Victor and Nora are unmarried co-owners of a beach house in Bethany Beach, Delaware. They hold title as joint tenants with right of survivorship. Victor executes a mortgage on his undivided interest to secure a personal loan without Nora's knowledge or consent. Victor later dies before the loan is repaid. Under Delaware law, which of the following most accurately describes the effect of Victor's mortgage on Nora's ownership after Victor's death?
Correct Answer
A) Nora takes full ownership of the property free and clear of Victor's mortgage, because the right of survivorship extinguished Victor's interest and the lien attached to it upon his death
Delaware follows the lien theory of mortgages, under which a mortgage does not convey title to the lender but merely creates a lien on the borrower's interest. Under lien theory, the execution of a mortgage by one joint tenant does not sever the joint tenancy, because title does not pass to the lender. When Victor died, the right of survivorship operated to vest full ownership in Nora by operation of law. Because the joint tenancy was never severed, Victor's interest — and the mortgage lien attached to it — was extinguished at the moment of his death. Nora takes the entire property free of Victor's personal mortgage obligation. This outcome reflects the intersection of Delaware's lien theory mortgage approach and joint tenancy survivorship rules.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The bundle of rights describes the rights associated with property ownership, allowing owners to use, control, enjoy, exclude others from, and dispose of the property.
Community property is a form of ownership recognized in certain states where property acquired during marriage is considered equally owned by both spouses, regardless of who earned the money or whose name is on the title.
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
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