Английский язык для юристов. Предпринимательское право
Шрифт:
By law and by agreement, the mortgagor has certain rights and certain duties in conjunction with the mortgage. First, under the rule followed by a majority of jurisdictions, the mortgagor has the right to possess the property. The mortgagor holds title to the property despite the financial interest of the mortgagee. In jurisdictions following the old common law rule, the mortgagee has title to the premises but the mortgagor retains possession.
Second, the mortgagor has the right to any income produced by the property. Of course, the mortgagor could also assign this right to the mortgagee as a condition to executing the original mortgage agreement.
Third, the mortgagor has the right to use the property for a second or third mortgage.
Finally, the mortgagor has the right of redemption, that is, the right to pay off the mortgage in full, including interest, and to thus discharge the debt in total.
Chief among duties of the mortgagor is to pay installment payments on time. Mortgagors must also preserve and maintain the mortgaged property for the benefit of the mortgagee's interest and security, and insure the property for the benefit of the mortgagee to the amount of the mortgaged debt.
The mortgagor must pay all taxes and assessments that may be levied against the property.
The mortgagee has the unrestricted right to sell, assign, or transfer the mortgage to a third party. Whatever rights the mortgagee had in the mortgage are then the rights of the assignee. The only way the mortgagor could stop the mortgagee from assigning the mortgage is to pay the mortgagee everything owed on the mortgage.
Sometimes, the property may be sold with the mortgage remaining on it. In such takeovers, the transfer of title to a new buyer is subject to the buyer's payment of the seller's mortgage at the existing rate of interest.
In purchasing a property already mortgaged, the buyer will either assume the mortgage or take the property subject to the mortgage. When buyers decide to assume the mortgage, they agree to pay it. When they take the property subject to a mortgage, the seller agrees to continue paying the debt.
The property that is subject to the security interest is called collateral. A security interest is created by a written agreement, called a security agreement, which identifies the goods and is signed by the debtor. The lender or seller who holds the security interest is known as the secured party. A security interest is said to attach when the secured party has a legally enforceable right to take that property and sell it to satisfy the debt. It is said to be perfected when the secured party has done everything that the law requires to give the secured party greater rights to the goods than others have.
A security agreement is an agreement that creates a security interest. It must be in writing, signed by the debtor, and contain a description of the collateral that is used for security.
To be effective, a security interest must be legally enforceable against the debtor. This is known as attachment. Attachment occurs when three conditions are met. First, the debtor has some ownership or possessive rights in the collateral. Second, the secured party (or creditor) transfers something of value, such as money, to the debtor. Third, the secured party takes possession of the collateral or signs a security agreement that describes the collateral.
When a security interest attaches, it is effective only between debtor and creditor. Such creditors, however, will want to make certain that no one else can claim that collateral before they do, if the debtors fail to pay them back. To preserve the right to first claim on the collateral, creditors must perfect their interest. A security interest can be perfected in one of three ways: by attachment alone, by possession of the collateral, or by filing a financial statement in the appropriate government office.
Perfection by attachment alone means that, in limited situations, a security interest is perfected the moment it attaches, that is, as soon as the security interest becomes legally enforceable. One situation in which this type of perfection occurs is when someone lends money to a consumer and then takes a security interest in the goods that the consumer buys. This is called a purchase money security interest and applies only to consumer goods.
Perfection by possession means that a security interest may be perfected when the secured party (the creditor) takes possession of the collateral. This is called a pledge. The borrower, or debtor, who gives up the property, is the pledger. The secured party, or creditor, is the pledgee. A secured party who has possession of the collateral must take reasonable care of the property. The debtor must reimburse the secured party for any money spent to take care of the property. The debtor assumes the risk of accidental loss beyond any insurance coverage.
Perfection by filing means that security interests in most kinds of personal property are perfected by filing a financial statement in a public office.
Exercise 1. Comprehension questions:
1. What kinds of property can be used to secure a debt?
2. Give definition of a mortgage.
3. When is the mortgagor's obligation to the mortgage over?
4. Who bears the risk of loss in conventional mortgage?
5. What does a deed of trust suppose?
6. What are the requirements to a mortgage?
7. What is the role of the third party in a mortgage?
8. In what case does an attachment occur?
Exercise 2. Find in the text English equivalents to the following:
Сокращение
Exercise 3. Consult recommended dictionaries and give words or phrases to the following definitions:
Основания удержания; уменьшение неустойки; залог земельного участка; распоряжение предметом залога; прекращение поручительства.
Exercise 4. Be ready to talk on one of the following topics:
1. Differentiate between a secured and an unsecured loan.
2. Identify six types of mortgages.