Crucial Exams

Multistate Bar Examination Practice Question

A mortgagee, Bank X, holds a mortgage on a commercial property owned by Borrower Y. Bank X decides to sell and assign the mortgage to Bank Z as part of a portfolio sale. Shortly after the transfer, Borrower Y discovers that Bank Z has incorrectly recorded the assignment in the county records office, listing the mortgage as discharged. Bank Z attempts to recover the debt from Borrower Y when payments are missed. Borrower Y argues they have no obligation to pay because the mortgage appears to have been discharged. How should the dispute be resolved according to standard principles of mortgage law?

  • Bank Z must renegotiate a new mortgage agreement with Borrower Y due to the error in recordation.

  • Borrower Y is discharged from payment obligations because the county records show the mortgage as satisfied.

  • Bank Z has forfeited its right to enforce the mortgage due to negligence in recordation.

  • Borrower Y remains obligated to pay Bank Z because the incorrect recordation does not extinguish the mortgage obligations.

Multistate Bar Examination
Real Property
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