Also known as: deadpledge · mortgage
Written by attorneys · grounded in primary & secondary sources — see below
A security device by which real property is pledged to secure payment of a debt or performance of an obligation. The device creates a security interest that permits foreclosure upon default to satisfy the underlying obligation.
Danielle Dixon borrowed funds from a private lender and executed a promissory note secured by a mortgage on her rental building. After Dixon defaulted on payments, the lender commenced foreclosure. A court later declared the note usurious and void. The lender cannot foreclose because the mortgage requires a valid underlying obligation.
Devon Drake granted a mortgage on land located in State X to secure a loan from a lender in State Y. When a dispute arose over the nature of the interest created, the court applied the law of State X. That choice determined whether the mortgage conveyed legal title or merely a lien.
Select any source to read its text and confirm it supports the definition.
Diane Dawson faced foreclosure on her home during a severe economic downturn. State legislation imposed a temporary moratorium on foreclosures to protect homeowners. The court upheld the law because it served an important public purpose and was narrowly tailored to the emergency.
Demetrius Douglas formed Decker Electronics and authorized the board to mortgage corporate real estate to obtain financing. The board executed the mortgage without shareholder approval. The mortgage remained valid because the statute permits encumbering assets regardless of whether the transaction occurs in the usual course of business.
Dustin Donovan executed a promissory note and mortgage on commercial property. After default, a court held the note usurious and void. The mortgagee attempted foreclosure against a subsequent purchaser. Foreclosure failed because the mortgage secures a void obligation and cannot stand alone.
Damian Decker caused Diamond Manufacturing to mortgage a factory parcel to secure a bank loan. The mortgage was executed under the corporation's statutory powers. The transaction was valid even though it disposed of a substantial corporate asset.
The mortgage is extinguished and cannot support foreclosure. Security interests require a valid underlying debt or promise to pay. Without it, the mortgage lacks the foundation needed for enforcement against the property.
Supporting sources
The law applied by the courts of the situs governs whether a mortgage creates an interest in land and the nature of that interest. Courts of the situs ordinarily apply their own local law to such questions.
Supporting sources
Yes, provided the legislation serves an important and legitimate public purpose and constitutes a reasonable and narrowly tailored response to the emergency. Such measures can survive Contract Clause scrutiny when properly limited.
Supporting sources
…Such are cases commenced by attachment against the property of debtors, or instituted to partition real estate, foreclose a mortgage, or enforce a lien. So far as they affect property in the State, they are substantially proceedings in rem in the broader sense which we have mentioned. It is hardly necessary to observe,…