1. Whenever I see the word "mortgage" I die a little inside knowing I will have absolutely no idea how to answer the question.
2. SPOILER MBE SIM!!!!!!!!!!!
What the hell is this:
A physician entered into a written agreement to purchase land from his aunt. The agreement, which was secured by not only the land itself but also all future improvements, required the physician to make annual installment payments to the aunt. The deed from the aunt to the physician was recorded, but it made no mention of this agreement. The agreement itself was not recorded.
The following year, the physician obtained a loan from the local bank to build a house on the land in exchange for a mortgage on the property and any structures built on it. The physician informed the bank about the agreement with his aunt. The bank required the aunt to sign an agreement subordinating her loan to the bank’s loan. The mortgage agreement was recorded, but the agreement between the bank and the aunt was not recorded.
After the house was built, a patient successfully sued the physician for malpractice. The judgment was promptly and properly recorded so that it became a lien against the residence of the physician. The patient was unaware of the physician’s financial dealings with his aunt or the bank.
The physician failed to make timely payments on the mortgage. In accord with the terms of the mortgage, the bank declared the full mortgage obligation due and properly foreclosed on the property. At the time of the foreclosure sale, which was properly conducted, the physician’s outstanding balance with regard to the agreement with his aunt was $100,000, and with regard to the mortgage was $500,000. The total amount owed with respect to the judgment was $400,000. After expenses, the sale of the mortgaged property netted only $550,000.
The applicable jurisdiction has the following two statutes:
“Every conveyance not recorded is void as against any subsequent purchaser or mortgagee in good faith and for valuable consideration from the same vendor whose conveyance is first duly recorded.”
“Any judgment properly filed shall, for twelve years from filing, be a lien on the real property then owned or subsequently acquired by any person against whom the judgment is rendered.”
What is the amount due to the aunt from the sale?
A. $100,000, because the aunt’s interest predated the other interests.
B. $100,000, because the aunt’s interest was a seller-financed purchase money security interest.
C. $50,000, because the aunt’s interest has priority over the patient’s judgment lien, but not the bank’s mortgage.
D. Nothing, because both the patient’s judgment lien and the bank’s mortgage have priority over the aunt’s interest.
That problem took up my entire computer screen. My thought process after reading that was: "Umm...WHAT?!"