Legal Memorandum: Language of a Mortgage

Issue: When Must the Language of a Mortgage be Given Effect?

Area of Law: Business Organizations & Contracts
Keywords: Mortgage language; Effect to the language in a contract
Jurisdiction: Minnesota
Cited Cases: 769 N.W.2d 285; 535 N.W.2d 803
Cited Statutes: 54A Am. Jur. 2d Mortgages § 7, § 8; Minn. Stat. § 580.02; Restatement (Third) of Property (Mortgages) § 8.2, § 1.4
Date: 05/01/2010

Minnesota case law and statutory law, as well as established general legal principles, strongly support the idea of giving effect to the language in a contract.  In Business Bank v. Hanson, 769 N.W.2d 285 (Minn. 2009), for instance, the court made it clear that the language of a mortgage must be given effect.  The court in Hanson considered whether a third-party mortgage was invalid because it did not state the amount the mortgage secured, as required by the Mortgage Registry Tax statutes.  The court observed that, “[w]hen reading a mortgage, as with any contract, we must give effect to all language in the instrument,” and that the “plain and ordinary meaning of the contract language controls, unless the language is ambiguous.”  769 N.W.2d at 288.  “Language is ambiguous if it is subject to more than one reasonable interpretation.”  Id.  Turning to the language of the mortgage instrument in that case, the court held that it complied with the statute, in that it disclosed that it was intended to secure only a portion of the debt owed under the notes, contrary to the mortgagee’s assertion that it should have disclosed the entire amount owing.  As noted by the court, “[o]ur jurisprudence recognizes that the amount owed on a note and the amount secured by a mortgage may be different.”  Id. at 290.

The Hanson case thus makes clear when a mortgage is enforceable—and must be enforced—as is.  General authorities are in accord.  “As is true in […]

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