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Real Property • Security Interests in Real Estate
PROP#211
Legal Definition
A holder in due course is not burdened by any personal defenses of the maker (lack of consideration, fraud in inducement, waiver, estoppel, payment, unconscionability), but remains burdened by real defenses (infancy, incapacity, duress, illegality, fraud in execution, forgery, discharge in insolvency, and material alteration).
Plain English Explanation
A holder in due course is sort of like a bona fide purchaser. They are an innocent party who has paid for something without any knowledge of drama attached to it. As such, the law will try to insulate them from possible backlash from several common defenses to the formation of a contract.
Related Concepts
How do states treat a mortgage without a note?
How do states treat a note without a mortgage?
How is a mortgage's priority determined?
How may a party be a holder in due course of a note?
In lieu of foreclosure, what do many installment contracts prefer and how do courts address this alternative?
Under which theories may a mortgagee take possession of a property and begin receiving rents before foreclosure?
What are the 5 types of security interests in real estate?
What are the limitations of a junior interest?
What are the methods of transferring a note?
What interests does a foreclosure destroy?
What is a deficiency judgment?
What is a due on sales clause?
What is a foreclosure?
What is an installment land contracts?
What is a receivership?
What is a redemption in equity?
What is a statutory redemption?
What is the distribution order of proceeds from a foreclosure?
What is the result of a grantee assuming the mortgage?
What liabilities are associated with a mortgaged property that is transferred to another party?
What occurs in intermediate theory states?
What occurs in lien theory states?
What occurs in title theory states?
What results from a party purchasing a foreclosed property subject to a senior interest?
What security interests exist under a absolute deed?
What security interests exist under a deed of trust?
What security interests exist under a installment land contract?
What security interests exist under a mortgage?
What security interests exist under a sale-leaseback?
Who may transfer their interest in a mortgage?