equitable mortgage.
  68. Will a subsequent legal mortgage that is accepted in good faith, without notice, and for value have priority over a prior equitable mortgage?
  69. Are a mortgagee and mortgage assignee purchasers under the recording act?
  70. If a purchase money mortgage and another mortgage are executed and recorded together, who has priority?
    The purchase money mortgagee.
  71. Is a mortgage securing an antecedent debt valid?
    Yes, but the mortgagee is not a purchaser for value within the meaning of the recording act and his rights will be inferior to a prior unrecorded mortgage even if the subsequent mortgagee records first.

    However, any extension of time for paying the antecedent date is concurrent consideration, and thus a subsequent mortgagee is deemed a purchaser for value and will prevail if he records first.
  72. Is a judgment creditor a purchaser within the purview of the recording act?
    No. A judgment lien is not a conveyance.
  73. Is a docketed lien of a judgment creditor superior to subsequent mortgages whether or not recorded?
    Yes, but it is inferior to prior mortgages whether or not recorded.
  74. Is a docketed lien of a judgment creditor inferior to prior mortgages whether or not recorde?
    Yes, but it is superior to subsequent mortgages whether or not recorded.
  75. Does the existence of a docketed judgment lien prevent a transfer of property in satisfaction of a purchase money mortgage ont he property?
  76. Will a subsequently recorded mortgage have priority oer previous recorded mechanics' liens?
    Yes, to the extent of advances of the mortgage made prior to the mechanics' lien, provided that the mortgage includes a provision reciting that payments under it are subject to the trust fund provisions of the Lien Law.
  77. Does the Lien Law protect against granting of collusive mortgages used to avoid provisions of that law?
    Yes. It voids a mortgage taken by a contractor when the mechanics' lienors already possess claims against the property.
  78. Is a mortgage given in good faith prior to the existence of mechanics' liens valid?
  79. Does payment of the mortgage debt discharge the mortgage?
  80. May a mortgage be terminated by acquisition by the same person of both the fee and the mortgage?
    Yes. However, any manifest intention not ot merge will prevent a judicial determination of merger and termination.
  81. Will a mortgage be terminated if the mortgagor makes an appropriate tender of payment of the debt secured by the mortgage and tender is refused?
    Yes. But termination has no impact on the underlying debt.
  82. What is the statute of limitations applicable to a bond or note secured by a mortgage on real property, or to a mortgage on real property itself?
    Six years.
  83. What is required for effective waiver of the six-year statute of limitations?
    Waiver must be in a writing signed by the obligor. Waiver will be valid despite the absence of consideration. The statute will then run from the date of waiver.
  84. Does a written assumption of the mortgage by a grantee of property constitute a waiver?
    Yes, unless it also contains a statement of intent not to waive the statute.
  85. Does part payment of a past-due indebtedness secured by the mortgage revive the statute of limitations?
    Yes, both on the debt and on the right to foreclose on the mortgage.