assignable. A contract of sale should follow the description in the policy, and be subject to the encumbrances and defects, if any, set out in the policy. If not, the company may deny liability if the purchaser breaks the contract of sale, and refuse to enforce it. 4. MORTGAGES The best known and most usual method of raising or borrowing money on the strength of one's estate in land is that furnished by the mortgage. The mortgage is in form a conveyance of the title to land as security for a debt or other obligation, containing a defeasance clause stating that upon the payment of the debt or fulfilment of the obligation, the conveyance shall be null and of no effect. It is a contract and requires competent parties, a consideration, material consent, etc., and is executed, acknowledged and recorded like a deed. The party conveying the real estate, or the debtor, is called the mortgagor, and the lender or creditor is the mortgagee. What may be Mortgaged.-Any interest in real estate which can be sold or transferred can also be mortgaged. Thus the owner of an estate in fee simple may mortgage it. A widow may mortgage her right of dower, or a mortgagee may mortgage his mortage, or an heir may mortgage his interest. Equity of Redemption.-Under the common law, a mortgage was an absolute conveyance, in which the mortgagor was entitled to receive a reconveyance of the property upon payment of the debt or performance of the stipulated conditions. The mortgagee held the legal title to the property, and upon the failure of the mortgagor to pay, he entered into absolute possession. This often gave rise to cases of hardship and injustice, as for instance, where a man wished to borrow $500. He mortgaged his estate, which was worth $2,000, to the extent of $500. On failure to pay, the mortgagee was entitled to take the whole estate. A Modern Accounting Department The modern office is well lighted and well equipped. In this accounting department, each clerk has a comptometer to insure accuracy and speed in calculation The actual purpose of a mortgage is merely to give security for the debt, and this view has for a long time been taken by the courts of equity. The debtor is permitted on payment of the debt and damages to the creditor to petition for the redemption or restoration of the land. A certain time is given the debtor to find the money or lose his right. This right of the mortgagor is called Equity of Redemption and can not be waived by any stipulation in the mortgage. The States have statutes requiring suits of different kinds to be brought within certain periods, usually in about twenty to twenty-one years after the debt falls due. But equity now gives the mortgagee power to cut short the right of redemption, by means of foreclosing. Status of the Mortgage To-day.-In many States the mortgage is regarded as a lien which the mortgagee has in the mortgaged premises, the mortgagor still being the legal owner, subject of course to the lien held as security for the debt. The mortgage while in form a conveyance is restricted by its defeasance clause and equity of redemption to a mere security. The mortgagor is entitled to remain in possession of the mortgaged premises until failure to pay, or to perform his obligation. After that the mortgagee may enter into possession. Of course stipulation may be made that the mortgagee may have possession, but it is not usual. Form of the Mortgage.-A mortgage is in the form of a formal deed, with the addition of the defeasance clause. No particular form is necessary for this clause, and so long as it shows that conveyance is merely to secure payment of a debt, it constitutes the conveyance a mortgage. A court of equity will accept proof going to show that a certain instrument, though a deed in form, is in reality a mortgage, the defeasance clause being made orally by declaration in court. A specimen mortgage is here shown: A. B. M. VOL. 3 .... ... George Richards .... Buffalo County of .... Erie .... Edward Smith ... part y of the first of part y of the second part. George Richards .... is justly indebted to the said part y of the second part in the sum of three thousand ... dollars (... $3,000.00 .......), lawful money of the United States, secured to be paid by his certain bond or obligation, bearing even date herewith, conditioned for the payment of the said sum of .... three thousand dollars (.... $3,000.00 ....) on the first.... day of July, 191 6... and the interest thereon, to be computed from this date at the rate of five per centum per annum, and to be paid semiannually on the first days of April and October in each and every year until the whole of said principal sum be fully paid, with the privilege to the party of the first part, his executor, administrator or assigns, on any day when interest is payable, to pay off the principal of said mortgage in sums of .... one thousand dollars or more ........ NOW THIS INDENTURE WITNESSETH, That the said part y of the first part, for the better securing the payment of the said sum of money mentioned in the condition of the said bond or obligation, with interest thereon, and also for and in consideration of one dollar paid by the said part y of the second part, the receipt whereof is hereby acknowledged, do es hereby grant and release unto the part y of the second part, and to .... his heirs (or successors) and assigns forever, .... .... .... ALL THAT TRACT OR PARCEL OF LAND, situate in the City.... of .... Buffalo .... County of Erie .... and State of New York, bounded and described as follows, viz.: Beginning at a point in the northerly line of Forest Avenue three hundred and twenty-three (323) feet easterly from the easterly line of West Street; running thence easterly along said line of Forest Avenue three hundred and seventy (370) feet; thence northerly two hundred and fifty-two (252) feet; thence westerly and parallel with Forest Avenue three hundred and seventy (370) feet; thence southerly two hundred and fifty-two (252) feet to the place of beginning. TOGETHER with the appurtenances, and all the estate and rights of the part y of the first part in and to said premises. |