Legalese 2009 (Week 34)

Lexicon

absolute conveyance as a security device – the obligor transfers legal title to property in order to secure performance of his obligations to the obligee.

Lexplore

ART. 1454. If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him.

Lexpound

Ordinarily, the creditor will require the execution by the debtor of a mortgage or a pledge as security of the fulfillment of the latter’s obligation. In this case, the mortgagee or the pledgee does not become a trustee. But if an absolute conveyance of property is made instead in order to guarantee the performance of an obligation of the grantor toward the grantee, an implied trust is created by operation of law for the benefit of the grantor (see Comments and Cases on Partnership, Agency and Trust, p. 705 [2005]).

Lexcogitate

Is the conveyance of property pursuant to Art. 1454 subject to documentary stamp taxes imposed on mortgages and pledges?

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