Exam 42: Introduction to Security

If the creditor allows the principal an extension of time to perform the contract,compensated sureties are relieved of liability unless they consent to the extension of time.

A guarantor is a person who:

A surety:

In a 'deed of trust' transaction,the borrower deeds to the trustee the property that is to be put up as security.

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:

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

In a land sales contract,the seller usually retains legal title and does not turn over the deed until the property is paid for.

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

A surety could avoid liability for a principal's default by using the principal's bankruptcy as a defense.

Arnold purchased real estate known as Parcel A,subject to a preexisting mortgage,in favor of Local National Bank.Bridget purchased real estate known as Parcel B,assuming a preexisting mortgage on it in favor of Local National.After each purchase took place,there were defaults on the debts that gave rise to the mortgages referred to.Though Local National 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 made demands on Arnold and Bridget for payment of the deficiency owed on Parcel A and on Parcel B respectively.Explain if Local National is entitled to receive the deficiencies it seeks from Arnold and Bridget.