A landowner in fee simple signed a promissory note for $10,000 to a bank, and secured the note by a mortgage of her land to the bank. The mortgage was duly recorded. The landowner then sold the property to an attorney, who assumed and agreed to pay the mortgage to the bank on the land. The attorney did not make payments on the mortgage note to the bank. The bank, following appropriate statutory procedures, foreclosed the mortgage and gave notice to both the landowner and the attorney that it intended to sue for any deficiency. At the foreclosure sale, the property sold for $6,000. The bank now sues both the landowner and the attorney for $5,000, which is the remaining amount of the unpaid principal and interest on the note plus costs of foreclosure. Against which party will the bank be successful in obtaining a judgment? response - correctA Only the landowner. B Only the attorney. C Either the landowner or the attorney. D Both the landowner and the attorney.

Question

Carlos Sheppard

Business

14 April, 08:21

A landowner in fee simple signed a promissory note for $10,000 to a bank, and secured the note by a mortgage of her land to the bank. The mortgage was duly recorded. The landowner then sold the property to an attorney, who assumed and agreed to pay the mortgage to the bank on the land. The attorney did not make payments on the mortgage note to the bank. The bank, following appropriate statutory procedures, foreclosed the mortgage and gave notice to both the landowner and the attorney that it intended to sue for any deficiency. At the foreclosure sale, the property sold for $6,000. The bank now sues both the landowner and the attorney for $5,000, which is the remaining amount of the unpaid principal and interest on the note plus costs of foreclosure. Against which party will the bank be successful in obtaining a judgment? response - correctA Only the landowner. B Only the attorney. C Either the landowner or the attorney. D Both the landowner and the attorney.

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Answers (1)

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Dane Powers · Answer 1

D) Both the landowner and the attorney.

Explanation:

The bank will succeed in obtaining a judgement against both the former landowner and the attorney. The bank can sue either of them or both of them, but it can only collect the $5,000 once.

When the attorney assumed the mortgage, he expressly promised to pay it. The lender becomes a third party beneficiary of the attorney's promise to pay and can sue him if the mortgage isn't paid. The former landowner became secondarily liable to the lender in case the attorney didn't pay.