Real Estate Mortgage

Real Estate Mortgage

Facts

The borrower is liable on a real estate mortgage, with an outstanding balance of $1.5 million. The property has a current market value of $1.2 million, wile the Borrower's basis in the property is $1 million.

Issue

It is important to determine the borrowers liability if the borrower become insolvent.

Authorities

The bank has an authority to go to the court or take a legal action against the borrower, who is unable to pay off the liabilities. If the bank reposses the property, the borrower can gain some benefits from it too.

Analysis

Repossesion is the return of the previously sold items as a result of failure to pay the next payment under the contract of hire purchase. Loss of foreclosure on the house is also called the recovery in the possession of the house.

The Bankruptcy and Insolvency Act (the Act) contains special provisions for providers of goods sold and delivered to a purchaser for the purposes of his business, which have not been paid (Mapother, 2003).. Under the Act, where the buyer is bankrupt or the subject of a receivership, the unpaid seller may resume possession of his goods at his own expense and under certain conditions:

•First, the unpaid seller has 15 days after the debtor's bankruptcy or the appointment of a receiver to apply to repossess the goods. Furthermore, the goods must be delivered no later than 30 days before the bankruptcy or the appointment of the receiver. The application must be submitted to the Trustee on Form 75 and give full particulars of the transaction.

At the time of submission of the application, the following conditions must be met:

•the goods are still in the possession of the buyer or the trustee;

•they have not been resold at arm's length or have ...