Marcia executed a mortgage of Blackacre to secure her indebtedness to Ajax Savin
ID: 2716641 • Letter: M
Question
Marcia executed a mortgage of Blackacre to secure her indebtedness to Ajax Savings and Loan Association in the amount of $125,000. Later, Marcia sold Blackacre to Morton. The deed contained the following provision: “This deed is subject to the mortgage executed by the Grantor herein to Ajax Savings and Loan Association.”
The sale price of Blackacre to Morton was $150,000. Morton paid $25,000 in cash, deducting the $125,000 mortgage debt from the purchase price. On default in the payment of the mortgage debt, Ajax brings an action against Marcia and Morton to recover a judgment for the amount of the mortgage debt and to foreclose the mortgage. Can Ajax recover from Marcia and Morton? Please explain.
Explanation / Answer
Answer: Yes. Marcia transferred the mortgage to Morton. If Morton didn’t expressly assume the mortgage, Marcia should be personally liable for the mortgage debt. If Morton did, she would be personally obligated to pay the debt of the Blackacre. If Marcia or Morton (the mortgagor based on the above two probabilities) failed to perform the promises in the mortgage, Ajax has the right of foreclosure to recover from the mortgagor his outstanding money.