The most desirable form of investment in property, and by far the safest, is to purchase land and then lease it for a long period, usually ninety-nine years, the lessee or lessees agreeing to pay general taxes and all other obligations incurred by the ownership of the land, and in addition, as security for the payment of the rent and all additions thereto, erect an improvement on the property which he maintains during the life of the lease, said improvements reverting to the owner of the land at the termination of the lease by purchase, or otherwise, according to agreement. It is usually a beneficial arrangement also to the lessee, as it affords him all the rights of ownership of the land, providing, of course, that the ground rents and all the covenants of his lease are promptly met, without investing a large sum of money in the title. Long term leases of ground as previously stated, are usually made for the term of ninety-nine years. This is only a custom, following the old theory that a conveyance or letting of land for a period of more than three average life times, that is three life times of thirty-three years each, was an absolute conveyance and not a lease. Leases may just as properly and legally be made for one hundred years, or nine hundred years, or nine hundred and ninety-nine years as for ninety-nine years.

Having investigated the present condition and future prospects of a property and decided upon its purchase, the buyer enters into a written contract* with the seller, or his agent, in which the seller agrees to sell the property at an agreed price, to deliver a "merchantable" abstract showing a perfect title in him, and to convey the same by deed properly executed. On his part, the buyer agrees to buy or receive the property within a specified time, usually thirty days, after a complete abstract of title has been furnished him by the seller, showing perfect title in him, and to pay for the property the price agreed either in cash or installments as agreed. The buyer usually makes a cash deposit of about 5 per cent. of the purchase price when the contract is executed, which is to be

♦All contracts with a reference to the purchase of real estate must be in writing in order to be valid.

Real Estate Contract

Ninety-nine-Year Leases refunded in case the transaction is not consummated through the fault of the seller, or is forfeited to the seller in case the buyer fails to carry out the agreement. If the transaction is consummated the contract money is applied upon the purchase price.

The seller then furnishes an abstract of title, which may be procured from an abstract company, showing the complete history of the ownership of the property to the present holder. This is examined by the buyer or his attorney.* Past conveyances, encumbrances, the rights of heirs, and especially minors, judgment creditors and many other points must be carefully watched and scrutinized in the past history of the property. So many questions of law are involved in the examination of titles to real estate that a good lawyer is a necessity. Defects in titles may be cured in various ways, many of them by securing quit claim deeds from possible claimants by purchase or otherwise. Some defects are cured by time, while others are incurable. Properties sometimes lie unimproved and unsalable in our cities through some defect in title until lapse of time cures the fault. It is needless to say that the buyer should be absolutely safe in the quality of title which he accepts.

*We have Guaranty Companies which issue policies of insurance against defects in titles, but the examination of the abstract is the most common method.

The next step is the execution and "passing of the papers" which convey title. On the part of the seller or grantor this consists of a warranty deed signed by him and the signature duly acknowledged by a notary. If the grantor is married, the wife, (or husband, as the case may be,) must join in the execution of the deed, and, if the grantor is a bachelor, or spinster, the fact must be recited in the deed. The buyer, or grantee, on his part pays the purchase money, or in case any portion of the purchase price is to be paid at future dates, he executes notes therefor, and a mortgage or trust deed on the property as security for their payment. The wife or husband of the grantee need not join in the execution of a mortgage or trust deed given to secure purchase money, but in all other cases where such instruments are executed she or he must so join.

As explained in a previous chapter, a mortgage is virtually a conveyance of property to the mortgagee, with a provisional clause that in case a certain note shall be paid upon a given date then the conveyance described in the mortgage shall be void and the title shall vest in the mortgagor. A deed of trust is a conveyance of property by the mortgagor to a third person called a trustee, to be held by him as security for the notes given. After the notes are paid the trustee "releases" or recon-veys the property to the grantor in the trust deed by the execution of a release deed. This is the more common method of securing real estate notes. When there is a default in one note of a series or interest upon one of the notes, by a provision in the mortgage or trust deed such default causes all of the notes to fall due at once at the election of the trustee or legal owner of the notes. This is necessary in order that action may be taken under the mortgage or trust deed to enforce full and complete payment and avoid the necessity for foreclosure proceedings upon each note separately. Mortgages are still used largely by insurance corporations in loaning their surplus capital, for the reason that they do not expect to transfer the paper and the mortgage gives publicity to the fact that they are the actual lenders of the money, but by individuals the trust deed form is preferred as it enables the owner to transfer the trust deed and notes without recourse or publicity, the actual lender not being known in the trust deed. In 1879 a law was passed in Illinois making the proceedings to foreclose a mortgage on real estate and a trust deed practically the same. Prior to that date it was not necessary for the mortgagee to file a bill of complaint, etc., it being only necessary for him to advertise the property a certain number of days and sell it to the highest and best bidder. The law was no doubt enacted largely in the interest of the borrower, giving him a certain protection in the event of a fraudulent foreclosure, etc.,. and for the reason that a trust deed conveys the property absolutely under certain conditions and enables the paper to be more readily sold or used as collateral security for loans.

In foreclosing a trust deed or mortgage the complainant files a bill of complaint in the court having proper jurisdiction, making the signers of the notes and trust deed, and all parties having any interest in the property, defendants. The court usually refers the case to a Master in Chancery for the purpose of taking evidence and arriving at a conclusion as to the amount due. To this report either parties have a right to file and argue objections with the Master. In the event of the Master's report being favorable to the complainant and sustained by the court, a decree of sale is entered. The Master then advertises and sells the property to the highest and best bidder for cash. This being approved by the court the Master executes a certificate of sale to the purchaser, which certificate will entitle the purchaser or holder thereof to a deed at the expiration of the redemption period. This latter is one to two years in different states*, - a period of time in which the mortgagor may have a final opportunity to recover his property by paying up his debt with interest and costs.

During the continuance of the mortgage the owner of the property has what is called "an equity of redemption." He enjoys the same right of ownership over the property (assuming, of course, that interest and maturing notes are paid when due) as though the mortgage and trust deed did not exist. He has the right to transfer by deed, or to again mortgage the property, subject, of course, to the rights of the holder of the previous lien. In case the property is sold while it is under mortgage the purchaser either buys it "subject to" the mortgage, or "assumes and agrees to pay" the incumbrance. In this latter event, the purchaser of the property, by accepting such a deed, obligates himself personally to pay the incumbrance and in case of foreclosure, if the property does not sell for enough to pay the mortgage together with interest and costs, he may be held for the balance. It is to the interest of the purchaser to see that the deed is properly placed on record in the office of the Recorder of Deeds. If the buyer fails to record his deed and the seller should fraudulently convey the property over again or mortgage it to an innocent person who placed his deed or mortgage upon record first, he, the innocent purchaser, would be protected in his title. The same principle holds in regard to recording other documents. The mortgagee must at once file his mortgage for record, lest another mortgage, sale or judgment takes precedence over it.