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November 21, 2018

Advance


Word of the day

Advance

To give consideration before it is due.  Money is advanced by one party (such as a mortgagee or vendor) to cover carrying charges (such as taxes and insurance) on the property that were not properly paid by the other party in default.  These amounts are credited to the account of the advance-ing party.  For example,  a second mortgagee might advance delinquent first-mortgage payments of the borrower in order to prevent a foreclosure of the secured property.    

An important issue for lenders is whether a recorded mortgage securing future advances takes priority over a subsequent mortgage recorded before the date of the advance but subsequent to the recording of the first mortgage.  Other advances include additional funds disbursed under an open-end mortgage or advances made by a construction lender to a developer-borrower. 

 

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