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Questions and Answers
What is true about the nature of mortgage interest?
What is true about the nature of mortgage interest?
- Partial discharge affects the security interest.
- Mortgage interest is divisible and can be split.
- Mortgage interest can serve as security for any debts.
- Mortgage interest is indivisible. (correct)
Which act limits a new owner's right to evict unlawful occupiers?
Which act limits a new owner's right to evict unlawful occupiers?
- Residential Accommodation Act
- Property Ownership Act
- Tenants Rights Act
- Prevention of Illegal Eviction and Unlawful Occupation of Land Act (correct)
Which of the following is NOT a type of mortgage bond?
Which of the following is NOT a type of mortgage bond?
- Credit bond (correct)
- Standard building bond
- Participation bond
- Collateral bond
What is a defining feature of a pledge of movables?
What is a defining feature of a pledge of movables?
In the case of a pledge, what can the pledgee NOT do?
In the case of a pledge, what can the pledgee NOT do?
What is required for creating a notarial bond?
What is required for creating a notarial bond?
Which of the following statements regarding the parate executie clause is TRUE?
Which of the following statements regarding the parate executie clause is TRUE?
What distinguishes between a general and specific notarial bond?
What distinguishes between a general and specific notarial bond?
Under what circumstances can a creditor not obtain a judgment against a debtor according to the examples provided?
Under what circumstances can a creditor not obtain a judgment against a debtor according to the examples provided?
What does the benefit of division allow co-sureties to do?
What does the benefit of division allow co-sureties to do?
What must a surety demonstrate to secure release from suretyship?
What must a surety demonstrate to secure release from suretyship?
When does the right of recourse for a surety arise?
When does the right of recourse for a surety arise?
Which of the following is NOT an exception to the benefit of division?
Which of the following is NOT an exception to the benefit of division?
What can a surety NOT do to maintain the right of recourse against the debtor?
What can a surety NOT do to maintain the right of recourse against the debtor?
Which scenario necessitates a creditor to secure a surety’s release according to court orders?
Which scenario necessitates a creditor to secure a surety’s release according to court orders?
In which case does a judgment become futile for the creditor?
In which case does a judgment become futile for the creditor?
What is the requirement for a co-surety to claim reimbursement from other co-sureties?
What is the requirement for a co-surety to claim reimbursement from other co-sureties?
In the case of Strachan v Fawcett, how much was co-surety F held liable for after co-surety S made a partial payment?
In the case of Strachan v Fawcett, how much was co-surety F held liable for after co-surety S made a partial payment?
What does the right of reimbursement from a co-surety entail?
What does the right of reimbursement from a co-surety entail?
When can a co-surety bring a claim for reimbursement against another co-surety?
When can a co-surety bring a claim for reimbursement against another co-surety?
What is a key characteristic of the surety's right to creditor’s counter-performance?
What is a key characteristic of the surety's right to creditor’s counter-performance?
In the ASA Investments v Smit case, what did the court determine regarding reimbursement claims?
In the ASA Investments v Smit case, what did the court determine regarding reimbursement claims?
What happens to the amount of contribution required from co-sureties when a portion has been recovered from the principal debtor?
What happens to the amount of contribution required from co-sureties when a portion has been recovered from the principal debtor?
What must a co-surety do to raise the benefit of excussion?
What must a co-surety do to raise the benefit of excussion?
What is the primary purpose of security in a contractual relationship?
What is the primary purpose of security in a contractual relationship?
Which of the following is a type of real security that applies by operation of law?
Which of the following is a type of real security that applies by operation of law?
Which term describes a situation where a third person is obligated to fulfill the debtor's performance?
Which term describes a situation where a third person is obligated to fulfill the debtor's performance?
What is an example of a general mortgage according to the content provided?
What is an example of a general mortgage according to the content provided?
What must the validity of a security interest depend upon?
What must the validity of a security interest depend upon?
Which of the following statements is true regarding general mortgages?
Which of the following statements is true regarding general mortgages?
What is a stipulation for specific performance?
