Facts: Nichols owned a ranch which was encumbered by a seven (7%) mortgage held
ID: 2739790 • Letter: F
Question
Facts: Nichols owned a ranch which was encumbered by a seven (7%) mortgage held by the Dickerson County Bank. As of July 31, 2005, the outstanding mortgage amount was $154, 890. Nichols decided to sell the ranch and engage in the dirt bike business. During the time that he was negotiating the sell of the ranch, the bank sent out an offer to several mortgagors indicating a five percent (5%) discount on the mortgage if the mortgagors would pay the entire mortgage in cash or by certified check by July 31, 2005. The bank was doing this in order to liquidate older unprofitable mortgages which it had on the books. Anyone seeking to avail himself of the offer was required to present his payment at the Second Street branch on July 31, 2005. Nichols, having obtained a buyer for his property, decided to take advantage of the offer since his buyer was arranging his own financing and was not interested in assuming the mortgage. Therefore, on July 15^th, he wrote the bank a letter which stated "I accept your offer on my mortgage, see you on July 31, 2005, I'll have a certified check." Nichols did not indicate that he was selling the ranch and would have to pay the full amount in any event. Only July 28. the bank sent Nichols a letter by certified mail which was received by Nichols on the 30^th of July which stated: "We withdraw our offer. We are over subscribed. Furthermore, we have learned that you are selling your property and the mortgage is not being assumed." Nevertheless, on July 31, at 9:05 in the morning when Nichols walked in the door of the bank holding his certified check, Stocks, a bank mortgage officer, approached him and stated firmly and clearly that the bank's offer had been revoked and that the bank would refuse to accept tender of payment. Dumbfounded, as he usual is, by all this. Nichols nevertheless tendered the check which was refused. Answer the following, setting forth reasons for any conclusions stated. In the eventual lawsuit that ensued, who will prevail.Explanation / Answer
As per the relevant provisions, Nicholas should have informed the bank about the selling of ranch before engaging in the sales transaction and obtained a written consent regarding the same. However, he intentionally didnot inform the bank in order to take advantage of 5% discount on the mortgage. Sale of mortgaged property without the consent of the lender/bank makes it mandatory for the borrower to repay the mortgage in full value. Therefore, Nicholas will not be entitled to claim discount. However, the bank cannot refuse to accept the payment in full as the the borrower has a right to settle the dues before the expiry of the loan period. The bank can levy additional penalty or other charges (as the case may be and if provided in the contract) and accept the payment made by Nicholas.
Nicholas claim to discount will therefore, not get enforced and he will have to settle the payment in full.
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