Also known as: rights of exoneration · exoneration right · exoneration rights · exoneration
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A rule of will construction under which a specific devisee of encumbered property receives the property subject to any lien existing at the testator's death. The rule eliminates any common-law presumption that the residuary estate must discharge the encumbrance. A general direction in the will to pay debts does not overcome the rule.
A rule of will construction under which a specific devisee of encumbered property receives the property subject to any lien existing at the testator's death. The rule eliminates any common-law presumption that the residuary estate must discharge the encumbrance. A general direction in the will to pay debts does not overcome the rule.
Select any source to read its text and confirm it supports the definition.
A remedy available to a secondary obligor who remains personally liable on a mortgage after transferring the encumbered property. The remedy permits the secondary obligor to compel the principal obligor to perform the assumed obligation. The remedy arises upon default or conduct creating an unreasonable risk of default and does not require prior payment by the secondary obligor.
Select any source to read its text and confirm it supports the definition.
A remedy available to a secondary obligor who remains personally liable on a mortgage after transferring the encumbered property. The remedy permits the secondary obligor to compel the principal obligor to perform the assumed obligation. The remedy arises upon default or conduct creating an unreasonable risk of default and does not require prior payment by the secondary obligor.
Each sense below has its own examples, sources, and questions.
Victor died leaving a will that specifically devised his mortgaged bistro building to Danielle and left the residuary estate to Alison. The mortgage remained of record at death. Danielle petitioned the probate court to require the estate to pay the mortgage so she would receive the building free of the lien. The court denied the petition because a general debt-payment clause in the will did not create a right of exoneration.
Rebecca Ross's will specifically devised her encumbered warehouse to Ronald Reed and named Rosa Ruiz as residuary beneficiary. The mortgage existed at Ross's death. Reed demanded that the personal representative pay the mortgage from residuary assets. The court ruled that the specific devise passed subject to the mortgage without any right of exoneration.
No. Under the modern rule a specific devise passes subject to any mortgage existing at death without any right of exoneration. A general debt-payment clause supplies no basis for requiring the residuary estate to discharge the lien.
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No. The devise passes subject to the mortgage. The nonexoneration rule prevents the residuary estate from bearing the burden unless the will expressly directs otherwise.
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Renee Rogers sold her mortgaged apartment complex to Ravi Reddy. Reddy expressly agreed in the purchase contract to assume and pay the mortgage. Reddy later defaulted. Rogers, who remained personally liable to the lender, sued Reddy to compel performance of the assumed obligation. The court granted relief because the assumption made Reddy the principal obligor and gave Rogers the right of exoneration.
Robert Rivera personally guaranteed a mortgage on property owned by his company. After selling the property to Royal Crest Hotels with an express assumption agreement, the buyer defaulted. Rivera, who remained personally liable, sued the buyer for an order compelling it to satisfy the loan. The court granted relief under the right of exoneration without requiring Rivera to pay first.
Redwood Bank held a mortgage on property that Reliance Insurance sold to Raven Logistics. Raven expressly assumed the obligation in the purchase agreement. Raven stopped making payments, exposing Reliance to liability. Reliance sued Raven seeking an order that Raven discharge the mortgage directly to the bank. The court issued the order under the right of exoneration.
The transferor may obtain exoneration upon the transferee's default or conduct creating an unreasonable risk of default. The remedy does not require the transferor to pay the mortgage first or wait for the mortgagee to sue.
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An express assumption makes the transferee the principal obligor and the transferor a secondary obligor. That suretyship relationship gives the transferor the right to compel the transferee to perform the assumed obligation.
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…Gardens according to the agreement; third, that the plaintiffs were not ready or willing to take the Hall and Gardens; fourth, exoneration before breach; and fifth, that by a general custom (part of the agreement) if the Gardens and Music Hall were destroyed or so far damaged by accidental fire as to prevent the entertainments…