Nearly all improved properties in the built-up districts are mortgaged for part of their value. These mortgages usually remain on the property indefinitely. Most contracts of sale, therefore, involve in their financial statement an existing mortgage. The mortgage is always accompanied by a bond, or note, under the terms of which the original borrower or some late owner, who has secured an extension of its time of payment, has undertaken to pay the amount of the loan which the mortgage was given to secure. The purchaser may take the realty subject to this mortgage or he may assume its payment. In either event to prevent foreclosure of the mortgage he must pay the interest. If, however, he merely buys subject to the mortgage he undertakes no personal obligation to pay the loan, while if he assumes the mortgage he becomes personally liable for the loan, and should the property under foreclosure not bring sufficient to pay the mortgage, interest and expenses, he would be personally liable for the deficiency. For obvious reasons the purchaser usually endeavors to have the contract provide that he take subject to the mortgage. In actual experience the purchaser seldom assumes the mortgage.

The purchaser, in order to know what he is buying, should always secure a full detailed statement of the terms of the existing mortgage, particularly the principal amount, interest rate, interest payment dates, name of the mortgagee, and the date when the principal of the mortgage is payable. This last is very important. The purchaser must know when he may be compelled to pay or renew the mortgage. Possibly he can not pay it and has reason to believe he could not procure a new loan for as great an amount. He wants to have time to prepare. He might not buy at all if the mortgage were to become due very soon. If, on the other hand, he thinks the mortgage is low; that he could procure a larger loan, he is desirous that it become due shortly. If, in any way, the seller has any control over or option in respect to the mortgage or any of its terms the purchaser should see that the contract make proper provision to protect his desires or requirements.