LEB 323 Study Guide - Midterm Guide: Fee Simple, Life Estate, Interest
29 Nov 2017
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Mortgages and Liens
o person who borrows money has to grant lender an interest in some
item of property to secure payment of the debt
▪ when the property given is a house it is called a mortgage
o Lien: interest created by the mortgage
▪ in some states a person does not own the property until the
debt is paid
o If person does not pay the debt, the mortgagor has a right to
foreclose the home and auction it to make up for the lost money
o Mechanic lien: secure payment for work done or material added to
property
▪ if someone did work (builds) a room the mechanic has a right
to foreclose that room and sell it if payment is not given
o Other types of lien
▪ plaintiff duty to pay defendant is called “judgement lien”
o a lien is created by filing the written document with a public official
❖ Future Interests
o consists of the residue remaining when the owner of a fee simple
estate transfers less than a fee simple interest to someone else
o Two types
▪ reversion
• owner of a fee simple defeasible (on condition)
transfers a lesser interest and retains the residence
o after owner who bought the house on life estate
dies the original owner gets to keep the house
and pass it down or sell it
▪ remainder
• transfers a lesser interest and expressly provides that
ownership will pass to a third person upon expiration
of the lesser interest
o remainder will pass to C , after A’s agreement
with B expires or is fulfilled as cause of the
defeasible clause
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