Term
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Definition
| the landowner leases the land only to a tenant who covenants in the lease to erect a building on the premises, or who otherwise takes fee simple ownership of the building by deed |
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Term
| Is a ground lease generally net? |
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Definition
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Term
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Definition
| it starts out looking like the typical large-scale mortgage, but an option clause gives the mortgage the privilege, at some future specified date, to convert the outstanding balance of the mortgage into a predetermined % of ownership of the property. |
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Term
| Why is a convertible mortgage attractive to the borrower and lender? x |
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Definition
- it is allows the borrower to retain all of the tax benefits associated with ownership until the lender exercises the conversion option
- it is attractive to the lender because the lender exercises its option at a time when the property has proven itself to be viable and has increased in value.
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Term
| What are the problems with a participating mortgage? x |
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Definition
| the possibility that the loan may be held to be usurious, unconscionable, a clog on the equity of redemption, or as creating a joint venture between the borrower and lender |
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Term
| How would you protect against the problems customary with a participating mortgage? |
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Definition
- regularly documented
- fixed maturity date
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Term
| Advantages of a Sale and Lease Back x |
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Definition
- Tax advantage ...deduct rent for income purposes instead of only interest from a mortgage
- Much more cash than if mortgaged
- may have restrictions on borrowing
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Term
Disadvantages of a Sale lease Back x
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Definition
- appreciation means bad news
- Lessee has burden of ownership since NET NET NET but lacks the benefits of ownership
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Term
| What are the possibilities a lender will exhaust before going through foreclosure? x |
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Definition
- extension of time or moratorium of payments
- restructuring the loan
- sale to a credit worthy borrower
- deed in lieu of foreclosure
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Term
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Definition
| a court orders a public auction sale of the property, and the sale is held by an officer of the court |
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Term
| equitable right of redemption |
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Definition
| can redeem property before sale |
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Term
| Statutory Right of Redemption |
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Definition
| right to redeem from the sale within a certain period after the sale |
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Term
The mortgagee can be the winning bidder and collect a deficiency judgement.
T/F |
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Definition
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Term
Foreclosure of the mortgage will terminate the tenants rights to possession of the premises.
T/F |
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Definition
| True if the mortgage was senior to the leases |
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Term
| Subrogation/Nondisturbance/Attornment agreement x |
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Definition
| the tenant acknowledges that its lease is junior, but if a foreclosure sale occurs and the tenant is not behind, the tenant can stay |
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