Also known as: real property mortgage · mortgage on real property · mortgages on real property · mortgage · real estate mortgage
Written by attorneys · grounded in primary & secondary sources — see below
A consensual security interest in real property that secures payment of a debt or performance of an obligation. The mortgagor retains possession and an equity of redemption. Upon default the mortgagee may foreclose to satisfy the obligation.
Ronald Reed borrows funds from Riverstone Manufacturing to expand his warehouse. He executes a deed of trust conveying title to a trustee who holds the property for the lender until repayment. When Ronald defaults on the note, Riverstone directs the trustee to initiate foreclosure proceedings.
Rachel Ramirez, a resident of State A, grants a mortgage on land located in State B to secure a loan from Royal Crest Hotels. When a dispute arises over the nature of the interest created, the courts of State B apply their own local law to determine whether the mortgage creates a lien or conveys title.
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Robert Rivera, a homeowner facing foreclosure, obtains a temporary stay under state legislation enacted during a severe economic downturn. The statute delays foreclosure sales for six months to protect borrowers and stabilize the housing market. The lender challenges the law, but the court upholds it as a reasonable response to the emergency.
Riverside Healthcare, a nonprofit hospital corporation, grants a mortgage on its main campus to secure a construction loan. The board approves the transaction even though the project lies outside the corporation's usual operations. The mortgage remains valid under the statute authorizing encumbrances regardless of ordinary course of business.
Roberto Reyes signs a mortgage document in favor of Radiance Media but receives no loan or other obligation in return. When Radiance attempts to foreclose after a later business dispute, the court refuses enforcement because no valid debt supports the mortgage.
Rebecca Ross, president of Royal Crest Hotels, authorizes a mortgage on a downtown property to obtain working capital. The board resolution cites the corporation's statutory authority to mortgage any part of its property. The lender records the mortgage and later enforces it after default.
Jurisdictions follow title theory, lien theory, or an intermediate theory. Under title theory the mortgagee holds legal title while the mortgagor retains only an equity of redemption. Under lien theory the mortgagor keeps legal title and the mortgage creates only a lien. The intermediate theory blends elements of both.
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A mortgage or other security device must secure an obligation, typically a debt or promise to pay. The obligation may be existing or future and may be defined in the mortgage or a separate note. If the underlying obligation is void or discharged, the mortgage may be extinguished or unenforceable.
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The equity of redemption is the mortgagor's right to redeem the property by paying the debt before foreclosure. Any agreement that unreasonably restricts or waives this right, such as a provision making redemption impossible, is generally void as against public policy.
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A future advance mortgage secures not only the initial loan but also later advances made by the mortgagee to the mortgagor. Validity and priority of those advances depend on state statute and the mortgage terms, with some jurisdictions requiring the advances to be optional or obligatory and within a stated maximum.
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…65 F. Supp. 2d 651, 657-658 (WD Mich. 1999). It found, however, that respondent's husband's use of nonexempt funds to pay the mortgage on the entireties property, which placed them beyond the reach of creditors, constituted a fraudulent act under state law, and the court awarded the IRS a share of the proceeds of the sale…