Discussion Scenario: Elmer and Arletta Hans, husband and wife, owned a parcel of
ID: 359331 • Letter: D
Question
Discussion Scenario: Elmer and Arletta Hans, husband and wife, owned a parcel of farmland in Illinois. They borrowed $100,000 from First Illinois National Bank (First Illinois) and executed a note and mortgage to First Illinois, making the real estate security for the loan. The security agreement authorized First Illinois to take possession of the property on the occurrence of a default and required the Hanses to execute a quitclaim deed in favor of First Illinois. The state of Illinois recognizes the doctrine of redemption. When the Hanses defaulted on the loan, First Illinois filed a lawsuit, seeking an order requiring the Hanses to immediately execute a quitclaim deed to the property.
Discussion Questions: After reviewing the learning materials in this Module, prepare an Initial Post (by Thursday, 11:59PM) that incorporates these materials to answer the following questions. Also, your grade in this learning activity relies on your engagement in the discussion through your Peer Replies (TWO or more by Saturday, 11:59PM).
Topic Questions:
Must the Hanses execute the quitclaim deed before the foreclosure sale? Why or why not?
Would it matter if the loan proceeds were used to build a house on a piece of the land?
Reflection Questions:
What specific knowledge and information did you gain from the learning materials and activities that you can apply to your experiences now? In the future?
What are the social and ethical issues involved with the subject matter of this assignment?
Which topics were confusing, complicated or contradictory? Why? Did you ask the class or instructor for assistance?
Explanation / Answer
Hanses must not be forced to execute the quitclaim deed before the foreclosure sale, and neither should Hanses take a hasty decision of executing the quitclaim deed. As the parcel of the farm-land was the collateral for the origination of the loans sought by the Hans, it can be argued that, they should first enter into the agreement while taking the loan with the understanding that the land was collateral to be forfeited in the event of default.
Secondly, in case of the first loan, which was a part in the loan agreement which states that the land would be quit deeded to the bank in the event of default. Therefore it should be executed per the terms of the loan agreement. The second loan does not make this mention, however the land was used as collateral to secure the loan. Therefore, Hanses can not be forced to execute quitclaim deed. He has right to redeem the property from foreclosure by paying off debt at any time before sale happens.