James and Debra Reid purchased a home for 623,000 in January ...

[KimWrice]

James and Debra Reid purchased a home for 623,000 in January 2014. They put down 62,300 and financed the remainder with Fifth Third Bank. Fifth Third Bank recorded its mortgage on February 1, 2014. On March 31, 2014, the Reids purchased a swimming pool and the pool contractors, Cristoria Pools, financed the construction for 45.000. Cristoria recorded a second mortgage on the property on April 15, 2014. On December 15, 2014, the Reids sold their house to the Griffins for 720,000. The Griffins put 120,000 down and agreed to pay the Reids for the existing mortgage in wrap-around. The mortgage balance at the time of the sale was 619,000. The balance on the Cristoria mortgage was 42,000. On August 15, 2015, the Griffins defaulted on their payments. The Reids had already purchased another home and were unable to make the payments on the home. Fifth Third Bank foreclosed on the mortgage. What rights do the Reids have against the Griffins?
 A)Breach of contract
 B)The right to foreclose, subject to the priority interests of other lenders
 C)Creditors if the Griffins declare bankruptcy
 D)All of the above

Question 2

The following grant has been made: To Nordstrom Department Stores so long as the land is used only for a 5' high by 12' long sign with only the word Nordstrom' on the sign. Describe the type of interest(s) created by this grant. Be sure to discuss any rules that may apply.

[Fayaz00962]

Answer to Question 1

D

Answer to Question 2

The grant is a fee simple defeasible (fee simple determinable). There is a right of reversion that belongs to the grantor or grantor's heirs. If Nordstrom ceases to use the property for the sign, it loses the interest and the interest automatically reverts back to the grantor or grantor's heirs. No rules apply here because fee simple defeasibles are not subject to the rule against perpetuities.