Terms 1
A proceeding in which a mortgagee either takes title to or forces the sale of the mortgagor’s property in satisfaction of a debt.
Foreclosure
Failure to pay a debt when it is due.
default
Atchison Bank provides Denny with a standard mortgage with an unchanging rate of interest to buy a home. Payments on the loan remain the same for the duration of the mortgage. This is
a. an adjustable-rate mortgage.
b. a fixed-rate mortgage.
c. a workout agreement.
d. a violation of the law.
b. a fixed-rate mortgage.
Monk's Brewing Company has a claim against Dale’s property to satisfy a debt that takes priority over other claims against the same property. This is
a. a lien.
b. a violation of most state laws.
c. a composition agreement.
d. a contract of suretyship.
a. a lien.
Darrel threatens physical harm to force Ernie to sell his business, Ravens, Inc. This is
a. fraud.
b. mistake.
c. undue influence.
d. duress.
d. duress.
A person who agrees to satisfy the debt of another (the debtor) only after the principal debtor defaults.
Guarantor
A person, such as a cosigner on a note, who agrees to be primarily responsible for the debt of another.
surety
LeTiffany borrows $150,000 from Springfest Loans to buy a home. The financing documents require LeTiffany to maintain the property, obtain homeowners’ insurance, and pay all property taxes and other assessments through the lender. With respect to these terms, a court is most likely to
a. enforce them.
b. refuse to enforce them.
c. rescind them.
d. rewrite them.
a. enforce them.
Rick borrows $200,000 from Raven Bank to buy a home. If he fails to make payments on the mortgage, the bank has the right to repossess and auction off the property securing the loan. This is
a. attachment.
b. foreclosure.
c. execution.
d. redemption.
b. foreclosure.
Fred carves on the side of a wall, “I promise to pay $15,000 to the order of Suzzie.” Under the Uniform Commercial Code, the note is:
a. valid as long as it is for a fixed amount.
b. invalid because of its impermanence.
c. invalid because of its lack of portability.
d. inconvenient but legally valid.
c. invalid because of its lack of portability.
A court’s order, prior to a trial to collect a debt, directing the sheriff or other officer to seize nonexempt property of the debtor. If the creditor prevails at trial, the seized property can be sold to satisfy the judgment.
writ of attachment
A legal process used by a creditor to collect a debt by seizing property of the debtor (such as wages) that is being held by a third party (such as the debtor’s employer).
Garnishment
Jill owes Rico $10,000. When the debt comes due, Jill refuses to pay. Rico obtains a judgment to collect the debt. Using a writ of execution, the court orders the sheriff to seize Jill's boat and sell it to pay the debt. The boat sells for $15,000. Rico will receive
a. $15,000.
b. $10,000.
c. $7,500.
d. $15,000 minus the collection costs.
b. $10,000.
Nikki’s debt to Otter is past due. Otter obtains an order of garnishment to require Nikki’s employer Atchison Retail, Inc., to pay part of Nikki’s paycheck to Otter. The law
a. permits Atchison Retail, Inc. to dismiss Nikki because her wages are garnished.
b. limits the amount that can be taken from Nikki’s take-home pay.
c. practically does not allow Otter to collect the awarded amount.
d. requires Atchison Retail, Inc. to retain Nikki as an employee until the debt is paid.
b. limits the amount that can be taken from Nikki’s take-home pay.
A contract entered into by a mentally ill individual could be:
a. void
b. voidable
c. valid
d. any of the above depending on the specific circumstances.
d. any of the above depending on the specific circumstances.
A possessory lien given to a person who has made improvements and added value to another person’s personal property as security for payment for services performed.
artisan’s lien
A statutory lien on the real property of another, created to ensure payment for work performed and materials furnished in the repair or improvement of real property, such as a building.
mechanic’s lien
Rex is a surety for Sarah’s loan from Benedictine Credit, Inc. Rex’s right to “step into the shoes” of Benedictine, after paying Sarah’s debt, and exercise any of Benedictine's rights against Sarah is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
d. subrogation.
Dee borrows $70,000 from Benedictine Credit Union to buy a home. Dee loses her job and fails to make payments on the mortgage, but assures Benedictine Credit that she will soon secure a new job. The lender agrees to postpone the payments. This is
a. a right of redemption.
b. a forbearance.
c. a short sale.
d. a workout agreement.
b. a forbearance.
Generally, to be enforceable, all of the following types of contracts must be in writing and signed, EXCEPT:
a. Contracts involving interests in land.
b. Contracts that can be performed within one year from the day after the date of formation.
c. Collateral, or secondary, contracts.
d. Promises made in consideration of marriage.
b. Contracts that can be performed within one year from the day after the date of formation.
The right of a co-surety who pays more than his or her proportionate share on a debtor’s default to recover the excess paid from other co-sureties.
right of contribution
The right of a person to stand in the place of (be substituted for) another, giving the substituted party the same legal rights that the original party had.
right of subrogation
Fido performs a contract with Gary to add a garage to Gary's property, but Gary does not pay. Fido can file a lien on Gary's property if, from the last date labor or materials were provided, he acts
a. within 60 to 120 days.
b. immediately.
c. within two years.
d. within a reasonable time.
a. within 60 to 120 days.
Lucy delivers her Honda to be repaired at BC’s Body Shop. Lucy agrees to pay cash. BC performs, but Lucy does not pay. BC tells Lucy that it will keep the car until she pays. This is
a. a judicial lien.
b. a mechanic’s lien.
c. an artisan’s lien.
d. a violation of most states’ laws.
c. an artisan’s lien.
Chad, a minor, signs a contract with Daisy, an adult. The contract is voidable at the option of
a. neither party.
b. Chad only.
c. either party.
d. Daisy only.
b. Chad only.