Full question:
A residential mortgage note was signed in November of 1998 for a primary residential loan. The terms were $131,000, 8% fixed rate with a amortization of 15 years. The note had a 'call' in 24 months with the balance due. The lien holder (individual not institutional lender) has never excised his legal right by calling the note due or charging the 18% default rate. He never sent a demand in writing or verbal. He has always accepted monthly payments and has said nothing. Now I have been approved for a loan to refinance, and he wants to charge the 18% default rate for the past seven years when I requested a payoff. Also, would 'laches' come into play in this dispute?
- Category: Debts and Credit
- Subcategory: Promissory Notes
- Date:
- State: National
Answer:
It would be a matter of interpretation for the court to decide if laches applied, based on the contract terms and the facts and circumstances involved. Laches typically seeks to prevent an injustice due to the prejudice caused by the complaining party's delay.
Generally, the contract terms will govern whether or not a party is required to give notice within a certain time period before exercising a right to accelerate, or whether payments may be due retroactively. Where the terms aren't defined or ambiguous, the court will attempt to
determine the intent of the parties based on prior dealings, trade practices, and other evidence. To determine intent of the parties, the court will look at evidence of
(a) their relationship,
(b) the subject matter of the contract,
(c) facts and circumstances surrounding execution of the contract,
(d) the practical construction the parties themselves have placed on the contract by their acts and deeds and
(e) other external circumstances that cast light on the parties' intent.
When all else fails, an ambiguity in a contract should be construed against the party which drafted the ambiguous language.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
