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Ashton wished to raise additional capital for his business and arranged with Banyon for a $10,000 mortgage on his estate, Blackacre. Ashton did not disclose the fact that he had previously borrowed $10,000 from Clayton by way of a mortgage, and Clayton had not registered his mortgage against the title of Blackacre. Shortly after the mortgage to Banyon was registered, Ashton conveyed the estate to Dayton, for $25,000. Dayton was unaware of the mortgages to Banyon and Clayton and did not examine the title to Blackacre when he registered his deed. Dayton's title would not be subject to the mortgage to Clayton.
Subject to the mortgage
This phrase denotes that a property is encumbered by a mortgage, meaning any dealings with the property must take into account the mortgage's terms and conditions.
Unregistered Mortgage
An unregistered mortgage refers to a mortgage agreement that has not been formally recorded with a governmental registry or legal authority, potentially affecting its enforceability and priority against other claims.
- Comprehend the legal consequences of concealed and unrecorded mortgages in real estate dealings.
- Comprehend the importance of mortgage precedence and the effect of its registration on this hierarchy.
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Learning Objectives
- Comprehend the legal consequences of concealed and unrecorded mortgages in real estate dealings.
- Comprehend the importance of mortgage precedence and the effect of its registration on this hierarchy.
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