Phillip Owns a Home in Fee Simple, Which He Subsequently

question 38

Essay

Phillip owns a home in fee simple, which he subsequently mortgages for $150,000 to the Empire Bank. Two years later Phillip decides to move to another city and sells the property to Carl, who assumes the mortgage to the Empire Bank. Carl is later laid-off from work and runs into serious financial difficulties resulting in the mortgage going into default. Describe the options open to the Empire Bank with respect to each of the parties and follow these options through to their natural conclusion. Speculate as to any mechanisms which may commonly be put in place for greater certainty between the parties on the assumption of a mortgage.

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Definitions:

Usage of Trade

A common practice or method of dealing recognized and accepted in a particular industry or trade.

Usage of Trade

Customary practices and standards within a particular industry or market that are considered legally binding in commercial transactions.

Exclusive Remedy

A sole solution or legal recourse available to a party under a contract in the event of a breach, often limiting other forms of legal action.

Remedies Agreed Upon

Refers to solutions or compensations for breach of contract that both parties have consented to in advance.