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"Reasonable notice" is notice of the nature and amount of the encumbrance which the mortgagor intends to place upon the land. The "nature" of a secured debt includes such fundamental characteristics as whether the debt is absolute or contingent, liquidated or unliquidated, or whether it is given to secure an existing liability or future advances. The "amount" of the debt is the dollar value of the obligation secured, to the extent that it can be ascertained at the time the mortgage is executed. If the debt cannot be definitively ascertained at that time, such data must be set out with respect to that debt as will put anyone interested in the inquiry upon a track leading to discovery. The record is the starting point for inquiry, not the starting and ending point. In sum, if a party is able by common prudence and by the exercise of ordinary diligence, to ascertain the extent of the encumbrance from information set out in the land records, then the mortgage is valid.
Plaintiff, Gerald Devlin, entered into an agreement under which the defendant corporations acquired the plaintiff’s residence and land in exchange for a cash payment and a promise by the defendants to provide the plaintiff with land to construct a residence in a planned subdivision in one of three ways. As security for the defendants’ additional promise, the defendant mortgaged the transferred property back to the plaintiff. The agreement provided that the mortgage secured a debt to the plaintiff in the amount of $84,000. The cash payment was paid to plaintiff at the time of the closing. No other consideration has been paid to the plaintiff. Subsequently, the plaintiff initiated a foreclosure action against the defendants, claiming that the defendants’ obligation to the plaintiff was in default. The trial court concluded that a debt was owed the plaintiff and that the debt was secured by a valid mortgage. Defendants appealed.
Were the mortgage deed and the underlying obligation that the deed purported to secure sufficiently definite to sustain the plaintiff’s foreclosure action?
The court held that the mortgage deed and the obligation purportedly secured by the mortgage deed were sufficiently definite to sustain the foreclosure action. The mortgage deed was not invalid simply because the deed lacked a statement of the specific amount of the debt secured, where the deed referred to a debt set forth in the purchase and sale agreement. The mortgage deed was not invalid simply because it purported to secure a "performance" instead of a stated monetary obligation. The trial court's determination that there was an underlying obligation that was secured by a valid mortgage was supported by the record and was legally and logically correct. Accordingly, the judgment of the trial court was affirmed.