Frank owns an office building worth $100,000. He approaches Citibank and offers the office building as security for a loan of $100,000. On September 1, Frank gives Citibank a note and deed of trust; Citibank gives Frank $100,000. Citibank records its deed of trust on September 10. On September 5, Frank gives his sister Suzie a deed to the office building as a gift. She records her deed on September 5. On September 8, Suzie approaches TexasBank and obtains a loan for $100,000. She gives TexasBank a note and deed of trust. TexasBank records its deed of trust on September 8. Assume both Suzie’s note and Frank’s note are in default. Which lien against the property takes priority (Citibank or TexasBank)? Whichever bank loses out will have an unsecured claim against the debtor for the amount of the unsatisfied loan. Assume the debtor is single and owns a house and 20 acres in town which is served only by police protection, fire protection, cable TV, electric service, and street sweeping. The property has a well and septic tank (no city water or sewer available). The debtor also has three guns, one car and one tractor, and Grandma’s diamond ring worth $7,500. If the loser bank sues its debtor and wins a court judgment, what property listed here may be seized and sold to satisfy the judgment? Explain your conclusions.
TexasBank takes the priority for the lien against the property,
as the TexasBank records its deed of trust on September 08 with
Suzie for a loan of $100,000, which is earlier than Citibank;
recording its deed of trust with Frank on September 10 for the same
Loan amount.
If the loser bank sues its debtor (Suzie) and wins a court
judgment, the property which may be seized and sold to satisfy the
judgment will include:
- Self Owned house.
- One car and one tractor.
- Three guns.
- 20 acres Land possession and can rented for an
equivalent amount to be recovered.
Frank owns an office building worth $100,000. He approaches Citibank and offers the office building as...
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