Also known as:underlying obligations · primary obligation
Written by attorneys · grounded in primary & secondary sources — see below
A primary debt or promise to pay that a security interest or secondary obligation secures. The existence and validity of this obligation determine whether the security device remains enforceable. If the obligation is void or discharged, the security interest may be extinguished.
Sources & Authorities
How it applies
Common Examples
2
Mortgage Extinguished After Contract Termination
River Steel contracted with Pinnacle Foundation to supply materials for a construction project and granted Pinnacle a recorded mortgage on its headquarters to secure payment. After Silver Construct terminated the prime contract, River Steel notified Pinnacle that no further sums would come due. Pinnacle sought to foreclose on the mortgage for the unpaid balance. Because the underlying obligation had been discharged by the project termination, the mortgage was extinguished and Pinnacle could not enforce the security interest.
Moratorium Leaves Debt Intact
Homeowners borrowed from a savings and loan association and gave a mortgage on their residence to secure repayment of the loan. A state law temporarily stayed foreclosure proceedings during an economic emergency. The homeowners remained liable on the original debt. The underlying obligation continued in force, so the mortgage lien was not extinguished and the lender retained its security interest once the moratorium ended.
Put it into practice
Test Yourself
10
Practice Questions5
· 5 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Common Law
Restatements
Casebooks
Hornbooks
Study Supplements
Home Building & Loan Association v. Blaisdell290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934)
Common questions
Frequently Asked
3
What happens to a mortgage if the underlying obligation is discharged?+
The mortgage may be extinguished or rendered unenforceable. Security relationships require a valid underlying obligation, and once that obligation is void or discharged the mortgage no longer has legal force.
Supporting sources
Can a mortgage secure a future or contingent obligation?+
Yes. The obligation may be existing or future and may be defined by the mortgage itself or by a separate note. The rule expressly permits security for contingent or future advances so long as a valid underlying obligation exists at the time of enforcement.
Supporting sources
How does the underlying obligation differ from a secondary obligation?+
The underlying obligation is the primary debt owed by the principal obligor to the obligee. The secondary obligation is the separate contractual promise made by a surety or guarantor to the same obligee.
Supporting sources
Real PropertyOwnership of real property · Landlord-tenant lawUBEFoundational