Exam 42: Introduction to Security

If the surety has to perform the principal's obligation,then the surety acquires all the rights that the creditor had against the principal.This is known as the surety's:

Rashid purchased real estate known as Parcel A,subject to a preexisting mortgage,in favor of Local National Bank.Leila purchased real estate known as Parcel B,assuming a preexisting mortgage on it in favor of Local National Bank.After each purchase took place,there were defaults on the debts that gave rise to the mortgages.Although Local National Bank instituted and completed foreclosure proceedings with regard to each of the two mortgages,it did not yield enough funds to pay off the debt in full.Therefore,Local National Bank made demands on Rashid and Leila for payment of the deficiency owed on Parcel A and on Parcel B,respectively.Explain if Local National Bank is entitled to receive the deficiencies it seeks from Rashid and Leila.

A common law lien essentially includes:

Andy bought a bicycle on credit from a dealer.Andy being a minor,his father agreed to be a surety for him on the purchase.When Andy failed to repay the debt within the stipulated time,the dealer filed a lawsuit against Andy's father.What defense can Andy's father use to avoid paying the dealer?

Which of the following statements best defines a surety?

If you buy a pair of jackets and charge it to your MasterCard account,secured credit has been extended to you.

What is a possessory lien? Give an example.

The right of a lienholder to possess goods automatically gives him or her the right to immediately sell the property if the charges are not paid.

The owner (mortgagor)of property subject to a mortgage cannot sell the interest in the property without the consent of the mortgagee.

The rights and liabilities of both sureties and guarantors are substantially equivalent.

People who contract to furnish labor or materials to improve real estate:

In a deed of trust transaction,the _____.

An employee from Hamid's Automobile Inc.called up Horner's home to repair the latter's car.It was repaired in Horner's garage.When Horner defaulted on the bill,Hamid's employee went to his house to take possession of the car,claiming that the corporation had a lien on the car by virtue of the work performed on it.According to this scenario,which of the following statements is true?

Linda and David borrowed $10,000 from the Smart Loan Company and executed a mortgage on their home to Smart Loan as security for the note.Smart Loan did not record the mortgage.If Linda and David sell their home to Sheila,and Sheila is not aware of the mortgage,then the mortgage is _____.

In which of the following cases can a surety avoid liability for a principal's default?

Under the common law,airlines were entitled to liens to secure the reasonable value of the services they perform because they:

A surety's right to recover his or her costs from a principal once he or she performs or pays the principal's obligations is known as _____.

If mortgagors sell the interest in their property without the consent of the mortgagee,_____.

The foreclosure of a mechanic's or materialman's lien is very different from a court foreclosure of a real estate mortgage.

Which of the following statements about foreclosure of liens is true?