What is a stipulation for specific performance?
According to the Deed Registry Act 1937, which statement is correct?
According to the Deed Registry Act 1937, which statement is correct?
What defines the scope of a surety's liability according to the given principles?
What defines the scope of a surety's liability according to the given principles?
In the case of Fedbond Nominees v Meier, what important concept is established regarding surety's liability?
In the case of Fedbond Nominees v Meier, what important concept is established regarding surety's liability?
Which of the following is a 'defence in rem' available to a surety?
Which of the following is a 'defence in rem' available to a surety?
What does 'benefit of excussion' imply in the context of suretyship?
What does 'benefit of excussion' imply in the context of suretyship?
In the scenario where G settled his debt but later failed to pay SAB, what was V's liability?
In the scenario where G settled his debt but later failed to pay SAB, what was V's liability?
What type of defences can a surety use in rem, regardless of existing judgments?
What type of defences can a surety use in rem, regardless of existing judgments?
In the case of Ideal Finance Corporation v Coetzer, what was the main finding regarding the Hire-Purchase Act?
In the case of Ideal Finance Corporation v Coetzer, what was the main finding regarding the Hire-Purchase Act?
What happens to the liability of co-sureties as established in the principles discussed?
What happens to the liability of co-sureties as established in the principles discussed?
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Study Notes
Nature of Security Interest
- Performance obligations dictate what the debtor must fulfill, typically established by contract.
- Two forms of performance: Specific performance (exact obligation) and Alternate performance (equivalent obligation).
Security Types
- Security ensures creditors receive performance. Two main types:
- Real Security: Allows creditors to claim proceeds from debtor’s property, prioritizing their claim over others.
- Examples include mortgages (immovable), pledges (movable), notarial bonds, and cessions in securitatem debiti.
- Legal real securities include liens and landlord's tacit hypothec.
- Personal Security: Rights derived from having a third party fulfill the debtor's obligations.
- Personal securities often take the form of suretyship or liens.
- Real Security: Allows creditors to claim proceeds from debtor’s property, prioritizing their claim over others.
General Mortgage
- A general mortgage hypothecates all debtor’s property, but is limited to a general notarial bond covering only movable assets.
- Any mortgage bond over all the debtor’s property is invalid per the Deed Registry Act 1937.
Security Characteristics
- Security interest is always accessory to a principal obligation—its validity hinges on the principal obligation's validity.
- Mortgage bonds remain in effect regardless of partial discharges unless otherwise specified by law.
Common Mortgage Bond Types
- Includes standard mortgage, standard building bond, covering bond, collateral bond, and surety bond.
Pledge of Movables
- A pledge involves handing over movable property to secure a debt, remaining valid as long as the creditor retains possession.
- Pledgee's rights allow for immediate execution of pledged property upon debtor default, unlike mortgages which require court action.
Notarial Bond
- A notarial bond represents a registered security interest in movable property and is validated through notary public attestation.
- Comes in two forms: General notarial bond and Specific notarial bond.
Suretyship and Liability
- A surety’s liability is dictated by the terms of the agreement, often limited to outcomes after the creditor exhausts recovery options against the principal debtor.
- Co-sureties are liable for the entire debt, although they may seek proportionate reimbursement among themselves.
Defenses and Rights of Surety
- Sureties can employ defenses related to the principal obligation (defenses in rem).
- The Right of Excursion necessitates that creditors exhaust debtor’s assets before seeking recovery from sureties.
- Benefit of Division allows co-sureties to share debt liability proportionately unless waived.
Right to Reimbursement
- Sureties may recover amounts paid to creditors from debtors or other co-sureties, often enforced in proportion to liabilities.
- Co-sureties' contributions adjust based on amounts recouped from principal debtors.
General Principles
- The validity of security interests directly ties to the underlying principal obligations.
- Legal protections limit creditor actions against mortgagors, emphasizing tenants' rights under specific statutes like the Prevention of Illegal Eviction and Unlawful Occupation of Land Act (PIE).
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