Real Property Ch. 10

Estoppel certificate

A written statement generally signed by the holder of a first mortgage and given to the holder of a second mortgage, swearing as to certain facts concerning the first mortgage loan. The estoppel certificate may also obligate the first mortgage holder to notify the second mortgage holder in the event of a default under the first mortgage loan.

Conversion

Act of taking a person's property without a legal right to do so.

Due on sale clause

Clause found in a mortgage that prohibits the sale of the real property described in the mortgage without the lender's consent. A sale in violation of this provision is a default of the mortgage.

Usury

Interest rates that are determined to be in excess of the maximum permitted by law.

Interpleader

Judicial proceeding in which money is paid in to the court and all parties who claim an interest in the money are allowed to process their claims to the money in the court proceeding.

Promissory note

Legal document that contains a promise by one party to pay money to another party.

Mortgage

Legal document that creates an encumbrance on real property to secure a debt.

Guaranty

Legal document that obligates the maker of the document to pay the debt of another person.

Endorsement

Method of transferring ownership of a promissory note.

Open-end or dragnet

Mortgage provision that provides that the mortgage will secure any and all debt between the mortgagor and the mortgagee, including past debt, present debt, and even future debt incurred after the mortgage is signed.

Payee

Party to a promissory note to whom a promise to pay money has been made.

Maker

Party to a promissory notes who promises to pay money.

Holder

Person who is the owner of a promissory note.

Mortgagee

Person who receives a mortgage, that is, a lender.

Guarantor

Person who signs a guaranty promising to pay the debt of another person.

Mortgagor

Person who signs a mortgage pledging real property to secure a debt.

Redemption

Right of a property owner to buy back his property before a foreclosure, or even after, depending on the state.

Foreclosure

Sale brought by a holder of a mortgage, deed of trust, or security deed of the real property conveyed in the instrument for the purposes of paying the debt secured by the real property.

Receiver

Third party appointed by a court to take possession of real property in the event of a mortgage default. A receiver acts as a caretaker for the property.

Negotiable note

Written note signed by the maker and containing an unconditional promise to pay a certain sum of money on demand or at a definite time. A negotiable note may be transferred to a holder in due course.