Chat with AI
Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
Edition 10ISBN: 978-1305075443Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
Edition 10ISBN: 978-1305075443 Exercise 12
Facts Beneficial Homeowner Service Corporation filed a suit in a New York state court against Stephen and Susan Steele to foreclose on a mortgage. Foreclosure is a process that allows a lender to repossess and sell the property that secures a loan. A mortgage is a written instrument that gives a creditor an interest in the property that the debtor provides as security for the payment of the loan.
In this case, Beneficial (the lender) claimed that the loan was secured by real property in East Hampton, New York. Beneficial sought $91,614.34 in unpaid principal, plus interest. The lender, based on its assertion that both Stephen and Susan Steele had signed the loan agreement, filed a motion for summary judgment. Among the documents that Beneficial filed with the court was a copy of the loan agreement. There were two problems-the agreement identified Stephen Steele as the sole obligor (the party owing the obligation), and it had not been signed.
Issue Does the Statute of Frauds require the borrowers' signatures on a contract that gives the lender an interest in real property (a mortgage loan)?
Decision Yes. The court denied Beneficial's motion for summary judgment.
Reason Because a mortgage involves the transfer of an interest in real property, the loan agreement to which it relates must be in writing to satisfy the Statute of Frauds. To be enforceable, the writing must be signed by the parties to be charged.
Beneficial was seeking to foreclose on a mortgage that purportedly constituted security for a certain loan agreement. Beneficial sought to enforce the agreement against two parties-Stephen and Susan Steele-who had not signed it. In fact, Susan was not even mentioned in the agreement as a party to it. The lender's assertions about the document were "painfully obvious misstatements of facts" and meant that the agreement was most likely unenforceable. The court ordered a hearing to determine whether Beneficial had acted in good faith.
WHAT IF THE FACTS WERE DIFFERENT? Suppose that at the hearing, the Steeles had admitted they had an obligation to pay the outstanding loan amount. Would the result have been different ? Explain
In this case, Beneficial (the lender) claimed that the loan was secured by real property in East Hampton, New York. Beneficial sought $91,614.34 in unpaid principal, plus interest. The lender, based on its assertion that both Stephen and Susan Steele had signed the loan agreement, filed a motion for summary judgment. Among the documents that Beneficial filed with the court was a copy of the loan agreement. There were two problems-the agreement identified Stephen Steele as the sole obligor (the party owing the obligation), and it had not been signed.
Issue Does the Statute of Frauds require the borrowers' signatures on a contract that gives the lender an interest in real property (a mortgage loan)?
Decision Yes. The court denied Beneficial's motion for summary judgment.
Reason Because a mortgage involves the transfer of an interest in real property, the loan agreement to which it relates must be in writing to satisfy the Statute of Frauds. To be enforceable, the writing must be signed by the parties to be charged.
Beneficial was seeking to foreclose on a mortgage that purportedly constituted security for a certain loan agreement. Beneficial sought to enforce the agreement against two parties-Stephen and Susan Steele-who had not signed it. In fact, Susan was not even mentioned in the agreement as a party to it. The lender's assertions about the document were "painfully obvious misstatements of facts" and meant that the agreement was most likely unenforceable. The court ordered a hearing to determine whether Beneficial had acted in good faith.
WHAT IF THE FACTS WERE DIFFERENT? Suppose that at the hearing, the Steeles had admitted they had an obligation to pay the outstanding loan amount. Would the result have been different ? Explain
Explanation
Verified
Verified
Statute of Frauds:
The statutes that re...
Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
