Term
|
Definition
| An interest in real property that serves as security for an obligation. The obligation may be owed by the person who conveys the interest (i.e., the mortgagor) or a third party. The mortgagee is the person with the security interest in the real property, typically a bank. |
|
|
Term
|
Definition
| Used in place of a mortgage. The borrower (landowner) delivers title to real property to a third-party trustee (typically the lender’s lawyer) as security for the payment of the note to the beneficiary (lender), with the condition that the trustee re-conveys the title to the borrower upon payment of the note. If the borrower fails to pay the note (defaults), then the beneficiary instructs the trustee to sell the land to repay the note. When the property is transferred by trustee in violation of the trust, an equitable lien may be imposed on the transferred property in favor of the lender. |
|
|
Term
| What is an installment land contract? |
|
Definition
| An installment land contract (i.e., a contract for deed) is a contract whereby the seller retains title until the buyer makes the final payment under an installment payment plan. |
|
|
Term
|
Definition
| An absolute deed (also known as a “deed of absolute sale”) is free of all liens and encumbrances and is used to transfer unrestricted title to property. When there is an obligation created prior to or contemporaneously with this transfer, the grantor may prove that the transfer was not actually a sale but instead a disguised mortgage. If proven, a court treats the transfer as an equitable mortgage. |
|
|
Term
| Conditional sale and repurchase |
|
Definition
| When real property is sold and then leased back to the seller, usually for a long period of time with the option to repurchase the property, the transaction may constitute the creation of a security interest in the property, a disguised mortgage, rather than a sale-leaseback arrangement. |
|
|
