The Magnolia gazette. [volume] (Magnolia, Miss.) 1872-current, 1892-06-25
CONVERTING LAND INTO BANKABLE
SECURITY.

munication from Edward Atkinson,
political economist of Boston, TO
the Manufacturs rs Record pre-
sents a novel plan for increasing
the value of real estate as security
for loans:
l observe that an article which 1
lately wrote in the Century maga-
zine upon the Torrens system of
registering land titles has attracted
the attention of General Alexander
and other OF my Southern friends.
] may venture to call attention 10
q method whereby land may be
converted into security on v hich
money can be borrowed from banks
and bankers without the necessity
OF making a conveyance of the
land as security for each loan. Ii
Is plan which has not vet been
adopted, and to which there may
be objections unknown to me, but
~ all but one respect the sugges-
tlons that / make are a part of the
common practice IN many places.
especially in Philadelphia and
Baltimore. What | suggest is this:
The conveyance of land by the
ordinary methods is by registry Of
deed, under the guarantee of a
title insurance company and on
condition of the payment of
ground rent without any promise
topay principal lump sum secured
in part by mortgage in the usual
way. 90 not propose perpetual
ground rents, but ground rents
terminable at the option Of the
buyer or lessee on gwen notice,
mol terminable at the option of tile
seller or lessor. 1t is the common
pracllce, notably in Phllaaelphia,
ts sell and con, ey Ia d subject to Il
terminable ground rent under an
insured title to capable men, who,
being III good health, also get their
lives Insured for an amount equal
to the valuation of the land. The
lessees then join a building socie-
ty, and thus procure the means
for building a house on the leased
lot, becoming tmately their own
landlords by paying up heir as
seSsments in the building society
and by ultimately compromising
the rent by payment at 4 valuation
In one sum either in instalments
or IN one payment.
The plan which suggest is to
add one single element to this
method, namely, that the obliga-
ton to pay rent upon the land
should be represented by what
may be called rent OF rental certi-
ficates, TO be registered at the
office OF the title insurance com
pany, containing provisions both
III the conveyance and in the rental
certificate that ON q given notice
at a certain period in advance of
payment of rent at such office OF
registry the lessee of the land may
become entitled to purchase each
or all of these rent certificates BY
depositing at such Office of registry
a given sum of money for each Ger
tificate.
Example: Let it be assumed
that John Smith buys or leases
from James Brown lot of land Of
which the valuation is 81 900, upon
which lie builds house valued at
$4,000. Tue ground rent is TO lie
$50 year. This rent is represe IT.
ed by ten registered certificates OF
rent, each OF So per annum, pro-
vision being made that at any
period three months in advance OF
any part of the rent becoming due.
John Smith may file a written
notice at the registry that, on the
payment of 300, together with llir
rent then due, he desires to become
the owner by purchase of rent Ger
tificate No. 1, and so on through
Nos. ?, 3 up to 10. When he has
purchased all the rent certificate,
at $10N each he will have become
his own lan.ilOrd. These Ielt Ger
tificates constitute a lien upon the
land as good to him, John S NTH,
as they are to the original holder,
and he need not cancel them.
Or let us suppose that John
Smith, being the owner of land
free of encumbranee, upon which
his house stands and which com
stitutes his farm, executes ren
certificates recorded npou that
farm with a trust company, it'll,
insured, and himself becomes thu
possessor ofsuch certificates, would
not these become the first lien
upon the land, not as a mort gage,
but as lien, subject to foreclosure
If the rent is not paids Would not
these transferable rent certificates
then become available to be de.
posted with banks, bankers OF
trust companies as security foi
temporary loans fiom season 10
season?
L am not a lawyer and cannot
tell what technical difficulties
there may be III the way, but this
seems to me to be the easiest way,
under our present tolm of registry
of title by deed, to put land into d
form in which it can be assigned us
security TOR temporary loans With
r..tr frr.t,.rr 81.