What Makes a Mortgage Contract an Enforceable Contract?

Written by gary r. crum
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What Makes a Mortgage Contract an Enforceable Contract?
The home mortgage is an enforceable contract. (Image by Flickr.com, courtesy of woodley wonderworks)

A loan secured by real estate is called a mortgage loan or mortgage contract. Real estate borrowers sign a note which is the borrower's promise to repay the loan and the mortgage, which ties the note to the subject property.

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The Note

The document that makes a mortgage an enforceable contract is the note that accompanies the mortgage. The note is a promise to pay and is enforceable in a court of law. The note and the mortgage contract are signed by the borrower(s) at the loan closing. A loan secured by real estate is called a mortgage loan or mortgage contract. Real estate borrowers sign a note which is the borrower's promise to repay the loan and the mortgage, which ties the note to the subject property.

What Makes a Mortgage Contract an Enforceable Contract?
The mortgage note is a promise to repay the loan. (Image by Flickr.com, courtesy of Daniel Lobo)

Mortgage Contract

A mortgage contract includes a legal description of the property as determined by a survey. The legal description will identify the property being mortgaged. In urban and suburban areas, property is platted and each lot given a unique identification. For example, the legal description will read: Lot 23, Block 17, plat book 1234. In rural areas where property is not usually platted, the legal description will usually use landmarks on the property to identify the bounds.

What Makes a Mortgage Contract an Enforceable Contract?
A legal description identifies each property. (Image by Flickr.com, courtesy of Casey Serin)

Mortgage Contract Recording

After all parties sign the mortgage closing documents, the mortgage is sent for recording. In most municipalities, the county courthouse records mortgages by making a copy of the mortgage and assigning the mortgage a book and page number. The copy is filed by the courthouse in its records and the original is returned to the lender with the book and page number indicated on the mortgage. If the original document is lost, a copy may be obtained from the recording courthouse.

What Makes a Mortgage Contract an Enforceable Contract?
A mortgage is recorded at the courthouse. (Image by Flickr.com, courtesy of Jeff Turner)

Title Insurance

The recording of the mortgage is accompanied by the title company issuing a title policy that indicates the property being encumbered is not owned by someone else and is free of claims against the property. This protects the lender and the borrower against future claims to the property.

Mortgage Contract and Note

The note, the mortgage contract and the title insurance policy ensure that in the event of default on repayment of the loan, the lender will be able to foreclose on the property.

What Makes a Mortgage Contract an Enforceable Contract?
The lender can foreclose if the borrower defaults on repayment. (Image by Flickr.com, courtesy of Jeff Turner)

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