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Formalities
Mortgage must be in writing to be valid. Effective against third parties only if it is recorded, any basic contract defect will void a mortgage transaction
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Sales of mortgaged Property
- No general prohibition on selling mortgaged property
- Buyer takes subject to the mortgage
- Buyer not liable for mortgage debt unless he assumes it
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Payment of mortgage Debt
Any payment or discharge of mortgage debt extinguishes the mortgage
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Right of Redemption
if, after default, debtor or any other person with an interest in the property tenders the balance of the debt to the mortgagee, the mortgagee must take the tender and stop any pending foreclosure
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Statute of Limitations
possession by either party for ten years following default cuts off the other party's rights
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Future Advances
NC Statute, a mortgagee may make a later advance to a debtor and have it tacked on the original priority even if the mortgagee knows of intervening claims
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NC Future advance statute applies where parties to the orgiginal mortgage documents:
- authorize future advance claims
- place a dollar amount ceiling on future advances
- state the period, not more than 30 yrs, in which advances can be made
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Power of Sale Foreclosure
Right to foreclose under a power of sale must be granted in the parties contract. Statute provides that debtor entitled to pre-sale hearing before clerk of court
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Pre-sale hearing must consider
- Was there sufficient notice
- Is foreclosure authorized
- Is there a valid debt
- Has there been a default
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Anti-deficiency Statutes
- 1. Seller of property who provides PM financing can only look to the property in event of a default
- 2. Mortgagee buys property at a non-judicial foreclosure sale conducted on his behalf must account to mortgagor for deficiency between purchase price and FMV
- 3. Person otherwise liable on mortgage debt is discharged if he is not given notice of pre-sale hearing
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Priority Rules
Normally determined under first-in-time-first-in-right, exceptions for PMSI, tax liens and under doctrine of instantaneous seisin
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Reformation, conversion of absolute deed to mortgage
Grantor must prove facts by clear and convincing evidence(85%) and grantor must show that mortgage language was omitted as a result of fraud, duress or mistake
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After Aquired property in NC
not possile for mortgagee to claim an interest in mortgagor's after-acquired property and have priority date back to original mortgage
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Purchase Money Exception
- 1. Mortgagee is seller of property
- 2. Mortgage secures purchase price of property
- 3. mortgage documents state on face they arise ourt of purchase money transaction
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