Transfers

Question 1

Transfers

Answer 1

Can transfer rights but not duties

*There are 2 types:

1. Transfer by the Mortgagor
2. Transfer by the Mortgagee

Question 2

Transfer by the Mortgagor

Answer 2

New mortgagor will either:

1. Take property Subject to; OR
2. Assume the mortgage

*Original mortgagor can escape liability completely if mortgagee agrees to a Novation (Brand New Contract)
(a) Mortgagee can refuse to sign a novation for a commercially reasonable reason.

Question 3

Type 1 (Transfer by Mortgagor)

Answer 3

• The purchaser can take the property Subject To (Sublease) the mortgage, meaning NO PERSONAL LIABILITY

*In case of foreclosure, Mortgagee may sue only the original mortgagor because the new mortgagor didn’t sign a promissory note)

Question 4

Type 2 (Transfer by the Mortgagor)

Answer 4

*The purchaser can assume the Mortgage (Assignment). it is the promise to pay the note and the mortgage obligation.

*In case of a foreclosure, a mortgagee may sue both the original mortgagor and the subsequent (new) purchaser.

Question 5

Transfer by the Mortgagee

Answer 5

1. Transfers of NOTES ALONE are NOT void because the mortgage is always presumed to FOLLOW THE NOTE.