Exam 42: Introduction to Security

Sheng and Min were cosureties for their friend Lei on a loan contract. When Lei failed to repay the loan within the stipulated time, Min paid the whole obligation as her surety. Min is now entitled to collect half the amount of liability from Sheng in accordance with her right _____.

Possessory liens give the lienholder the right to keep possession of the debtor's property:

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

Most states treat the deed of trust different from a mortgage in giving the borrower a relatively short period of time to redeem the property.

If you go to a dentist to have a cavity in a tooth filled and she sends you a bill payable by the end of the month, services have been rendered on the basis of secured credit.

The surety joins with the person who is primarily liable in promising to make the payment or to perform the duty.

Describe the distinction between a surety and a guarantor.

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

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 _____.

What is a possessory lien? Give an example.

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.

There are only two parties to a deed of trust: (1) the owner of the property who borrows the money and (2) the trustee who holds legal title to the property put up as security.

If the creditor allows the principal more time to perform the contract without the surety's consent, this relieves the surety of responsibility.

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 the right _____.

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?

What is a deed of trust?

Artisans who retain goods are liable for conversion if they:

A guarantor does not join with the person who is primarily liable in making a promise; rather, a guarantor makes a separate promise and agrees to be liable on the happening of a certain event.

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

Under the common law, the innkeeper was allowed to claim a lien on the guest's property brought to the hotel or inn to secure payment for the innkeeper's reasonable charges for food and lodging.