The most commonly used substitute for the mortgage or deed of trust as a land financing device is the installment land contract. This device is also known variously as the contract for deed or the long-term land contract. The installment land contract and the purchase money mortgage carry out the same economic function the financing by the seller of the unpaid portion of the purchase price of the real estate. Under the installment land contract, the vendee normally goes into possession and agrees to make monthly installment payments of principal and interest until the principal balance is paid off. The vendor retains legal until the final payment is made, at which time he has a duty to execute a deed to the land. Such contracts may be amortized over varying time periods as short as two or three years or as long as twenty years. Even if a long amortization period is used, the vendee may be required to pay off the balance by a “balloon payment” after three to five years. Even if a long amortization period is used, the vendee may be required to pay off the balance by a “balloon payment” after three to five years. During the period of the contract, the vendee will usually be required to pay the taxes, maintain casually insurance and keep the premises in good repair.
The law of real property usually develops in an evolutionary fashion. Change is often measured in terms of decades and centuries rather those in months and years. Yet economic turmoil can accelerate this process. Just as the Great Depression of the 1930’s spurred the enactment of mortgage moratoria and anti-deficiency legislation, so too the inflationary economic climate of the 1970’s and early 1980’s engendered new mortgage law.
Under Massachusetts law, a foreclosing mortgagee must do more than comply with the procedure prescribed by statute for more information click here.
Both mortgagor and mortgagee have an insurable interest with respect to a loss suffered by the mortgaged premises. The insurable interest of the mortgagor is the value of the premises and the mortgagee's insurable interest is the amount of the mortgage debt for more information read more here. See Nelson and Whitman, Real Estate Finance Law 4.14 (3d ed.1994) of course, a mortgagee is not allowed to collect both the proceeds of its casualty insurance policy and the full debt as well; doing so would result in a windfall and unjust enrichment.
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June 2015
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