". .. payment of which the purchaser shall assume when the deed is delivered." When this is carried out the purchaser becomes liable as tho he were the original maker of the bond and mortgage. In the event of a foreclosure, he may not only lose his equity in the property, but he may be held for the payment of the deficiency if the sale of the property does not produce enough to pay the claim of the mortgages. It should be remembered, however, that the original bondsman is not thus relieved from his personal liability. He too can be held for any de ficiency, but he can seek reimbursement from the one who assumed payment of the debt.
19. Bond and mortgage as part of purchase money. —When the sum of the cash payments and the mort gage already on the property do not make up the whole 'purchase price, the remainder is usually repre sented by a purchase money bond and mortgage. This simply means that the seller is extending credit to the purchaser for part of the price, and that he re quires security from the purchaser for its payment. A purchase money mortgage may then be described as a mortgage given by a purchaser to a seller to secure payment of that part of the purchase price of land not paid when the deed is delivered.
In the case assumed the balance due is $5,000. The additional clause describing the purchase money mort gage may be worded as follows: By the execution and delivery by the purchaser to the seller of his purchase money bond for that amount secured by a purchase money mortgage on said premises to bear interest at the rate of 6% per annum, to run for four years, and to be conditioned for instalments on account of princi pal of $500, every six months. Interest to be paid with said instalments of principal.
This clause provides that the purchase money mort gage be paid in instalments. It may, of course, be worded so that it be payable in one sum at a definite time, if sych is the bargain.
20. Provisions regarding mort the case which has been assumed for an illustration, the purchase money mortgage would be a second mortgage. That is to say, it would be subject or subordinate in lien to the earlier mortgage of $25,000. In order that it remain a second mortgage, the purchaser may require the following clause: Said mortgage shall contain a clause that if the first mortgage be discharged this mortgage shall remain subordin ate to any new mortgage placed on the premises in lieu thereof, for like amount and having similar terms.
For his protection the seller usually requires that three things be stated in the contract in connection with this mortgage : That the bond and mortgage be prepared by his attorney, or be drawn on a particular form with which he is familiar, or in a form approved by his attorney.
That the expense of preparing and recording the bond and mortgage be paid by the purchaser.
That the purchaser pay the mortgage tax, if any.
21. When the deed is to be exact day, hour and place for closing the title and delivering the deed are stated in the contract. No rule can be laid down, but many closing dates are fixed thirty days, after the contract is signed. If a title company examines the title it is often arranged to close at the company's office.
22. Apportionments to be made at closing.—The next clause in the printed form may be completed to read, "Rents, taxes, assessments, or local improvement taxes, interest on mortgages and fire ums, if any, are to be apportioned to date of closing." On closing title, rents for the current month are di vided between the parties as of that date, the seller allowing the purchaser his share of any of the current month's rent that he has already collected. Taxes for the current year are apportioned, the vendor being charged his proportion from previous January 1. The seller also shows the purchaser the accrued inter est on the mortgages on the property to the day of closing, and the purchaser repays to the seller the proportionate part of any premiums on fire insurance policies not yet expired.
23. Title to land in street.—In some cases the seller owns the fee to the land in the street adjoining the property, and it is often required that he convey what ever right or title he may have to the purchaser. A proceeding to open the street may be pending, and in order that the man whose land may be charged with an assessment for the proceeding may get any award for the land taken, the contract provides that the seller shall assign to the purchaser, at closing, all his right, title and interest in any such award. This pro vision can be altered to suit any particular case.